Understanding the International Fuel Tax Agreement (IFTA)
The International Fuel Tax Agreement was established to make the collection and reporting of fuel taxes simpler for drivers operating in the continental United States and Canada. Drivers are assigned a home jurisdiction and from then on submit all of their relevant paperwork through an office located in that jurisdiction. This saves the operator from having to manage different logs and records for all states and provinces in which he or she operated during the reporting period.
Who Has To File?
Any vehicle that weighs more than 26,000 pounds or has 3 or more axles regardless of weight is considered a “qualified motor vehicle” (QMV) under the IFTA. Anyone who operates a QMV is responsible for filing an IFTA fuel tax return. In most cases, this return must be filed quarterly. However, if the vehicle is operated infrequently and the operator has a clean record of previous filings then he or she may apply to be placed on an annual filing schedule rather than quarterly.
When Are Filings Due?
IFTA filings are due on the last day of the month following the reporting period. For instance if the driver is required to file reports on a quarterly basis, then he or she would have to file prior to the last day of April for all fuel consumed during January through March. For those who are filing on an annual basis, IFTA fuel tax reports are due prior to January 31st. Adjustments to these dates are made if the last day falls on a major holiday or Sunday.
Here is the IFTA filing requirements per quarter:
- Jan-Mar Returns due Apr 30
- Apr-Jun Returns due Jul 31
- Jul-Sep Returns due Oct 31
- Oct-Dec Returns due Jan 31
What Are the Penalties for Filing Late?
Failure to file a report or to file a report without the required taxable amount will incur a penalty of $50 or an amount equal to 10% of the amount owed, whichever is greater. Late fees and unpaid tax balances are subject to 1% interest PER MONTH until the balance is paid off entirely. Repeated failure to file an IFTA tax return or pay penalties and fees can result in a revocation of the IFTA license.
Why Use a Service Provider to Handle IFTA Filings?
For owners and operators, the IFTA is just one more piece of red tape that has to be
dealt with. Even the most responsible driver can lose or fail to file a return on time and find their self facing stiff penalties and fines. A qualified IFTA service provider can eliminate these worries and allow the driver and fleet operator to focus on safety and customer service.
Looking over the IFTA Carrier Manual, a fleet operator might think that handling the IFTA returns might not be that time consuming. However, it is not just about turning in some paperwork that was casually compiled over the course of a year. The IFTA calls for detailed trip reports outlining miles traveled and fuel purchases in each jurisdiction. The fleet operator is responsible for the accuracy of IFTA filings. If a driver turns in falsified or inaccurate reports it will be the fleet operator that bears the brunt of the penalties.
Service providers can protect from these penalties as well as theft and fraud that may be committed by drivers. Service providers have the time and the skill to analyze logs and purchases and spot inconsistencies. Hiring a service provider is not just a convenience – it is an investment in the safety and financial well being of a fleet.
Beyond the IFTA
Hiring a transportation consultant to help manage a fleet provides benefits beyond just handling the IFTA requirements. In addition to the IFTA, the service provider will also keep archives of your logs and file required taxes and licensing documents. There are a lot more fuel and trucking taxes and laws in the United States and Canada than just the IFTA. A service provider will handle the work for New York, New Mexico, Oregon, and Kentucky mileage taxes in addition to keeping track of your plates and tags.
Even a lone operator has a bundle of legal and tax information that he has to keep track of every month. For a medium sized fleet, the amount of time taken out of each week just to handle these filings can quickly put a significant strain on fleet operations. By utilizing the services of a transportation consultant, fleet managers can ensure that their company is protected from penalties and fees that might arise from failing to report accurate fuel usage, purchases, or fees that come from filing these returns beyond the expected date.