IFTA fuel tax report

IFTA Fuel Tax Return The International Fuel Tax Agreement, also known as IFTA, is an agreement for fuel tax collection and sharing among 48 states and 10 provinces.

The International Fuel Tax Agreement — also known as IFTA — is a fuel tax collection and sharing agreement for the redistribution of fuel taxes paid by interstate commercial carriers. There are 58 member jurisdictions of IFTA, including 48 American states and 10 Canadian provinces.

By requiring commercial carriers to pay fuel taxes proportionally, according to the miles driven in each state or province, the agreement ensures that each jurisdiction has its fair share of revenue to put towards roads and transportation. Historically, motor fuel taxes have funded transportation. The first fuel taxes of 1919 and the 1-cent gas tax, formalised in 1933, were instituted to help balance the federal budget and pay for public works to boost the economy. In 1956, it was decided that fuel tax revenue should be directed to the new Highway Trust Fund for supporting the growing Interstate System and highways.

Under the IFTA agreement, qualified motor carriers can obtain an IFTA licence for their motor vehicles allowing them to travel through other IFTA jurisdictions and submit only one quarterly fuel tax return in their base jurisdiction for fuel usage. If motor carriers aren’t registered with IFTA, they must comply with the fuel tax reporting guidelines of each individual jurisdiction in which they travel, which may include purchasing fuel trip permits. IFTA (International Fuels Tax Agreement ) is an important part of IFTA fuel.

How IFTA works

Apart from the benefits of IFTA to trucking businesses, the agreement also makes sure jurisdictions are properly compensated for the use of their roads by heavy commercial vehicles.

Under IFTA, carriers only need to report inter-jurisdictional fuel use to their base state. The state will collect the taxes on net fuel use, process fuel tax returns, and distribute the funds to all the other states.

The base state is also responsible for enforcing compliance through scheduled IFTA audits.

IFTA Fuel Tax and Due Dates

submit a quarterly tax return to their base jurisdiction that covers motor fuel usage and the distance travelled in IFTA tax member jurisdictions for all their qualified vehicles. Even if the carrier has not conducted any operations or used taxable fuel for a particular period, a report must be filed.

The due dates for filing a tax return and submitting payment are the last day of April, July, October, and January (or if that day falls on a weekend or holiday, the next business day).

Quarterly Tax Reporting Periods

Who has to register for IFTA?

Qualified motor vehicles used/designed to transport people or property may require IFTA registration if they:

• Have three or more axles

• Have two axles and a gross vehicle or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms

• Are used in a combination that has a combined or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms.

Just to confuse you… There are vehicles that fall under this definition but do not require an IFTA licence, like an intrastate vehicle.

To be licensed for tax reporting, these vehicles must use diesel, propane, or natural gas. Some jurisdictions even require gas-powered vehicles to be licensed.

Documents and applications — IFTA requirements

All carriers must keep fuel use records. Either a digital or hard copy will do. An annual licence is required for every vehicle that qualifies. Each year, your base jurisdiction may send you a reminder to file your IFTA. But the responsibility falls to each carrier to remember to apply and to store the licence properly once they get it.

Vehicles with active licences are given two decals to display. Each carrier registers a base state that their vehicles operate out of. But the single licence and one set of decals allows operation through all member jurisdictions. Only the base jurisdiction performs audits.

Why must interstate carriers file IFTA reports?

Under IFTA, carriers only need to report inter-jurisdictional fuel use to their base state. The state, in turn, will collect the taxes on net fuel use, process fuel tax returns, and distribute the funds to all the other states. The base state is also responsible for enforcing compliance through scheduled IFTA audits

Penalty and Interest

An IFTA quarterly tax return that is filed after the due date or without full payment of taxes owing is considered late. A penalty of 10% of the total tax due on the tax return will be applied if the total tax due is greater than $100.00. The penalty also applies to amounts payable resulting from an audit. Jurisdictional or IFTA interest will be calculated monthly on the outstanding balance in accordance with the IFTA Agreement. This interest is transmitted to the jurisdictions in which you travelled during the reporting period. Manitoba system interest will also be calculated in the month following the filing of a tax return if all monies owing have not been paid. This interest will continue to accrue until monies owing are paid. This interest is calculated in accordance with the Tax Administration and Miscellaneous Taxes Act. This interest is not transmitted to other jurisdictions. As the penalty is not distributed to other jurisdictions, the base jurisdiction may waive the application of the penalty for a good cause. A licensee may appeal the imposition of the 10% penalty. A base jurisdiction may waive the IFTA interest assessed on taxes a licensee paid late when the licensee can show that the tax return for those taxes was filed late due to misinformation provided by the base jurisdiction. In these circumstances, only the IFTA interest due on the base jurisdiction's own taxes may be waived.

Advantages of an IFTA Licence

An IFTA licence authorizes each qualified vehicle to travel in all IFTA jurisdictions without having to purchase fuel tax permits at the ports of entry. It also standardised reporting of fuel taxes. You only have to file one set of tax forms quarterly through your base jurisdiction (Arizona) instead of filing in each jurisdiction where you travel. All audit administrative costs are reduced because fuel tax audits are performed by your base state on behalf of all member jurisdictions

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