WHAT IS IFTA AND HOW DOES THE IFTA REPORTING SYSTEM WORK?
IFTA or International Fuel Tax Agreement is a method used to simplify how the truckers along with trucking companies work and pay their fuel taxes. Earlier, paying fuel taxes was a very time-consuming process that required truckers to stop at the selected port of entry in order to buy a permit.
Here, trucks or commercial vehicles must be registered under the International Registration Plan to comply with ifta reporting system. All the carriers will be provided with International Fuel Tax Agreement decals that tend to expire annually. It must be displayed whenever required to avoid the consequences or fines. Also, under this tax, you only need to report the fuel consumed to the base-jurisdiction, rather than creating a separate report for every state you traveled through. However, the base state performs the following:
- Processing the vehicles based on its quarterly IFTA tax return.
- It collects from or refunds the vehicle after calculating the net fuel tax representing the tax you owe.
- Distributes the other state, or receives from them, the amount of fuel consumed tax the vehicle’s owner owes.
- Auditing the vehicle on behalf of IFTA members and related jurisdictions.
What motor vehicles are required to follow IFTA?
Below are the requirements in terms of IFTA for any carrier with the following specifications:
- The vehicle with two axles along with a gross weight of 26,000 pounds or more.
- Those of any weight that has 3+ axles.
- Well, any combination of vehicle having a gross total weight or weight rating of 26,000 pounds or more.
How Does the Agreement Work?
To know all about ifta calculator you need to know how drivers are required to track the fuel consumed along with the miles traveled in every jurisdiction including states, territories, provinces, and more. Also, as the business owner, you need to report this information quarterly, and the members of jurisdictions will automatically share the tax revenue accordingly.
“Next to being shot at and missed, nothing is quite as satisfying as an income tax refund.” — F.J. Raymond
This is good news for the members because IFTA ensures the safety of the road and that they can easily maintain the roads used for the heavy carriers or other commercial vehicles. Additionally, the license requires to be renewed after every year and you are also required to file reports after every 4 months, even if you operate the fleet within your home state. It is crucial to know that the agreement tends not to pertain to the drivers but to the trucks as well as the power units.
Video Credit: CDTFA
What is the Suggested Time Frame of IFTA Reporting?
The International Fuel Tax Agreement needs you to file a report quarterly. The timeframes are as follow:
- January to March, due date April 30
- April to June, due date July 31
- July to September, due date Oct. 31
- October to December due date Jan. 31
How can you file an IFTA report?
Digitally: It is an automated process. Filing it digitally means that your return marked on the same date you submitted the same.
Using the Mail: This is the conventional process, where your return is marked by the date you mentioned on the envelope.
Visiting Physically: Your return is marked received when you submitted it by visiting the office.
What are the consequences of not filing IFTA?
Well, apart from the fines. It is also possible that you might forget filing IFTA requirements reporting. In such cases, generally, the licenses are revoked for not paying the same on the given time, not filing the fuel tax or report, and even you are failing to comply with the bookkeeping requirements stated in the agreement.
Again this is exactly where using the right technology or software can help you to keep up with your operations or related orders. It is best to have a fleet management solution for better accuracy and even to save time.
Is there any Alternative?
Well, it is still possible for you to buy temporary fuel permits. However, it can be more of a hassle than settling for the IFTA license. IFTA is considered the most efficient method you can go for. It is also possible to buy the fuel permits online these days. This can really save your time while travelling from one state to another regardless of the times where you were asked to stop and buy a permit before entering a particular state.