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Use ROAD20 to grab 20% off on filing with eForm2290 File 2290 Now

Use ROAD20 to grab 20% off on filing with eForm2290 File 2290 Now

What is IFTA?

IFTA stands for the International Fuel Tax Agreement. It is a tax collection agreement between the 48 contiguous states of the United States and the 10 provinces of Canada. It is designed to reduce the administrative burden of reporting motor fuel taxes in multiple jurisdictions.

The United Mexican States (Mexico), the District of Columbia, Alaska and Canada’s Northwest Territories, Nunavut Territory and Yukon Territory are not members of IFTA. Carriers travelling in these jurisdictions must file certain reports as mandated by these jurisdictions, even if they have an IFTA license.

Motor carriers that travel only between Texas and Mexico are not eligible to apply for an IFTA license and must either obtain a Texas interstate trucker license or purchase a fuel trip permit each time a qualified motor vehicle enters Texas.

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What is a qualified motor vehicle?

A qualified motor vehicles a motor vehicle used, designed, or maintained for
transportation of persons or property. They must:

  • Have two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or
  • Have three or more axles regardless of its weight
  • Or is used in combination, when the weight of such combination exceeds 26,000 pounds gross vehicle or registered gross vehicle weight.

Qualified motor vehicles do not include recreational vehicles. Farm plated vehicles and school buses, meeting the definition of qualified motor vehicle must obtain an IFTA license and fuel decals if travelling in another jurisdiction that requires them.

Who Must File the IFTA taxes?

If you operate a qualified motor vehicle if you’re based in a member state and operate across two or more member jurisdictions, you need to file the IFTA taxes. Failure to file the IFTA return and pay the applicable tax may result in the imposition of penalties.

IFTA Due Dates 2021

IFTA returns are due quarterly, on the last day of the month following the end of the calendar quarter. If the due date is a Saturday, Sunday or a legal holiday, the next business day is considered the due date.

Filing Period

Due Date

First Quarter

April 30th 

Second Quarter

July 31st

Third Quarter

October 31st

Fourth Quarter

January 31st

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How does IFTA work?

IFTA operates on a ‘pay now or pay later’ system. If you purchase fuel for your commercial motor vehicle, the fuel tax you paid will be credited to your account. At the end of the fiscal quarter, you will complete your fuel tax report by listing the miles traveled in all participating jurisdictions and the gallons of fuel that was purchased.

Your average fuel mileage is then applied to the miles traveled to determine the tax liability to each jurisdiction. Any fuel taxes due (or refund) is then paid to (or received from) the base jurisdiction who issued you the license. The member jurisdictions then take care of transferring the funds accordingly.

How do you calculate IFTA?

Your IFTA tax (1) is calculated based on how many gallons of fuel you burn in each state. You need to know details of how many miles you traveled in each jurisdiction and how many gallons you purchased in each jurisdiction.

Once you have these details, you need to calculate your fuel mileage over the quarter and the total gallons burned in each state. Finally, you need to calculate the tax owed in per jurisdiction, and the total amount owed on your IFTA return.

Next, you need to add up all the gallons of fuel you purchased in each state. As well as a running total of all the gallons purchased in all states during the quarter. The fuel mileage across all states for an entire quarter needs to be calculated using the equation:

Total miles driven in all states ÷ Total gallons purchased in all states = Overall fuel mileage

Then you need to calculate the fuel tax required and the fuel tax you already paid to each state based on the gallons burned there using the equation:

Total gallons burned in each state x Fuel tax rate for that state = Fuel tax required for that state

Multiply total gallons purchased in each state by the fuel tax rate for that state to get the fuel tax paid for that state. Likewise, do that for all the other states.

You will need to calculate how much tax you actually owe for each state by subtracting fuel tax required for each state with fuel tax paid in that state.

Finally, you need to calculate the total amount owed on your IFTA return by adding up all the fuel taxes owed to each state. Some of them may be negative and you subtract those amounts from the total.

The negative values indicate that you bought more fuel in that state than you burned, and therefore you paid more in fuel taxes to that state than you were required to pay. In such cases, you won’t get a refund from each state.

How to apply for an IFTA license and IFTA Stickers

You must fill out the IFTA application form used in your base state to apply for IFTA license. A single IFTA license will be issued for your entire fleet of qualified motor vehicles. You must provide some basic carrier information while filling out the IFTA applications, such as:

  • Registered business name
  • Mailing address
  • Federal business number
  • USDOT number

Once you’ve entered the above details, you can send the form by mail. Some jurisdictions allow IFTA forms to be sent by fax or through taxpayer service offices. After your form is processed, you will be issued two IFTA stickers  for each qualified motor vehicle at no cost. Stickers should be displayed outside the vehicle, one for each side of the cab.

IFTA stickers/ decals are valid from January 1st through December 31st and can be displayed one month before the beginning of a new year, but must be displayed throughout the calendar year the decals are valid.

You must always carry a copy of the IFTA license in your vehicle and properly display IFTA decals on your qualified vehicle or it will not be considered to be operating under an IFTA license.

Operating a qualified motor vehicle without a copy of the original IFTA license may subject you to citations and fines, and you might be required to purchase a fuel trip permit each time your vehicle enters a member jurisdiction.

How does the IFTA reporting system work?

Once you register your qualified vehicle for IFTA, you will receive your IFTA license and decals. Whenever you purchase fuel, the amount paid gets logged into your IFTA account.

At the end of each quarter, you must submit an IFTA report that lists the miles driven and the gallons purchased. These reports will determine either the amount of tax still owed or the refund you are due. The IFTA office in your company’s home state will issue your refund or debt.

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How do you file an IFTA report?

There are three ways to file your IFTA report:

  1. Electronically: you can electronically submit your return online.
  2. By mail: You can fill out the report and mail it to the authorities. Your return will be considered received by the postmark date on the envelope.
  3. Manually: you can visit the office and fill out and submit the return directly. Your return is considered received the date it is delivered to the office

How to pay IFTA taxes online?

If you owe taxes, you can pay it online through your debit/credit card or using ACH payment to complete the transaction. If you are expecting a refund, it will be credited back to your account after filing the IFTA report.

IFTA License suspension and revocation

Authorities can suspend or revoke an IFTA license for failure to comply with any of the IFTA provisions such as:

  • Failure to file a required IFTA quarterly tax report;
  • Failure to remit all taxes for all member jurisdictions; or
  • Failure to pay or protest an audit assessment within the established time period.

If your IFTA license has been suspended or revoked, it is advisable to not operate your qualified vehicle. All member jurisdictions will be notified if your license is revoked or suspended.
If you operate the license suspended vehicle, you will be subject to citations, fines, and penalties. In addition, you may be required to purchase fuel trip permits to travel into or through each member jurisdiction.

Recordkeeping of mileage details

Always maintain proper records of your mileage to support the information reported on your quarterly tax reports. These records must contain information such as:

  • Vehicle Identification Number (VIN) or vehicle unit number
  • Beginning and ending trip dates
  • Trip origin and destination
  • Travel routes
  • Beginning and ending reading from odometer
  • Total distance of trip
  • Distance traveled in each jurisdiction

If you’ve installed a vehicle tracking system to track distance and related details, you must include:

  • Vehicle’s original GPS or other system reading
  • Date and time of each GPS reading at intervals sufficient to validate the total distance traveled in each jurisdiction
  • Location of each GPS or other system reading
  • Vehicle identification number (VIN) or vehicle unit number
  • Distance between each GPS or other system reading
  • Travel routes
  • Total distance traveled by vehicle
  • Distance traveled in each jurisdiction
  • Beginning and ending reading from odometer

Recordkeeping of fuel details

Like mileage records, you need to keep records of your fuel purchases, with separate totals for each fuel type. The fuel records must contain the following information:

  • Date of purchase
  • Name and address of the seller (a vendor code, properly identified, is acceptable for this purpose)
  • Number of gallons or liters purchased;
  • Type of fuel purchased, or the total price of the fuel purchased;
  • Price per gallon or liter;
  • Evidence of tax paid to a jurisdiction;
  • Unit number of the vehicle into which the fuel was placed; and
  • Name of the purchaser of the fuel

Acceptable fuel receipts include invoices and credit card receipts. A credit card receipt must document the delivery of fuel into a specific qualified motor vehicle. The receipt should not contain alterations or erasures as it would be considered invalid.

Frequently Asked Questions

Q. What states are not included in IFTA?

A. Alaska, Hawaii and the District of Columbia, the Northwest Territories, Nunavut and Yukon, as well as all the states and Federal District of Mexico are some of the jurisdictions that are not IFTA members where IFTA credentials are not valid.

Q. What are IFTA taxable miles?

A. The IFTA miles or taxable miles are the miles traveled by your qualifying vehicle(s) in an IFTA jurisdiction/jurisdictions throughout the quarter. The IFTA taxable miles include empty miles, personal conveyance miles as well as miles covered while moving around yards or to mechanic shops.

Q. Are IFTA taxes deductible?

A. Yes, the IFTA taxes are deductible. Taxes on gasoline, diesel fuel, and other motor fuels that you use in your business can be deducted as a business expense for carrying out your trade or business.

Q. Is there an alternative to IFTA registration?

A. If you do not register your qualified vehicle for IFTA, you should obtain fuel trip permits to travel into or through each IFTA member jurisdiction. Carriers traveling in non-IFTA jurisdictions must continue to comply with the fuel tax reporting requirements of those jurisdictions.

Q. How to request IFTA stickers?

A. If you lose, damage, or destroy an IFTA sticker, you may order replacement decals by sending a request to your jurisdiction’s IFTA authority and order new ones.

Q. What are the penalty and interest provisions for IFTA taxes?

A. Penalties and interests or both are imposed for:

  • Failing to file the IFTA report
  • Filing to report after the due date
  • Paying the tax after the due date
  • Underpaying taxes

Q. How to cancel an IFTA License?

A. You can cancel your IFTA license at any time. You must meet all reporting requirements and satisfy all tax liabilities to all member jurisdictions before you cancel your IFTA license.

Once cancelled, you need to return your original license and all unused IFTA decals to the Comptroller’s office. However, you must keep all relevant records safe for four years after the due date of your last IFTA tax report as any member jurisdiction can conduct an audit upon license cancellation.

To cancel your IFTA license, you must check the cancellation box on your final IFTA quarterly tax report to indicate the end of operations under IFTA. You can also send a written request to cancel your IFTA license. If you fail to notify the Comptroller that you are canceling your IFTA license, or if you fail to file an IFTA quarterly tax report, we will estimate a tax liability for you.

Q. How to renew the IFTA license?

A. You can renew your IFTA license online or do it manually each year. The motor department will issue pre-printed IFTA license renewal applications to all registered licensees at no extra cost.

Q. How to run an IFTA report?

A. You can generate an IFTA report by installing a GPS tracking solution in your vehicle. The device will track mile-to-kilometer and gallon-to-liter conversions automatically, ensuring IFTA fuel tax reporting accuracy. These devices will help you eliminate reporting errors and gather accurate data while calculating your IFTA taxes.

Q. Who can use a trip permit instead of an IFTA license?

A. Those who are not registered under the International Registration Plan (IRP), but intend to travel interstate, they’ll need to purchase a temporary fuel permit for each state they will travel through while operating the vehicle.

Q. What information do you report when traveling on a fuel trip permit?

A. Fuel purchases made while operating under a fuel trip permit should be included in total gallons purchased to calculate the miles per gallon and in the tax-paid gallons purchased (if taxes were paid at the time the fuel was purchased) for the appropriate jurisdictions.

You must include the miles traveled while using the fuel trip permit in total IFTA miles. It should be a part of the total IFA miles travelled in the jurisdiction, not as taxable miles travelled for that jurisdiction.

Q. Who must have an IFTA license for leased qualified motor vehicles?

A. Different jurisdictions have different rules for lease agreements. While some states hold the lessor and lessee liable for the payment of fuel taxes, some states hold lessor or lessee liable for IFTA reporting. In most cases, the owner of the IFTA decal on the vehicle is responsible for lost, destroyed, undelivered or stolen for filing the tax.

Q. What is the difference between IRP and IFTA?

A. IRP stands for the International Registration Plan. It is an agreement for registering qualified vehicles that travel into two or more jurisdictions. Whereas IFTA (International Fuel Tax Agreement) is an agreement between member jurisdictions for streamlined collection and distribution of fuel tax revenues.

Q. Does IFTA cover any other transportation-related taxes?

A. No. IFTA does not cover road taxes, weight mileage taxes, or any other jurisdiction specific taxes. IFTA covers only fuel taxes.

Final Thoughts

An IFTA license allows you to file one tax report that covers all member jurisdictions. Just as you e-file 2290 form through eForm2290.com, you must file your IFTA tax through an IFTA e-filing portal so you can stay compliant and avoid penalties.

Today, reporting IFTA taxes have become all the more easier now that e-filing has gained traction among truckers and trucking businesses.

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