Everything You Need To Know about IFTA Compliance
A complete guide to staying IFTA-compliant.
Dec 5, 2022
Everything You Need To Know To Stay IFTA Compliant
Fuel Tax. Compliance.
If you’re in the trucking industry, these words might carry some negative weight. After all, it’s annoying, tedious, and error prone. Not to mention the steep fines and possibility of losing permits that come with every audit.
At the end of the day, it's compliance. We all have to do it to keep our trucks on the road; and luckily, through the right tools and processes, IFTA can actually be quick and straight forward.
Not sure what IFTA is? Don't worry, we'll explain how it all works, and what you need to know.
What is IFTA?
The International Fuel Tax Agreement (IFTA) is an agreement between US states and Canadian provinces that simplifies the reporting and payment of fuel taxes for vehicles that operate in multiple jurisdictions.
Basically, it simplifies the process of calculating fuel taxes so businesses can easily pay taxes in multiple jurisdictions.
Under IFTA, participating jurisdictions agree to recognize each other's fuel tax licenses and to allow vehicles licensed in one jurisdiction to operate in other participating jurisdictions without having to obtain separate fuel tax licenses.
This simplifies fuel tax reporting and payment for carriers that operate in multiple jurisdictions, and helps to ensure that carriers pay their fair share of fuel taxes.
Who needs to file IFTA?
You are required to have an IFTA license if you operate in two or more jurisdictions and the power unit:
Has two axles and a gross vehicle weight or registered gross vehicle weight of 26,001 lbs. or heavier;
Has three or more axles regardless of weight; or
Is used in combination and the said combination is 26,001 lbs. or heavier.
This typically includes interstate commercial trucking and bus companies, as well as other carriers that operate vehicles with a gross vehicle weight of at least 26,000 pounds in more than one jurisdiction.
If a carrier operates a qualified vehicle and travels in multiple jurisdictions, they will need to file for IFTA in order to report and pay their fuel taxes.
How do I stay compliant?
To stay IFTA compliant, carriers need to keep accurate records of their fuel purchases and vehicle mileage, file their IFTA returns on time, and accurately pay any required fuel taxes.
As a carrier here are the steps you have to take to stay IFTA compliant:
Obtain an IFTA license for each qualified vehicle you operate: In order to file for IFTA, carriers must first obtain an IFTA license from their base jurisdiction. This license will be used to identify the carrier and their qualified vehicles when filing for IFTA.
Keep your IFTA license and decals up to date: Make sure to display them as required.
Keep accurate fuel and mileage records for the past 4 years: Carriers are required to keep accurate records of their fuel purchases and vehicle mileage in order to accurately report their fuel tax liabilities. This includes keeping receipts for fuel purchases and maintaining a mileage log that tracks the miles traveled by each qualified vehicle.
File IFTA returns on time: Carriers must file their IFTA returns on a quarterly basis, and the due date for each return will vary depending on the carrier's base jurisdiction. It's important to file IFTA returns on time to avoid penalties and interest charges. (Note: make sure to file for all qualified vehicles in your fleet, even those that weren't operated during the quarter)
Pay any required fuel taxes (accurately!): If a carrier owes fuel taxes, they must pay them on time to avoid penalties and interest charges. Fuel taxes can be paid online, by mail, or in person, depending on the carrier's base jurisdiction. Make sure not to under or over-pay taxes, as this is sure-fire way to trigger an audit.
Audits: Respond to any requests for additional information or audits from your jurisdiction's IFTA office in a timely manner.
Make sure to check with your base jurisdiction's requirements, as some of the specifics can vary between jurisdictions.
If you're thinking that this sounds tedious and time consuming, don't worry. You're not alone. Luckily, over the years, carriers have found ways to make IFTA easier.
Tips for making IFTA easier
Nowadays, most carriers opt to use IFTA software to help manage the process of collecting and storing compliant fuel transactions and trip records--and for good reason.
Using the right tools and processes can save you business hundreds of hours, increase driver satisfaction, and save you from hefty audit penalties.
For example, MetaFuel automatically manages IFTA-compliant trip records for you by integrating directly with your telematics provider. Fuel transactions are captured simply by uploading a picture of your receipt. No more manually tracking or typing in your fuel data. Instead, computer vision and machine learning automatically handle the data parsing.
Unlike 3rd parties that completely abstract away your data, MetaFuel actually gives you more visibility into your fuel purchases and telematics data, in addition to streaming your records in real-time.
Automate IFTA Compliance
If you want to completely get rid of fuel receipts altogether, the MetaFuel card takes it a step further by completely automating the collection and aggregation of IFTA-compliant fuel transactions. Simply swipe, and you’re compliant. It’s brainless.
With machine-learning powered fraud protection, best-in-class rewards, card-level administrative controls, configurable notifications, and absolutely 0 fees forever, the MetaFuel card is a card built for the modern age, giving complete visibility and control of your fleet’s fuel spend. All integrated with the rest of your fleets data in the cloud. Just like it should be.
Of course, we can't tell you what the best system for your fleet is. Only you can answer that.
With that said, if you're not satisfied with your current solution, feel like you spend too much time on tedious processes, or are just looking to centralize and automate your IFTA compliance across your fleet, schedule a demo or contact us.