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What is IFTA?

IFTA stands for International Fuel Tax Agreement; it is a tax collection agreement among the 48 contiguous States and the 10 Canadian Provinces bordering the United States. This IFTA agreement allows the collecting and redistributing of fuel taxes paid by interstate commercial carriers. Also, the IFTA agreement simplifies the fuel tax reporting of the commercial carriers when they cross the state and provincial borders of the states and provinces under the agreement.

IFTA License

You should apply for an IFTA license if you are based in any member jurisdiction under the IFTA agreement and operate commercial carriers in two or more member jurisdictions. The benefits of the license include the authorization to cross the state and province borders of the members, one set of decals, and you can file quarterly fuel tax reports that reflects net tax and refund dues. You should stick the decals on your motor vehicle/ commercial carriers, which will serve as proof of IFTA tax payment for the quarter.

IFTA requirements

Your motor vehicle is entitled to IFTA tax payments if it meets the following criteria,

  • Your motor vehicle or commercial must be used, designed or maintained for people or property.
  • Your motor vehicle must have two axles and a gross vehicle weight or registered gross vehicle weight over 26,000 pounds, or
  • Your vehicle must have three or more axles regardless of its gross vehicle weight, or
  • Your vehicle must be used in combination when the weight of such combination exceeds the total gross weight of over 26,000 pounds.

How Does IFTA Works?

IFTA is a combined tax collection agreement allowing the commercial carriers of one jurisdiction to pass into the other without any tax restrictions. IFTA is a uniform administration of fuel use taxation regulations specifically formed to save time and money for commercial carriers and member jurisdictions. Each member jurisdiction has its own fuel tax rates. Therefore, IFTA tax must be calculated accordingly.

IFTA Calculations

IFTA operates based on the following standards,

  • IFTA tax is calculated based on where the fuel was consumed by the motor vehicle.
  • IFTA tax credit is calculated based on where the fuel was purchased by the motor vehicle.
  • Then, the difference between consumed and purchased fuel in each jurisdiction constitutes the tax.

IFTA Filing

IFTA taxpayers should estimate and prepare their IFTA tax reports based on the member jurisdiction’s regulations. Then, they must file the tax reports quarterly to their base jurisdiction and get the proper authorization. You cannot e-file and report your IFTA taxes online directly to your base jurisdiction. You must manually prepare your taxes based on the trip, mileage, and fuel consumption of your IFTA tax-qualified motor vehicles and paper file the IFTA reports at your base jurisdiction every quarter.

Taxifta.com

Preparing the IFTA taxes for your qualified motor vehicles is not easy because it involves lots of calculations based on the trips, mileage, fuel purchase, and consumption of your motor vehicle. Also, the IFTA rates differ from one member jurisdiction to another. Therefore, you need to account for many attributes to prepare your IFTA tax reports and file them accurately. And you need to do this for every quarter of the tax year. Sounds tedious, isn’t it?

You can’t e-file IFTA taxes, but you can prepare them online and paper-file them at your base jurisdiction. Taxifta.com is a convenient online platform where you can prepare your IFTA reports easily and accurately. Our innovative platform helps in your IFTA tax preparations comfortably without any confusion. Taxifta.com serves a great deal of companies and taxpayers to prepare their IFTA tax reports online. Register at Taxifta.com, make your IFTA tax reports online and download them in your desired format. Taxifta.com helps you save more time and money.

FAQs

What is a base jurisdiction?

Base jurisdiction is the state or province under the IFTA members list in which your commercial carrier or qualified motor vehicle is registered. It is also the place where your operational control and records are maintained. You must report your IFTA taxes at your base jurisdiction every quarter of the tax year.

Yes, you need an IFTA license to pass through the state and province borders and to file the quarterly IFTA tax reports. You need to apply for an IFTA license in your base jurisdiction. You can get trip permits if you make occasional trips across the borders. You can get these trip permits from permitting services at any major truck stop.

If you have an IFTA license, you should report your IFTA taxes under all circumstances. It is applicable even if you didn’t cross the borders and travelled inside your base jurisdiction in the particular quarter. You must report IFTA taxes if your qualified motor vehicle did not travel at all in a quarter.

You would be charged penalties or late charges if you failed to report your IFTA taxes within the deadline. Your qualified motor vehicle cannot cross borders if it doesn’t have valid authorization or decals, which serve as proof of your IFTA tax payment.

Motor vehicles or commercial carriers should meet specific requirements to be entitled to IFTA tax.

  • It should have two axles and a gross vehicle weight or registered gross vehicle weight over 26,000 pounds, or
  • It should have three or more axles regardless of its gross vehicle weight, or
  • It must be used in combination when the weight of such combination exceeds the total gross weight of over 26,000 pounds.