TRUCKING PERMIT, SAFETY AND BUSINESS CONSULTANTS
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International Fuel Tax Agreement (IFTA license)
Who should have it?
Operators of commercial motor vehicles used in interstate commerce transporting persons or property and:
having two axles and a gross weight exceeding 26,000 pounds.
having three or more axles regardless of weight.
used in combination and the gross vehicle weight of the combined vehicles exceeds 26,000 pound.
Does it apply to owner operators?
Some motor carriers don't provide it and require owner-operators to have their own IFTA license. Talk to your employer to find out if you need to apply for your own license.
Does it apply to local drivers of heavy/combination vehicles?
It depends. If you plan to occasionally cross the state line, you must have IFTA and an apportioned (IRP) registration. If you have so called base plates and don't think you'll travel outside your home jurisdiction, IFTA license is not required. However, if one day you get a one-time load to or through another state, you should buy temporary fuel and trip permits.
How much does it cost?
When you apply for IFTA license, you receive two IFTA decals (stickers) for each qualifying vehicle. The fee per set differs from state to state, and it's below $10 in most jurisdictions while some of them provide it free-of-charge.
*The above fees do not include service provider fees
When is the deadline?
Apply for IFTA license before you start hauling loads. Plan ahead as it may take a couple of days to a couple of weeks to receive the license by mail. A few states will provide you with a temporary license while you're awaiting your decals.
IFTA license is due for renewal annually, so you should reapply before the end of year. Luckily, those who request renewal before January 1st are eligible for grace period until the end of February to allow arrival of the new IFTA decals. On-the-road enforcement starts on March 1st. A limited number of states will renew your license automatically, so you don't have to do anything. Call your local IFTA department or WIX Consulting for more details on renewal procedures.
When are the quarterly returns due?
By applying for IFTA license you agree to file quarterly returns and report miles travelled and fuel purchased in every US state and Canadian province.
1st quarter includes:
January, February and March.
The return is due:
on the last day of April*
2nd quarter includes:
April, May, and June.
The return is due:
on the last day of July*
3rd quarter includes:
July, August, and September.
The return is due:
on the last day of October*
4th quarter includes:
October, November and December.
The return is due:
on the last day of January*
* If the last day of the month when the return is due falls on a non-business day, then the return is due on the first business day of the following month.
NEXT IFTA RETURN
IS DUE IN:
Need help with yout IFTA return? Download the PDF form below, fill it out, and email it back to us or upload here.
We will call you back to discuss the details and then file and pay any tax due electronically!
What is IFTA?
The International Fuel Tax Agreement (or IFTA) is an agreement between the lower 48 states of the United States and the Canadian provinces, to simplify the reporting of fuel use by motor carriers that operate in more than one jurisdiction. An operating carrier with IFTA receives an IFTA license and two decals for each qualifying vehicle it operates. The carrier files a quarterly fuel tax report. This report is used to determine the net tax or refund due and to redistribute taxes from collecting states to states that it is due. (Source: Wikipedia).
So , what is IFTA again?
US states charge motor fuel use taxes on each gallon that you use/burn while in those state. In practice, you pay the tax in the state where you get gas. The rates differ from state to state and have major impact on why fuel in one jurisdiction may be much cheaper than in another. If you're travelling in your convertible from Chicago to Wisconsin for a weekend getaway, no one requires you to know how much fuel you used per state. That would make travelling more of a math assignment than pleasure. But when you're a trucker, it actually matters. You still pay the tax at the pump, but if you burned some of it in a state with a higher tax rate, you will have to pay the difference. Refunds are possible, too. Therefore, IFTA is not a tax as many think. It is rather an unified system of reporting your purchased fuel and miles travelled, so you can calculate over and underpayments of tax in each jurisdiction you visited. Well, this is only partially true, because 3 states (Indiana, Virginia and Kentucky) add a surcharge (additional, non-refundable tax) to each gallon that you used, and they collect it at the time you file your IFTA return decreasing your refund or increasing the amount underpaid.
How does it work in real life (an example)
John is an owner-operator who regularly travels between 2 states: Illinois and Indiana. He buys diesel in Indiana only because, on average, it's cheaper by $0.10.
Last quarter John purchased total of 2,000 gallons of diesel in Indiana.
The tax rates were as follows:
Indiana tax rate was $0.16
Indiana surcharge rate was $0.11
Illinois tax rate was $0.356
That means John paid $320.00 ($0.16 x 2,000 gal) in taxes already included in the price of fuel.
John travelled total of 10,000 miles - 6,000 miles in Illinois and 4,000 miles in Indiana.
John's miles-per-gallon (MPG) average was 5.00 (10,000 miles / 2,000 gallons).
In summary, John roughly used/burned:
1,200 gallons of fuel in Illinois (6,000 miles / 5.00 MPG) and
800 gallons of fuel in Indiana (4,000 miles / 5.00 MPG).
So the amount of tax he should pay is:
Indiana: 800 gal. x $0.16 = $128.00
Indiana surcharge: 800 gal. x $0.11 - $88.00
Illinois: 1,200 gal. x $0.356 = $427.20
Total taxes due: $643.20
Credit for tax already paid: $320.00
Remaining balance due: $323.20 ($643.20 - $320.00)
What would happen if Jonh purchased all the fuel in Illinois instead of Indiana?
Illinois and Indiana fuel use tax would not change. He'd still be charged the Indiana surchage. It would, however, change his "credit for tax already paid" (at the gas station) from $320.00 to $712.00 ($0.356 x 2,000 gal.).
So the amount of the tax he should pay now is:
Total taxes due: $643.20
Credit for tax already paid: $712.00
Expected refund: $68.80 ($643.20 - $712.00)
In the first part of our example, we mentioned that John buys fuel in Indiana because it's cheaper by $0.10 on average. However, the facts that every state has a different tax rate and that you pay the tax based on usage-per-state make things complicated. Let's calculate in which example John really saves money.
Price of fuel in Indiana: $2.33
Price of fuel in Illinois: $2.43
Cost of fuel if purchased in Indiana: $2.33 x 2,000 gal. + $323.20 (IFTA balance) = $4,983.20
Cost of fuel if purchased in Illinois: $2.43 * 2,000 gal. - $68.80 (IFTA refund) = $4,791.20
It turns out that instant savings at the pump don't really mean anything. You need to consider fuel use tax rate of each state and deduct it from the fuel price to come up the real price of diesel.
Indiana price before tax: $$2.17 ($2.33 - $0.16)
Illinois price before tax: $2.074 ($2.43 - $0.356)
In conclusion, if you're on the road and have a choice to buy fuel in one state or another, deduct the state tax rates from the fuel price to figure out where you'll save the most.
You can download the most current tax rate tables here.
The numbers of miles and gallons in the example above are rounded to 100, for the purspose of our article. In real life, you are required to provide more exact numbers.
What are the record-keeping requirements?
IFTA license holders are subject to audits and must maintain distance and fuel records supporting the information provided on your quarterly returns for the past 5 years and 9 months.
Every state provides a free-of-charge manual listing detailed requirements and procedures. Contact us and let us know where you're from, and we'll email you the most recent recordkeeping.
If you're from Illinois, you can download a manual here. Look for purple link to: MFUT-53, Illinois Motor Fuel Use Tax Carrier Compliance Manual.