Updated October 9, 2020
The International Fuel Tax Agreement (IFTA) is a program designated for interstate carriers in the United States and Canada. Under IFTA, carriers can work with a single state or province to file and pay fuel taxes to all other member jurisdictions in which they operate.
Staying in compliance with IFTA involves some diligence, and the following tips should help you stay on top of the requirements in your day-to-day operations.
1. Know Your Qualified Vehicles
Identifying which vehicles in your fleet qualify for IFTA registration is the first step to compliance. Not necessarily all of your vehicles will qualify for the program. Remember that IFTA applies to interstate vehicles only; intrastate vehicles are not subject to IFTA.
Qualified vehicles under IFTA are ones that meet any one of these criteria:
♦ A vehicle that has two axles and a gross weight or registered gross vehicle weight exceeding 26,000 pounds;
♦ A vehicle or power unit that has three or more axles regardless of its weight; or
♦ A combination when the weight of such a combination exceeds 26,000 pounds gross vehicle weight.
Keep in mind that yoru entire fleet may not have to be registered. For example, if you have 15 trucks that are over 26,000 pounds, but only two will regularly cross state lines, only those two vehicles would be registered under IFTA.
2. Track All Miles
Many carriers have questions about what miles must be counted for IFTA. The answer is: all of them.
When we talk about distance data, your drivers must know that all miles traveled in IFTA qualified vehicles must be recorded, regardless of the situation for which the vehicle is being used. For example, personal-use miles or when the vehicle is in the shop for repairs and the maintenance crew takes it our for road tests, all miles — work and non-work related — must be counted.
3. Maintain Proper Records
Recordkeeping requirements under IFTA can be quite exhaustive, but they are the heart of IFTA compliance. So, it's important to keep your records organized and accessible in case of an audit. You must keep records in two categories: mileage records and fuel receipts.
4. Mileage Records
Most carriers are now keeping their IFTA mileage data electronically through an electronic logging device (ELD) and here's what's required:
♦ Vehicle identification number
♦ Original Global Positioning System (GPS) reading or other location data for the vehicle
♦ Date and time and location of each GPS system reading
♦ Beginning and ending distance readings from the odometer, hubometer, or similar device
♦ Calculated distance between each GPS or other system reading
♦ Route of the vehicle's travel
♦ Total distance traveled by the vehicle
♦ Distance traveled in each jurisdiction
Most vehicle tracking systems, such as GPS or an ELD, will capture the required information and provide adequate records in the event of an audit. However, if you have an ELD provider that also captures data for IFTA, still make sure that your provider is retaining the right types of records and its keeping them long enough to satisfy IFTA requirements. You must also make sure the records are accessible in case of an audit.
5. Fuel Receipts
Fuel receipts are also a very important part of the recordkeeping process. Fuel receipts must include the following:
♦ Date of purchase
♦ Seller name/address
♦ Number of gallons
♦ Total amount of sale
♦ Purchaser's name/address
♦ Fuel type
♦ Vehicle number
Electronic receipts are also acceptable under IFTA. Many carriers use fuel cards, and if your company uses them, rest assured that fuel card reports are an acceptable form of fuel receipts.
Be aware, however, there will be times when a fuel card can't be used at the pump. Perhaps a driver loses the card, or it stops working for any reason (the card is faulty, or a truck stop's systems are down, for example). In these cases, whether cash or other form of payment is used, drivers need to know to keep physical receipts so you can accurately report fuel purchases.
6. Hang on to Unused IFTA decals
When you register for IFTA, you get two decals for each vehicle. The decals must be placed on both sides of the cab. However, sometimes you may end up with extra decals that never make it onto your vehicles. Do not throw out those unused decals at the end of a registration year.
Your jurisdiction has record of issuing them, and that same jurisdiction will also want to be sure they are accounted for in case of an audit. We recommend using an inventory sheet to keep track of their use. It will make it easier to produce the information on how decals were used (or not used) should you be audited.
7. Keep Records Long Enough
Under IFTA, you are required to keep the records for your quarterly tax return for four years from the return due date or filing date, whichever is later, plus any time period included as a result of any penalty assessments. These records inlcude all of your mileage records, fuel receipts, and unused IFTA decals (if applicable).