If you are thinking of starting, or are currently running a business in the motor carrier industry moving freight or people, you ought to understand why you need an IFTA license and IFTA decals.
Everyone applying for an IFTA license starts at the same spot. Whether you are starting a brand-new motor carrier business, or you have operated for some time but are now working in more than one state or province.
IFTA stands for the International Fuel Tax Agreement. It is an agreement between 48 US states and 10 Canadian provinces. The purpose of this agreement is to make the paperwork easier for reporting and paying motor fuel taxes, for interstate or inter-provincial motor carriers.
The IFTA registration allows you to travel in all 48 states and 10 provinces without any issues and lets you do your fuel tax reporting only with your base jurisdiction – instead of doing paperwork for all the states or provinces you operate in.
The important criteria to remember is that your vehicles are working in more than one IFTA member state or province and that your vehicle(s) meet any of the following:
- has two axles and gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 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 or 11,797 kilograms gross vehicle or registered gross vehicle weight.
So, with your IFTA license you can find loads and work in any of the 48 US states and 10 Canadian provinces. You will have to carry your IFTA license in your truck and stick the yearly IFTA decal to the side of your cab’s exterior. Your IFTA license must be renewed annually and expires on December 31st.
Your compliance duty is to file quarterly IFTA reports with your base jurisdiction. You will have to keep paper or electronic records of your fuel purchases (only fuel that propels your vehicles) and your miles per state for each vehicle.
The revenue raised through IFTA is used by states and provinces to maintain their road systems that your motor carrier company uses to move freight from one place to another.
You might have thought you have already paid your fuel taxes at the pump or when you purchased your fuel. However, IFTA ensures each state and province gets their fair share of fuel tax revenue from interstate or inter-provincial motor carriers. So, for you to understand how IFTA works, here is the IFTA operating principle:
- Fuel tax owed is calculated based on where you consumed the fuel
- Tax credit is determined by where you purchased the fuel
- IFTA nets the difference between fuel consumed and fuel purchased for each jurisdiction
With eTrucks, you can easily organize your fuel and mileage information to generate any IFTA or distance compliance reports with a click of a button. eTrucks keeps your fuel tax information stored for 6 years at no extra cost.
You will not have to worry about filing late or making mistakes, so you will avoid fines, penalties, or cancellation of your lFTA license. Even if you get called in for an IFTA audit, you will pass it without any issues.