Regulation Simplified - IFTA/Fuel Tax
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What is the International Fuel Tax Agreement (IFTA)?
IFTA is an agreement between the lower 48 states of the United States and the Canadian provinces, to simplify the reporting of fuel use by motor carriers that operate in more than one jurisdiction. Alaska, Hawaii, and the Canadian territories do not participate. The motor carrier registers in their home state/jurisdiction, files quarterly IFTA reports, pays tax due if applicable. The state distributes the taxes to states that the motor carrier has miles in.
How does a motor carrier qualify for IFTA?
- The Power Unit has two axles and a gross vehicle weight more than 26,000 pounds, and/or
- The Power Unit has three or more axles regardless of weight, and/or
- Is used in combination, when the weight of such combination exceeds 26,000 pounds gross vehicle or registered gross vehicle weight.
If any of the above apply contact your base state and open and IFTA account. The motor carrier will receive an IFTA license and two decals for each truck. You must cross state lines annually to qualify for IFTA. The other option for motor carriers is obtaining trip permits for the state they are crossing into it their drivers are only crossing state lines occasionally. More information about IFTA for your state go to “State Agency Links” on the toolbox or side menu.
What states do not participate in IFTA?
- Alaska, Hawaii, and Canadian territories.
- Oregon only has a weight mileage tax normally filed monthly.
- Oregon, Kentucky, New Mexico, and New York – these three states have additional taxes due called weight mileage tax
What information does a motor carrier need to file a quarterly IFTA report?
- Miles traveled in each jurisdiction or state.
- Total fuel purchased during the quarter filing for.
- Information on the company including their IFTA account number.
Where do motor carriers file at?
File and set up your account in your home state jurisdiction. (there are other options if you have a branch or terminal in other states) see “State Agency Links” to get access for all states IFTA information. Most states IFTA is filed through the Department of Revenue for that state.
What is the International Registration Plan (IRP)?
IRP is a registration reciprocity agreement among states of the United States, the District of Columbia and provinces of Canada providing for payment of apportionable fees based on total distance operated in all states/jurisdictions.
IRP is a system for motor carriers to obtain license plates called apportioned plates. With apportioned plates you will also receive a cab card allowing your equipment to travel freely through participating jurisdiction.
Keep in mind all fleets do not need to be part of IRP or IFTA fleets can get base plates and file trip permits to cross state lines.
How does a motor carrier qualify for IRP?
- Commercial vehicles over 26,000 pounds GVW in 2 or more jurisdictions.
- Vehicles with 3 or more axles, regardless of weight.
- A combination of vehicles whose total weight exceeds 26,000 pounds gross vehicle or registered GVW. (doesn’t include recreational vehicles, restricted farm plates, government owned vehicles, and school buses)
- Vehicles that are operating in two (2) or more jurisdictions.
What documentation does a motor carrier need to maintain for IRP and IFTA?
Under “Document Templates” below see a copy of a trip report for tracking all requirements. Keep in mind electronic tracking of information is accepted. Make sure your electronic logging devices can meet the following requirements for IFTA and IRP recordkeeping.
- Motor carrier name
- Vehicle fleet number
- Unit number or VIN
- Date of trip (start & end)
- Trip origin and destination, pickup and delivery location, fueling locations
- Mileage by state/province
- Total trip miles
- Routes of travel and/or state line odometer readings
- Beginning and ending odometer or hub odometer readings
- Original fuel invoices, including date, customer and seller name, gallons, fuel type, tax paid and OEN or VIN
Double check with your state if they have different retention requirements, but generally below is the standard retention requirements.
States will vary on how long you should keep your IFTA backup documentation. The general rule is four (4) years to retain all returns and backup documentation.
Again, states will vary on how long you need to keep IRP information and backup documentation. The general rule is four (4) years for all returns and backup documentation for IRP from the close of the registration year.
Industry tips and suggestions for IFTA and IRP.
• Motor carriers are not required to participate in IFTA or IRP. If your fleet stays within the same state or only occasionally goes out of state fleets can use base plates and trip permits to meet the regulations for crossing state lines.
• Make sure drivers logs (electronic or paper) is retained if it is what IFTA and IRP reports are based on.
• There are many great service providers who can help with setting up a motor carriers IFTA & IRP accounts within the more favorable jurisdiction for companies.
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