What Is IFTA?
IFTA, which stands for the International Fuel Tax Agreement, was started in order to simplify the reporting of motor carrier fuel used for tax purposes. The IFTA covers the lower 48 United States and many Canadian provinces.
Trucking companies often operate in multiple jurisdictions and travel across many different states at a time. Because of this, the IFTA needed to be developed to make taxing each vehicle’s fuel more simple and understandable.
Since each state had its own system for collecting fuel taxes, interstate commerce trucking companies were stuck in a difficult position. Trucks carried around “bingo plates” which showed each state’s permit sticker on it.
That system was commonly used, but it was expensive and time-consuming. Since the IFTA was established, the system used today is called the “pay now or pay later” system.
How Do IFTA Stickers Work?
When commercial motor vehicles buy their fuel, those taxes are paid and credited to the licensee’s account.
Then, at the end of the fiscal quarter, that licensee will state how many miles they’ve traveled and how many gallons of gas they’ve purchased in their fuel tax report.
The average fuel mileage is applied to the number of miles that were traveled in each jurisdiction to determine tax liability. That amount is paid to the jurisdiction that issued their license. Transferring the funds will occur after this step.
The Importance of IFTA and Why You Need an IFTA Sticker
Are you frustrated with all the IFTA reporting guidelines, due dates, regulations, and constant changes? Try to imagine what it was like back before IFTA simplified the process of fuel tax collection and distribution. Each state had its own fuel tax and fleet owners were required to have a tax permit for each state they operated in. This was extremely time-consuming and costly for everyone involved.
Today, you only need to report total fuel use and mileage to your base jurisdiction and the IFTA system takes care of the rest. When you register with the IFTA, you’ll receive an IFTA sticker that allows you to travel in any US or Canadian jurisdiction or province. The sticker also indicates that your company is in compliance with quarterly fuel tax payments. In most states, you can register and pay online after creating an account with an IFTA login.
So, if you’re questioning the importance of IFTA, keep in mind that your business depends on keeping fuel costs and taxes fair across the board. IFTA actually reduces the work that a trucker has to do. If you’d like to make fuel tax reporting easier and avoid penalties or fines, try our TruckingOffice TMS package with this free trial.
How Can I Get An IFTA Sticker?
To get an IFTA sticker, you just need to apply for an IFTA permit, and an IFTA sticker will be sent to be placed on the trucks. Applications can be found on any state or jurisdiction tax website.
Click here to find each jurisdiction’s IFTA information (on the right-hand side of the screen) from TruckingOffice’s IFTA Resource Center.
Where Do I Place My IFTA Sticker?
Many drivers wonder where the IFTA sticker placement should go on their trucks, but it’s easy. You’ll get two of them, so attach one to each side of the cab near the doors.
Hint: Try to place the stickers at eye level so that law enforcement will be able to see them with ease.
How Could I Get A Fine?
You could get fined if the IFTA stickers are not placed in the correct sites. In addition to that possibility, you also need to always be carrying a copy of your valid IFTA license.
How Much Does It Cost?
In California, an IFTA license costs $10.00, plus a $2.00 per-set charge for the decals. This license will cover all of your motor vehicles. In many states, the IFTA stickers are free, but there may be a replacement cost.
Some IFTA Rules And Reminders
Expiration dates. Decals and licenses expire on December 31st, so be sure to always renew on time to avoid fines and charges.
Be prepared. Keep a copy of your IFTA license with you at all times. You never know when you might need it (or who will need to see it). You are required to keep your IFTA stickers for up to 3 years after their expiration, so when you replace one sticker with another, keep it around.
Replacements. You’ll need to replace any lost IFTA permits and stickers as soon as you lose them. Contact your state’s IFTA department to get another one.
Be on time. Be sure to pay your IFTA taxes on time in order to avoid possible fines or even loss of your IFTA license.
When Reporting IFTA Taxes
Taxable miles. While certain jurisdictions will make exceptions to miles that don’t count as taxable, the total number of taxable miles often corresponds with the total number of miles driven in each jurisdiction.
We have a complete IFTA Resource Guide available to you, along with links to your jurisdiction’s IFTA pages.