The end of the first quarter of the new year is quickly approaching, and commercial trucking companies across the country know what that means… it is time to reconcile IFTA! The International Fuel Tax Agreement (IFTA) is a cooperative agreement between forty-eight states in the United States and ten provinces of Canada. It allows interjurisdictional carriers to report and pay taxes for the fuel their vehicles consume across states using a single fuel tax license. Prior to this agreement, enacted national by Congress in 1996, truckers were required to obtain fuel permits from every single state they entered.
IFTA has established an efficient and standardized way to file fuel taxes. The agreement defines that any “qualified motor vehicle” built and used to transport property or people must file IFTA taxes. The qualified motor vehicle must also fit these other categories:
- Any vehicle with two axles and a gross vehicle weight of over 26,000 pounds.
- A vehicle of any weight but with three or more axles.
- A vehicle that exceeds 26,000 pounds.
The agreement ensures jurisdictions are properly compensated for the use of their roads by heavy commercial vehicles. Carriers only need to report interjurisdictional (other states that aren’t defined as the “base state”) fuel use to their base state. The state that IFTA taxes are filed will collect the taxes on net fuel use, process the tax return, and distribute the funds to all other states recorded on the tax filing.
Feel free to reach out to your Fleet Card Services sales representative with any questions on how we can be of assistance with your IFTA filing. The due date for reporting the first quarter of this year is April 30, 2022.