The International Fuel Tax Agreement, commonly referred to as IFTA, is a cooperative agreement between the lower 48 states in the United States and the Canadian provinces. This agreement was formed to simplify the reporting of fuel use by motor carriers that travel in multiple jurisdictions. The purpose of IFTA is to ensure that carriers report and pay the fuel taxes owed to each state or province based on the amount of fuel consumed in each jurisdiction.
Under IFTA, motor carriers are required to obtain a single fuel tax license that allows them to travel in all member jurisdictions. The license is issued by the base state of the carrier and is valid for one year. Carriers must file quarterly fuel tax reports with their base state, reporting the number of miles traveled and the amount of fuel consumed in each jurisdiction.
The IFTA agreement has been in place since 1983 and has proven to be beneficial for both carriers and member jurisdictions. Carriers are able to simplify their reporting and payment of fuel taxes, while member jurisdictions are better able to collect the fuel taxes owed to them.
It is important to note that IFTA only applies to motor carriers that operate commercial vehicles with a gross vehicle weight of over 26,000 pounds or have three or more axles on the power unit. Additionally, carriers that operate solely within a single state or province are not required to obtain an IFTA license or file fuel tax reports under this agreement.
Some carriers are implementing fleet cards that track fuel expenses and automate IFTA reporting.
Frequently Asked Questions
What is the purpose of the International Fuel Tax Association (IFTA) transaction?
The purpose of the IFTA transaction is to simplify and streamline the reporting and payment of fuel taxes for motor carriers operating across multiple jurisdictions. It allows carriers to report their fuel consumption and pay taxes based on the miles traveled in each participating jurisdiction, rather than obtaining separate fuel permits for each state or province. IFTA transactions ensure efficient and standardized fuel tax reporting and collection for interstate and inter-jurisdictional carriers.
What is the meaning of IFTA?
IFTA stands for International Fuel Tax Agreement. It is an agreement between U.S. states and Canadian provinces that simplifies the reporting of fuel use taxes by interstate motor carriers. The agreement requires motor carriers to pay fuel taxes to their base jurisdiction, which then redistributes the taxes to other jurisdictions where the fuel was used. This agreement helps to ensure that motor carriers are paying the appropriate fuel taxes and reduces the administrative burden of reporting and paying taxes across multiple jurisdictions.
Some fleet cards help to automate IFTA reporting.
What is the IFTA in the US?
The International Fuel Tax Agreement (IFTA) is an agreement between the lower 48 states of the US and the Canadian provinces that simplifies the reporting of fuel taxes by commercial motor carriers. Under IFTA, carriers file a single tax return with their base jurisdiction and the taxes are distributed to the states or provinces where the fuel was consumed.
Do I need IFTA in California?
Yes, if your commercial vehicle weighs over 26,000 pounds or has three or more axles, and you operate it in California and other participating jurisdictions, you are required to obtain an International Fuel Tax Agreement (IFTA) license. The license simplifies the reporting and payment of fuel taxes for inter-jurisdictional carriers. IFTA is mandatory for fleets operating in the U.S. and Canada.
Get answers to more IFTA questions.