The International Fuel Tax Agreement (IFTA) is a cooperative agreement among the lower 48 U.S. states and Canadian provinces to simplify the reporting of fuel use by motor carriers operating in multiple jurisdictions. Here’s why you need it:
What is IFTA?
IFTA allows truckers to use a single fuel tax license to report and pay taxes on the fuel they use across different states and provinces. It aims to simplify the fuel tax reporting process and reduce the paperwork and administrative burden for motor carriers.
Why Do You Need IFTA?
- Simplified Tax Reporting: Instead of having to file separate fuel tax reports in each state or province where the vehicle operates, carriers only need to file one quarterly report to their base jurisdiction. This report includes the miles traveled and fuel purchased in each participating state or province.
- Compliance: Commercial motor carriers operating in multiple jurisdictions are required by law to report and pay fuel taxes. IFTA provides a streamlined process to ensure compliance with these regulations.
- Avoiding Penalties: Operating without an IFTA license can result in significant fines and penalties if a carrier is found non-compliant during a roadside inspection or audit.
- Fuel Tax Redistribution: IFTA ensures that the fuel taxes paid by carriers are fairly distributed to the states and provinces where the fuel was used, thus supporting the maintenance and development of infrastructure in those areas.
How It Works
- Application: Carriers must apply for an IFTA license with their base jurisdiction (the state or province where the business is headquartered).
- Decals: Once approved, the carrier receives IFTA decals that must be displayed on each qualified motor vehicle.
- Reporting: Carriers must file quarterly fuel use tax reports to their base jurisdiction. These reports calculate the taxes owed or credits due based on the fuel used and miles traveled in each jurisdiction.
For more detailed information, you can refer to the official IFTA Inc. website.