International Fuel Tax Agreement (IFTA)
The International Fuel Tax Agreement, also known as IFTA, filed on a quarterly basis, is a tax collection agreement by among the 48 contiguous States and the 10 Canadian Provinces bordering the US. It uniformly administers taxation laws on motor fuels for use in a qualified motor vehicle. The main objective of IFTA if a vehicle travels through a State, buy buys no gas while in that state, then there was no fuel tax paid to that state through the purchase of gasoline. IFTA would then redistribute to the state that received no fuel tax.
IFTA’s Core Principals
IFTA is implemented through the base jurisdiction of the Carrier. The base jurisdiction is where the qualified motor vehicles are registered, where operational control and operational records are maintained or can be made available, where some travel is accrued.
The tax collected through IFTA is motor fuel taxes that are imposed by each jurisdiction on the consumption of motor fuel in qualified motor vehicles.
Qualified Motor Vehicle
A motor vehicle used, designed or maintained for the transportation of persons or property; and
Has a gross vehicle or registered gross weight over 26,000 lbs. or 11,797 kgs.; and
Three-axles regardless of weight; and
Used in combination when the weight of the combination exceeds 26,000 lbs or 11,797 kgs.
Do You Need an IFTA License
If the Carrier is operating a qualified motor vehicle in two or more member jurisdictions then IFTA decals are needed and can be registered through the Carriers home jurisdiction. Once license and one set of decals for each qualified motor vehicle is needed to operate through all member jurisdictions. Only one Motor Fuel tax return is filed each quarter with the base jurisdiction, meaning one payment and/or refund, and only one audit from the base jurisdiction.
Carriers Record Keeping Requirements
A Carrier must maintain distance records, fuel records, fuel receipts, bulk fuel storage and withdrawals, and alternative recording devices. The Carrier must maintain their records for a minimum of 4 years from the time of filing their quarterly report with their base jurisdiction.
If you would like to discuss this or any other U.S. tax or accounting matter, please feel free to call Gabriel at 773.269.6513 or email Gabriel.firstname.lastname@example.org.
We look forward to hearing from you.
Gabriel Wise, CPA MST
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