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How Does the IFTA Reporting System Function?

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eTrucks
How Does the IFTA Reporting System Function?

The International Fuel Tax Agreement (IFTA) is known as an agreement between the ten Canadian provinces and the lower 48 states that need all the interstate motor carriers to report fuel taxes. This agreement does not affect Alaska, Hawaii, and other northern Canadian territories.

IFTA was formed to replace the old fuel tax system in which trucks were meant to have a separate decal for every state that they operate. The current IFTA reporting system simplifies the problems of reporting fuel tax for trucking companies.

What Motor Vehicles Need to Follow IFTA?

IFTA is needed for any motor vehicle that has the following specifications:

  • Those that have two axles and a gross vehicle rating or a registered gross vehicle weigh 26,000 pounds.
  • Any of those weights that have three or more axles
  • A combination of vehicles with a total gross vehicle weight or weight rating of more than 26,000 pounds

How Does The IFTA Work?

Every owner of a qualified motor vehicle needs to submit an IFTA application or have their bookkeeper/accountant do it for them. Sometimes highway use tax is imposed on motor carriers operating specific motor vehicles on public highways.

After the IFTA application is submitted, you will receive an IFTA license and an IFTA decal for every qualified vehicle you operate. When you purchase fuel, the amount is logged into your IFTA account.

After every quarter, you need to submit an IFTA report that will list the miles driven and the gallons purchased. The reports will also determine the amount of tax refund due or the amount you owe.

How Do You File an IFTA Report?

You can file an IFTA report with the following:

Electronically: your return will be considered received on the date it is submitted.

Walk-in: your return is considered received on the date it is delivered to the date.

By mail: Your return will be considered received by the postmark date on the envelope.

How Can Understanding ITA Assist You in Saving on Fuel?

At times, you might be imposed with highway use tax if you operate your motor vehicles on public highways. When you decide between buying fuel tax in one state compared to another tax, you must subtract the state fuel tax from the retail price that you pay for the fuel to get the total price.

With the IFTA policy currently in place, you will be taxed on which states the fuel is being used in and not where it is purchased. Due to this, the fuel taxes are out of the equation as they are being paid anyway.

Final Words

If you are a trucking company in Canada and have IFTA reporting issues, you can take advantage of an IFTA reporting software that will let you audit driver miles to get a proper overview of your fleet activity and current tax liability. This will put you back in control of your fuel taxes.

Brian Styris is the author of this article. For more details about Electronic Logs for Truckers please visit our website: etrucks.com

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