How to Prepare and File Your IFTA Taxes

The International Fuel Tax Agreement (IFTA) is a cooperative arrangement between the 48 contiguous United States and 10 Canadian provinces. This agreement simplifies the reporting and payment of fuel taxes for motor carriers that operate in multiple jurisdictions. Prior to IFTA, carriers were required to obtain permits and file tax reports with each individual state or province they traveled through, creating administrative burden. IFTA streamlines this process, allowing interstate carriers to report fuel usage to a single “base” jurisdiction, which then collects and distributes fuel taxes to other member jurisdictions.

Compliance with IFTA is required for motor carriers operating “qualified motor vehicles” in two or more IFTA member jurisdictions. A qualified motor vehicle has two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds (11,797 kilograms), or has three or more axles regardless of weight, or is used in combination when the weight of such combination exceeds 26,000 pounds (11,797 kilograms). Recreational vehicles are typically exempt unless used for a business purpose.

Gathering Required Information

Before calculations, motor carriers must gather specific information and documentation for each qualified vehicle. Diligent record-keeping throughout the reporting quarter ensures all necessary data is available for accurate IFTA reporting.

Accurate mileage tracking for every qualified vehicle is required, with mileage broken down by each jurisdiction traveled. Records must include the date, origin, destination, route, total trip miles, and miles accumulated within each state or province. Common tracking methods include electronic logging devices (ELDs), GPS systems, or manual trip logs. For electronic systems, data must be recorded at least every 10 minutes when the vehicle’s engine is running, capturing the date, time, latitude, longitude, and odometer readings.

Comprehensive fuel purchase records are also required for all fuel acquired in any IFTA jurisdiction. Acceptable documentation includes retail fuel receipts, invoices, credit card receipts, or automated vendor invoices. Each record must contain the date of purchase, seller’s name and address, quantity (gallons or liters), fuel type, price per unit, total sale amount, and vehicle unit number. If fuel is withdrawn from bulk storage, records must also indicate the bulk storage location, withdrawal date, quantity, fuel type, and vehicle identification.

Detailed vehicle information is necessary for IFTA compliance, including the Vehicle Identification Number (VIN), unique unit number, and license plate number for each qualified vehicle. These details link mileage and fuel data to the correct vehicle. IFTA reporting periods are quarterly: January to March, April to June, July to September, and October to December. All information must be summarized for these periods to meet reporting deadlines.

Calculating Your Taxable Fuel and Mileage

After gathering information, calculate taxable fuel and mileage for each jurisdiction. This process determines the net fuel tax liability or refund for the reporting quarter. Every mile driven and gallon of fuel purchased must be accounted for to ensure an accurate return.

First, aggregate the total miles traveled and fuel purchased for each IFTA jurisdiction during the quarter. This requires summarizing all individual trip logs and fuel receipts by the state or province where the activity occurred.

Next, calculate the overall fleet fuel economy (MPG or KPL) by dividing total miles driven across all jurisdictions by total fuel consumed. This average fuel economy is then used to determine the amount of fuel consumed in each jurisdiction, regardless of where the fuel was purchased. For example, if a vehicle travels 1,000 miles in one jurisdiction and its fleet average is 5 MPG, it consumed 200 gallons of fuel in that jurisdiction.

To determine the net taxable gallons for each jurisdiction, subtract the actual fuel purchased within that jurisdiction from the calculated fuel consumed there. A positive result indicates a fuel tax liability (more fuel consumed than purchased). A negative result signifies a credit or refund (more fuel purchased than consumed).

Finally, apply the current IFTA fuel tax rates for each jurisdiction to the net taxable gallons. These rates vary by jurisdiction and are updated quarterly by IFTA Inc. or state/provincial agencies. Summing these calculations provides the total tax due or refund for the IFTA return.

Completing and Submitting Your IFTA Return

After calculations are finalized, accurately complete and submit the IFTA return. This involves transferring calculated data onto official forms and ensuring timely submission to your base jurisdiction. Adherence to deadlines and proper submission methods avoids penalties.

Official IFTA return forms are obtained from your base jurisdiction’s IFTA website or online portals. Use the most current form for the specific reporting quarter.

Transfer the calculated mileage, fuel, and tax or refund amounts onto the appropriate lines of the official IFTA return. Each jurisdiction’s total miles, total fuel consumed, total fuel purchased, and the resulting net tax or credit must be accurately entered. Many online systems automatically perform these calculations once raw data is inputted.

Common submission methods include online portal submission (often preferred) or mailing a physical form. Online portals may require prior registration and account setup. If mailing, ensure the return is properly addressed and postmarked by the deadline. Retain copies of all submitted forms and payment confirmations for your records.

Make any required tax payments according to your base jurisdiction’s instructions, often via online payment systems, electronic funds transfers (EFTs), or mailed checks. Filing deadlines are quarterly: April 30 (January-March), July 31 (April-June), October 31 (July-September), and January 31 (October-December). If a deadline falls on a weekend or legal holiday, the due date extends to the next business day. Late filing can result in penalties, which may be a flat fee or a percentage of the tax due, along with interest on any unpaid taxes.

Understanding Post-Filing Responsibilities

After the IFTA return is filed, motor carriers have ongoing responsibilities to maintain compliance and prepare for future reviews. Maintaining organized records and staying informed are key aspects of post-filing compliance.

Retain all source documents and copies of filed returns for a specified period. IFTA regulations require keeping mileage logs, fuel receipts, and supporting documentation for at least four years from the return’s due date or filing date, whichever is later. This verifies the accuracy of reported data.

IFTA audits are a regular part of compliance; each IFTA jurisdiction audits a percentage of its accounts annually. Audits review a carrier’s records to verify the accuracy of reported mileage and fuel data. Organized and complete records streamline the audit process and help avoid potential assessments or penalties. Auditors often examine odometer readings and look for discrepancies between reported fuel and miles.

If an error is discovered after the original return is submitted, carriers must file an amended IFTA return. The process for amending a return is outlined by the base jurisdiction and should be followed promptly to correct inaccuracies. This proactive step can mitigate penalties for incorrect reporting.

Staying informed about changes in IFTA rules, tax rates, or reporting requirements is also an ongoing responsibility. IFTA tax rates fluctuate quarterly, and other regulations may be updated periodically. Regularly checking official IFTA Inc. publications and your base jurisdiction’s IFTA resources helps ensure continuous compliance.