International Fuel Tax Agreement

Vince Sandri
July 13, 2012 — 1,418 views  
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Under the International Registration Plan, carriers have the authority to drive across state lines regularly without having to worry about registration within each of the states. In order to operate routinely across state lines, carriers must apply to the International Fuel Tax Agreement (IFTA) to establish an account that logs fuel use across multiple jurisdictions. This agreement includes the 48 contiguous United States as well as Canadian provinces. This is a simple way to track fuel usage as well as net taxes and refunds due to or from the appropriate jurisdictions.

Once a carrier establishes an account with IFTA, each vehicle within the fleet receives an IFTA decal. Vehicles are subject to this fuel tax if they are used to transport people and cargo while also having two axles and a gross weight of over 26,000 pounds, three or more axles regardless of weight, or used in combination to exceed 26,000 pounds in gross weight. Certain vehicles are exempt from IFTA such as recreational vehicles like motor homes and pickup trucks with campers as well as base plate drivers that stay within one jurisdiction. Check state laws for their specific exemptions on certain vehicles.

All carriers with IFTA accounts are required to file quarterly fuel tax reports. All vehicles within a single IFTA account must be combined into one report to file; vehicles cannot be filed separately. The fuel report should list all miles traveled and the number of gallons purchased within each jurisdiction. If a vehicle in a fleet is not used at all throughout a quarter, a zero operation report must still be filed on that vehicle. As carrier vehicles purchase fuel, the state taxes on the fuel are credited to the IFTA account. After the report is filed, the average fuel mileage is calculated to determine the amount of fuel taxes either owed to the different jurisdictions or the refund that is owed back to the carrier depending on the difference in average fuel mileage and the taxes credited to the accounts at purchase. If a carrier with an IFTA account no longer needs the account, they can be cancelled during quarterly reports.

The International Fuel Tax Agreement or IFTA is an agreement between jurisdictions that simplifies the process of filing fuel tax reports. Before IFTA, vehicles had to stop and obtain tax permits within each state they operated through to be able to purchase fuel. This system allows for the taxes on the fuel to be configured and worked out with the quarterly reports so vehicles can fill up in different jurisdictions without having to halt operation.

Vince Sandri