User Guide for IFTA Reporting Program
We all want to stay ahead in business and by being on the right side of the law. Also, to do that, your fleet must adhere to various regulations imposed by the government to maintain road safety.
As we know compliance is said to be a responsibility for most carriers to pass on their fleet managers. However, this may include factors like USDOT numbering, material regulation, IFTA (International Fuel Tax Agreement), and much more.
The fleet managers with the help of fleet software make sure that your organization follows the above-mentioned compliance rules, along with the awareness of the regulations that further helps the drivers and the carriers to make better-informed choices taking care of their fleet.
Here, one such regulation is the International Fuel Tax Agreement- IFTA, which is often a little confusing. Therefore, to simplify this heavy term, we gathered all the information in this guide to help you better while managing your fleet.
Let’s start from the basics:
What is IFTA?
The International Fuel Tax Agreement- IFTA is an agreement in terms of fuel tax collection. There are 58 member jurisdictions of IFTA among 48 states in the USA and 10 provinces in Canada. It was also known as a fuel tax agreement and collection for the rearrangement of fuel taxes paid by the interstate commercial carriers.
To completely understand the term IFTA, it is important for you to understand why this agreement was made in the first place. Also, before the implementation of IFTA, the truckers were asked to acquire permits to enter every state they came across.
The process was not only inefficient, but also had additional costs involved in the form of lost-time, fuel burned, and more. Keeping that in mind IFTA was introduced to simplify the process.
Since time is money, especially when we talk about trucking business, a few states were kept out from this agreement in the early 80’s so as to create a permit that would be added in all of them.
Video credit: Judi Nelson
The International Fuel Tax Agreement was introduced to establish uniformity and efficiency in terms of the fuel tax payment among the member states. According to some facts and figures, IFAT saves trucking and related organizations mountains of money from their administrative costs.
Under this program, the truck is registered under IFTA and obtains a fuel tax permit from a single state. So, when a fleet drives through any participating province or state, the fuel tax purchased there is credited to the owner’s account. Lastly, at the end of the quarter a report is completed that highlights the miles traveled along with the gallons of fuel consumed in every region.
To highlight- Not every driver worries IFTA, as there are many exceptions for recreational vehicles including motor homes, pickup trucks, or even buses that are used by an individual for traveling and personal pleasure. Additionally, there states also have exemptions for government trucks, and those used for agriculture.
What is the Process to Register Fleet Vehicles for IFTA?
Well, under IFTA- the commercial carriers are required to keep detailed records on miles driven along with fuel purchased, fuel tax paid in every area that their vehicles travel through. Somehow, carriers need to submit the records to their base jurisdiction on a 4-month basis. Below is the IFTA process you can follow to register your Fleet Vehicles:
- Submit an IFTA license application according to the jurisdiction.
- The base jurisdiction assessments and processes your license application.
- The carrier receives an IFTA license along with two decals for every eligible vehicle. Here, a copy of the license must be kept in the vehicle during the process.
- After every quarter, with the help of fuel tax reporting software you need to file the IFTA tax return to the base jurisdiction for fuel consumed as well as remit any amounts pending.
- A transmittal report is sent by the base jurisdiction to other jurisdictions in which your truck is operated.
- As a business owner, you need to pay the due amount to the jurisdiction. The base jurisdiction also pays other jurisdictions what you owe along with collections from other jurisdictions owed to them.
What Is IFTA Reporting and who is required to file an IFTA report?
A comprehensive fuel tax report is required 4 times a year. The reporting dates are:
- Jan – March: April 30- Quarter 1
- April – June: July 31- Quarter 2
- July – Sept: Oct. 31- Quarter 3
- Oct – Dec: Jan. 31- Quarter 4
The agreement states that commercial carriers must keep accurate records in terms of fuel purchases, fuel taxes accrued in every state or region traveled in. Payment by cheque can be made by using quarterly report, and if there is some amount outstanding, you will automatically receive a credit or a bill.
To receive a refund or tax credit, you will need to provide file receipts for fuel tax when it comes to purchase as well as your quarterly forms. Also, smooth IFTA reporting requires reliability, precision, and timeliness. Not to forget there are penalties involved, if IFTA is filed after the due date or inaccurately. The best way to create the précised and error-free reports is to use a mileage calculator so that you can track IFTA data point jurisdiction.
Who has to register for IFTA?
The qualified motors vehicles that are meant to transport individual that may require IFTA registration if they:
- A vehicle having three or more axles.
- Vehicles that are registered and have more than 26,000 pounds, or 11,797 kilograms.
- Vehicle that has a combined or registered gross vehicle weight of more than 26,000 pounds.
Here, keep in mind that there are a number of vehicles that fall under this definition, but do not need to have an IFTA license, for instance with an intrastate vehicle. To be licensed for tax reporting, you need to use diesel, natural gas, and propane. Some jurisdictions need even gas-powered vehicles to be licensed.
Common IFTA Reporting Mistakes
You’re busy. And the IFTA deadline always seems to sneak up on you. It’s tough to dig up months of fuel records and calculate mileage. IFTA comes with a deadline and it is hard to dig up months of fuel records and calculate mileage. But, you have got to send your IFTA report on time in order to avoid a fine. Here, are some common IFTA reporting mistakes we all make:
- Estimating Fuel Calculations:
Saving time is always tempting by estimating your truck’s average mileage per gallon along with traveling at the end of an IFTA quarter, but it is crucial to record such figures accurately. Also, if fuel calculation is slightly incorrect, your fleet could be audited. To keep everything arranged and accurate you need to keep a complete record of fuel receipt information including gallons of fuel purchased which can also be done with truck repair software.
- Not Recording Personal Miles:
No mile should be left behind. Remember, that even your personal miles must be included in your IFTA reports. This also includes the distances traveled at the extreme end of the quarter. Also, waiting to report such as personal miles are not allowed quarter. Otherwise, reliance on the tracks and report and keep yourself out of trouble.
- Odometer or GPS Issues.
Here, IFTA mileage is expected to be précised and to the point. If any of your vehicles tends to have odometer or GPS related issues, during the reporting process, do not forget to record it since it can affect your numbers in terms of reporting. All miles traveled require recording keeping every detail in mind.
- Filing late
You have to send your IFTA report on time. Submitting your IFTA report late will lead you to a fine of $50 to 10% of the net tax liability, it potentially results in an audit and this might include documentation, scrutiny, and expenses. Just make sure to submit it all together and on time.
A Reliable IFTA Mileage Calculator
There are a lot of IFTA calculators online, but most of them are quite expensive, whereas some of them are hard to use and not interactive at all. A good IFTA Fuel Tax Software is highly interactive, free, and easy to use online calculators. You only need to provide only information in terms of your fuel purchased and stops. There are no notes, and manual counting, and no regular odometer check- it is calculated just based on trips and fuels. The IFTA calculator won’t leave you in financial trouble alone after every quarter.
IFTA Mileage Calculator for Good Results
Many people in the carrier or trucking industry claim that they know exactly how to use IFTA quarterly reports. However, in our experience, an IFTA calculator helps you learn and keep up with all the requirements and jurisdictions related to the same. Also, the best IFTA software program is known to have expertise only in IFA compliance without high fees. Using a calculator that has a well-built IFTA reporting system, allows you to follow IFTA compliances, and helps you to keep up with the rules and regulation when the legislation changes.
Other Tasks Handled By IFTA Calculator
IFTA must be taken more seriously than just being a small part of your trucking business. It is understandable that your business related tasks should be done in time as well. Keeping that in mind your IFTA calculator should be able to do as following:
- It should be able to handle your invoice both current and the delayed one.
- A reliable calculator will help you to track your payments and contact information.
- It also helps to manage your truck maintenance records.
- It seamlessly integrates with your ELD.