The International Fuel Tax Agreement (IFTA) was formulated to efficiently record fuel taxes for motor carriers. This agreement spans forty US states and Canadian provinces, making it simpler to track carriers that operate in more than one jurisdiction. Under the IFTA, each company will be issued one IFTA license and IFTA decals for each of their trucks, allowing them to operate in other jurisdictions without having to buy additional decals. Prior to this agreement, each state had their own taxing system where drivers would need to obtain individual permits for every state that it operated in.
To apply for a license, applicants must establish a place of business where their motor carrier operations are performed. Trucking mileage must be accrued in their state and operating records for the fleet should be maintained and made available to the state when necessary. In addition, the trucks must operate in at least two IFTA jurisdictions.
Registration and Quarterly Tax
Truck fleet owners can either complete the IFTA application package or have a Truckers Accounting and Permitting Service do the job for them. Once you have registered, a quarterly tax form should be filed, even if the license holder does not purchase fuel or operate during the quarter. The IFTA tax return is mailed on a quarterly basis to all licensed carriers. Tax rates can be viewed, downloaded, and printed at www.iftach.org.
Regardless of where or when the IFTA license is obtained, all decals will expire on December 31st every year. Although licensees are recommended to renew the decals immediately after expiration, it is not required. There is a 2 month grace period from December to February until the next fuel tax.
IFTA tax is required for any motor vehicle that has three or more axles, regardless of its weight. If the vehicle exceeds 26,000 pounds, tax will be required even if it only has two axles. All commercial trucking companies are required to obtain an International Fuel Tax Agreement license, although exceptions can be made for government vehicles and farm vehicles.