The International Fuel Tax Agreement (IFTA) was established for two reasons. One, to make it easier and more efficient for motor carriers who operate in multiple states or jurisdictions to report their fuel use. Secondarily to help them pay the appropriate fuel taxes.
If you don’t have a clear understanding of IFTA requirements and how to fill out the IFTA forms properly, you could end up incurring additional costs. Under IFTA, you only have to file one tax return per quarter. You will make fuel tax payments only to your base jurisdiction. Rather than purchasing a fuel permit for each state in which you travel.
In this way, IFTA makes the process of paying fuel taxes more convenient for trucking companies. That being said, the process can be a bit confusing. Keep in mind that the taxes you pay under IFTA are distributed based on the number of miles you drive in each state. It is imperative that you keep good fuel tax records and file them in accordance with IFTA reporting requirements. That means filling out the proper IFTA forms detailing the miles traveled and fuel purchased and/or withdrawn for each trip.
IFTA fuel tax reports are calculated quarterly and the taxes owed are due each quarter.
The Four Parts of IFTA
There are four parts to IFTA fuel tax forms: mileage, fuel, state and filing date. This does not sound complicated. Not until you realize the information needs to be filled out for each and every trip. Fortunately, our inexpensive TruckingOffice software makes it easy for trucking companies to stay in compliance even with IFTA fuel tax reporting requirements. We all know that noncompliance and inaccurate records can be extremely expensive!
IFTA fuel tax forms require detailed information of each trip. This form requests reasonable things like start and ending dates, the origination, and destination. However, required information also includes routes of travel, beginning and ending odometer readings, total miles, and miles. This is also in each jurisdiction. The miles are broken down between taxable and nontaxable miles.
The full information on fuel receipts must be kept for IFTA compliance. Date of purchase, type and amount of fuel, and sellers’ name are some of the requirements. Companies using tax-paid bulk storage must record each fuel withdrawal.
States and Fuel Tax Reporting Periods
Every state collects its fee. These complex quarterly calculations are due at the end of the month following the quarter. For the first quarter, the IFTA forms and payment must be mailed or paid at the tax office in each state by April 30. Fortunately, TruckingOffice software makes preparing these documents effortless, tracking income, charges, mileage and expenses of each load.
Unfortunately, penalties can be very high for noncompliance with IFTA fuel tax reporting. For example, an auditor from the state of Florida can estimate miles driven and lower the miles per gallon to four. The state can disallow credit for taxes paid in other states if valid fuel receipts are not provided. They may even suspend or revoke IFTA privileges.
There is no reason to attempt this paperwork nightmare by hand accounting. TruckingOffice software is a simple one-step process that compiles IFTA fuel tax records. The software does this automatically from information already in the system. This data meets or exceeds state requirements.