Understanding the International Fuel Tax Agreement (IFTA)
If you own a trucking company that uses CDL-required vehicles, then you’ve probably heard about IFTA (International Fuel Tax Agreement). But what exactly is it, who needs it, and how do you file for it? This article covers everything you need to know to ensure compliance with jurisdictional fuel tax regulations.
What is IFTA and Why Was it Created?
The International Fuel Tax Agreement (IFTA) is an agreement among the lower 48 U.S. states and Canadian provinces that simplifies tax reporting for motor carriers operating in multiple jurisdictions. Before IFTA, drivers had to obtain separate fuel tax permits for each state or province they entered. This process was time-consuming and created a heavy administrative burden. Alaska, Hawaii, and the Canadian territories are not required to participate in IFTA, but all of Canada and Alaska do participate.
Established in the 1980s, the International Fuel Tax Agreement allows motor carriers to register in one jurisdiction, typically where their qualified motor vehicles are registered, and file a single quarterly tax return for all member jurisdictions. The base jurisdiction handles applications, tax return processing, and audits on behalf of all participating jurisdictions.
Under IFTA, taxes are redistributed to the jurisdictions where fuel is actually used, not where it was purchased, ensuring fair and accurate tax collection. Some vehicles, like recreational vehicles, are exempt from IFTA requirements.
IFTA applies to commercial motor vehicles (CMVs) that:
- Have three or more axles,
- Have two axles and a registered gross vehicle weight over 26,000 pounds,
- And operate in at least two member jurisdictions.
All U.S. states except Alaska and Hawaii are members, along with all Canadian provinces.
Filing one tax return every quarter with the base jurisdiction simplifies compliance. That return includes total miles traveled and fuel consumed in each jurisdiction, allowing the base state to calculate taxes owed or refunds due.
How Does IFTA Work?
A truck registered under IFTA receives a fuel tax permit from its base state. As it travels through participating jurisdictions, fuel taxes paid at the pump are credited to the carrier’s account. At the end of each quarter, carriers file a report detailing miles driven and fuel used in each area. The base jurisdiction then calculates the taxes owed or credits due for each member jurisdiction.
Each state or province sets its own fuel tax rates and defines which activities are taxable or exempt. Carriers must stay up to date on rate changes and reporting rules to stay compliant. Alaska, Hawaii, and the Canadian territories are not required to participate, though Alaska and all Canadian provinces currently do.
What Counts as IFTA Qualified?
A qualified motor vehicle is used for transportation of persons or property and has two axles and a gross vehicle weight exceeding 26,000 pounds, three or more axles regardless of weight, or is used in combination exceeding 26,000 pounds.
Combination vehicles (e.g., tractor-trailers) must meet weight thresholds to qualify.
Personal vehicles used for recreation are not subject to these regulations.
Licensing and Registration
Motor carriers must register with their base jurisdiction to obtain an IFTA license. This typically involves submitting documents such as proof of vehicle registration, gross weight, and company identification. Once approved, the carrier receives a license and decals, which allow operation across member jurisdictions.
Applications can usually be submitted online or by mail. Licenses must be renewed annually with updated fleet and business information. Keeping them current is essential to avoid penalties and maintain legal operation across borders.
Eligible Fuels
IFTA applies to fuels used in qualified CMVs, including:
- Gasoline
- Diesel
- Compressed Natural Gas (CNG)
- Liquefied Natural Gas (LNG)
Carriers must report fuel consumption for these fuel types on their quarterly returns. Accurate records—including fuel receipts—are required to verify reported data.
Fuel tax rates vary by jurisdiction and fuel type. Carriers can check rates and eligible fuels through their base jurisdiction’s IFTA resources or by contacting an IFTA representative.
How to File IFTA
To apply for an IFTA license, carriers register in their home state. Many states encourage online filing through systems like the Comptroller’s Webfile. Paper filing may be allowed in cases of hardship.
Required information includes:
- USDOT number
- Business name and address
- Federal business number
Quarterly returns must include:
- Distance records
- Fuel purchase records
- Tax-paid fuel receipts
IFTA returns are due on the last day of the month following each quarter’s end. If the due date is a Saturday, Sunday, or a legal holiday, the next business day is considered the due date.
After approval, the base jurisdiction mails the license and decals. Carriers must place a copy of the license in each qualified vehicle. Tax rates for current and prior periods can be found at IFTA Inc.
IFTA Decals
Once your application is reviewed, approved, and processed, the license and decal(s) will be mailed to the address provided. Each qualified motor vehicle receives two decals—one for each side of the cab—issued by the base jurisdiction. These decals must be clearly visible and in good condition.
The license and decals serve as proof that a vehicle is authorized to operate under IFTA, which simplifies enforcement and prevents the need for additional fuel permits.
Failure to properly display decals or maintain records can result in fines or enforcement action. Compliance is key for smooth interstate and interprovincial travel.
What is a Base Jurisdiction?
Your base jurisdiction is the state or province where your qualified vehicles are registered. If your business operates in multiple states, you must select one as your base jurisdiction.
This jurisdiction handles licensing, tax return processing, and record audits on behalf of all other member jurisdictions.
Why Trucking Professionals Trust FCCR with Their IFTA Filing
At FCCR, we understand that your time is better spent on the road and growing your business, not buried in DOT paperwork. That’s why we specialize in handling IFTA and IRP filings from start to finish, making compliance simple, stress-free, and reliable.
Here’s what you can expect when you work with FCCR:
- Get Started in Just 10 Minutes
A brief conversation with your dedicated compliance agent is all it takes to get moving. - Streamlined Online Process
Our user-friendly online form lets you submit everything we need in just minutes. No confusion, no hassle. - Personalized Support
Our team carefully reviews your details and follows up by phone, email, or text, whichever works best for you. We’re here to make sure you’re fully covered. - No Shortcuts, Only Accuracy
We walk through your account with you to ensure everything is filed correctly the first time. - Stay Ahead of Deadlines
We send you quarterly reminders a full month in advance, so you never miss a due date.
Let FCCR handle your IRP and IFTA filings while you stay focused on what matters most, driving and building your business. We take care of the paperwork, so you don’t have to.
FCCR – We Succeed When You Do.
Frequently Asked Questions
No. International Fuel Tax Agreement (IFTA) is only required if your commercial vehicle meets the weight or axle criteria and you operate in two or more member jurisdictions. If you stay entirely within one state, you typically don’t need IFTA.
Vehicles used for personal or recreational purposes, like RVs, are exempt. Additionally, commercial vehicles under 26,000 pounds with less than three axles are not required to register for IFTA, unless they cross into multiple jurisdictions.
IFTA reports are filed quarterly. They are due by the last day of the month following the end of each calendar quarter. Carriers must include total miles driven and fuel purchased in each member jurisdiction.
Late filing can result in penalties, interest charges, and possible suspension of your IFTA license. Staying current with your quarterly returns is critical to maintaining your ability to operate legally across state and provincial lines.
IFTA decals must be placed on both sides of the cab, clearly visible and in good condition. A copy of the license should also be kept inside each qualified vehicle at all times.
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