The trucking industry involves a wide range of strict regulations and safety standards. Among the essential requirements for carriers operating in multiple states is IFTA reporting. This ensures a company adheres to fuel tax requirements.
Whether you’re an owner-operator or a fleet manager, you should understand how IFTA reporting works to maintain a smooth operation and avoid penalties and additional costs.
What is IFTA?
The International Fuel Tax Agreement (IFTA) refers to collaboration between the US states and Canada. It aims to simplify the reporting of fuel use by motor carriers. Before the IFTA was launched, carriers had to report fuel taxes in every state they drove. This process was complex and time-consuming.
Nowadays, motor carriers file a single report for all jurisdictions where fuel was used. Then, each state receives its share of the taxes based on the reported mileage and fuel usage.
What is IFTA Reporting?
IFTA reporting involves the quarterly submission of detailed information about the fuel consumed and miles driven in each jurisdiction. The goal of IFTA fuel tax reporting is to ensure the appropriate amount of tax revenue for each state. This system simplifies tax management for trucking companies and ensures that the tax burden is distributed among the states and provinces.
For trucking companies, IFTA reporting is an important aspect. Any errors or omissions can lead to fines, interest charges, or the suspension of an IFTA license. Thus, it’s crucial to check your operations to ensure full compliance with IFTA reporting requirements.
IFTA Reporting Requirements
To comply with IFTA reporting requirements, motor carriers must track and document a range of aspects. This includes:
- Miles driven. The total miles driven by each vehicle in every jurisdiction during the reporting period.
- Fuel purchases. The number of gallons of fuel purchased in each state and province. This should be accompanied by detailed receipts and invoices.
- Fuel consumption. Accurate records of where the fuel was purchased and used.
These records are critical in determining the amount of tax that each jurisdiction will receive. Companies that fail to maintain accurate and up-to-date records adhere to state and federal regulations. Violations or mistakes can lead to penalties and fines.
In addition, you should remember IFTA fuel tax reporting deadlines.
- Quarter 1 (Jan-Mar). The report is due by April 30.
- Quarter 2 (Apr-Jun). The report is due by July 31
- Quarter 3 (Jul-Sep). The report is due by October 31.
- Quarter 4 (Oct-Dec). The report is due by January 31 of the following year.
Missing these IFTA reporting dates can also result in penalties. You can schedule monitoring and reporting activities to avoid missing deadlines.
How to File an IFTA Report
Filing an IFTA report requires calculating the fuel purchased and consumed in every jurisdiction and the number of miles driven. The data is used to determine how much tax should be paid to each jurisdiction. As written above, it must be submitted on a quarterly basis.
- Collect mileage data. Track the total miles you or your drivers of your fleet traveled in each jurisdiction during the reporting period.
- Gather fuel receipts. Collect detailed records of fuel purchases in each jurisdiction, including gallons, location, and date.
- Calculate fuel tax. With the mileage and fuel data, determine tax obligations for each state and province.
- Submit the report. File the IFTA report. You can do it manually or through an IFTA reporting service.
- Keep records. Maintain accurate documentation for future audits and reference.
Many trucking companies want to simplify this process. For that, you can reach out to third-party IFTA reporting services. Logity Dispatch offers a range of solutions to ensure accuracy, reduce time, and guarantee compliance with IFTA reporting dates and requirements. We’ll make this process swift and burden-free for you! Contact us to discuss the cooperation.
Fuel Purchase Documentation & Tax Credits
Proper documentation is critical for successful and accurate IFTA fuel tax reporting. Carriers must keep detailed records of all fuel purchases. This includes the date, location, number of gallons purchased, and the price per gallon. These records are used to calculate the tax amount.
For instance, if a carrier purchases fuel in a state where the fuel price is higher than in the state in which it is consumed, they may be eligible for a tax credit. This reduces the tax burden and improves cash flow for the trucking company. However, the absence of proper fuel documentation may lead to missing these credits and even penalties.
What Happens After Filling?
Once your IFTA report is submitted, the authorities will review it. In case of errors or discrepancies, you may be notified of additional taxes due or face fines and penalties. The review process takes some time, but organized and accurate records and documentation ensure a smooth and swift process.
If your report is approved, your fuel taxes will be divided across the appropriate jurisdictions. Then, you may receive a notice of any balances owed or refunds due. Accurate reports can help you avoid burdens, such as additional audits, fines, and delays in the processing.
Conclusion
The process of IFTA reporting is an important aspect for any trucking business that operates across state lines. With a clear understanding of the IFTA reporting requirements, detailed fuel purchase records, and reports filed on time, you can ensure compliance and avoid penalties.
If you want to receive professional IFTA reporting services, you can contact Logity Dispatch. Our solutions will streamline the process and keep your business on the road to success.
Visit our website to learn more about how we can support your business.
FAQ
What Happens if I Don’t File?
If you fail to file your IFTA report, you can face severe penalties. This can involve fines, interest charges, and the potential suspension of your IFTA license. In addition, operating without an IFTA license is illegal and can lead to legal consequences.
Can IFTA Reports Be Filed Late?
Yes. Still, filing late will result in penalties and interest charges. Missing the IFTA reporting dates can also lead to additional audits of your operations.
How Do I Correct a Mistake on My Report?
If you find an error after submitting your report, you can file an amended IFTA report. Ensure you carefully check all your fuel purchase records and mileage logs before resubmitting.
What is the IFTA Decal and Why is it Important?
The IFTA decal is a sticker issued to trucks registered under the agreement. This must be displayed on each qualifying vehicle. The decal signifies the legal authorization of a truck to operate across state or provincial borders under IFTA regulations.
Article and permission to publish here provided by Oleg Pelypan. Originally written for Supply Chain Game Changer and published on October 8, 2024.
Cover image provided by Oleg Pelypan.