IFTA Filing Basics for Trucking Fleets

What is IFTA and Why It Exists

The International Fuel Tax Agreement (IFTA) is a cooperative agreement between 48 U.S. states and 10 Canadian provinces that simplifies fuel tax reporting for interstate commercial vehicles. Instead of filing separate fuel tax returns in each state or province where you operate, IFTA allows you to file one quarterly return with your base jurisdiction.

IFTA ensures that fuel taxes are distributed fairly based on where fuel is purchased and where miles are driven, rather than where the vehicle is registered. This system benefits both carriers and jurisdictions by reducing paperwork while ensuring proper tax collection.

Without IFTA, carriers would need to purchase trip permits for each state they enter, which is time-consuming and expensive. IFTA registration and quarterly returns streamline this process, making interstate operations more efficient while ensuring compliance with fuel tax obligations.

Who Must Register for IFTA

Commercial vehicles with two axles weighing over 26,000 pounds gross vehicle weight must register for IFTA if they operate in multiple member jurisdictions. This includes trucks, tractors, and other commercial vehicles that cross state or provincial lines.

Any vehicle with three or more axles must register for IFTA regardless of weight if it operates in multiple member jurisdictions. This includes most commercial trucks, buses, and specialized commercial vehicles.

You must register in your base jurisdiction, which is the state or province where your vehicles are registered, where you maintain operational records, and where you have qualified vehicles garaged. Your base jurisdiction issues your IFTA license and decals.

Display current IFTA decals on each power unit. Decals are valid for the calendar year (January 1 through December 31) and must be renewed annually. Decals should be placed on both sides of the cab, clearly visible to enforcement officers.

Owner-operators leased to carriers typically don't need separate IFTA registration if the carrier handles IFTA. However, confirm your lease agreement to ensure the carrier is responsible for IFTA compliance to avoid duplicate filings or penalties.

Understanding Quarterly Filing Deadlines

IFTA returns are due quarterly on the last day of the month following each quarter. The deadlines are consistent across all member jurisdictions: April 30 (Q1: January-March), July 31 (Q2: April-June), October 31 (Q3: July-September), and January 31 (Q4: October-December).

If the deadline falls on a weekend or holiday, the due date is typically extended to the next business day. However, confirm with your base jurisdiction, as rules may vary slightly. It's always safer to file before the deadline to avoid any issues.

Late filings can trigger interest charges at 1% per month (or fraction of a month) on any tax due. Additionally, late filing penalties may apply, and repeated late filings can result in license revocation. Some jurisdictions also charge late fees in addition to interest.

Plan to gather all required information at least two weeks before each deadline. This gives you time to compile trip sheets, fuel receipts, and mileage records, calculate taxes due, and file the return without rushing. Set calendar reminders 30 days before each deadline.

What Information You Need to File

Total miles driven in each jurisdiction during the quarter. This includes all miles, whether loaded or empty, and must be broken down by state or province. Use trip sheets, ELD data, or GPS records to track mileage accurately.

Total gallons of fuel purchased in each jurisdiction. Keep all fuel receipts showing the date, location (city and state/province), seller name, fuel type, price per gallon, and total gallons purchased. Credit card statements alone are not sufficient—you need detailed receipts.

Fuel tax rates for each jurisdiction during the quarter. These rates change periodically, so verify current rates when filing. Your base jurisdiction's IFTA office or website will have current tax rate tables.

Vehicle information including IFTA license number, vehicle unit numbers, and any changes to your fleet during the quarter. Report new vehicles added or vehicles removed from your IFTA fleet.

Calculation of net tax due or refund for each jurisdiction. This is calculated by comparing the fuel tax you paid in each jurisdiction to the fuel tax you owe based on miles driven. You'll either owe additional tax or receive a credit/refund.

How IFTA Tax Calculations Work

IFTA calculates fuel tax based on the difference between fuel taxes paid and fuel taxes owed. For each jurisdiction, you calculate: (Miles driven in jurisdiction ÷ Total miles) × Total fuel consumed × Jurisdiction's fuel tax rate.

If you paid more fuel tax in a jurisdiction than you owe based on miles driven, you receive a credit. If you owe more than you paid, you must pay the difference. The net result across all jurisdictions determines whether you owe money or receive a refund.

Fuel consumed is calculated by dividing total miles by your fleet's average fuel economy (miles per gallon). You can use actual fuel economy data from your vehicles or use standard rates provided by your base jurisdiction if you don't track actual MPG.

The calculation accounts for fuel purchased in each jurisdiction and miles driven in each jurisdiction. This ensures that fuel taxes are distributed fairly based on actual usage, regardless of where fuel was purchased.

Step-by-Step IFTA Filing Process

Step 1: Gather all required records for the quarter. Collect trip sheets or ELD data showing miles by jurisdiction, fuel receipts organized by jurisdiction, and any vehicle changes. Organize records chronologically to make the filing process smoother.

Step 2: Calculate total miles by jurisdiction. Sum all miles driven in each state or province during the quarter. Ensure your mileage records are accurate and can be supported by trip sheets or ELD data if audited.

Step 3: Calculate total fuel purchased by jurisdiction. Sum all fuel purchases in each state or province, ensuring you have receipts for each purchase. Verify that receipt totals match your records.

Step 4: Calculate fuel consumed and tax owed. Use your fleet's fuel economy to determine total fuel consumed, then calculate tax owed for each jurisdiction based on miles driven and current tax rates.

Step 5: Complete the IFTA return form. Most jurisdictions offer online filing through their IFTA portal, which simplifies calculations and reduces errors. Enter all required information accurately, double-checking numbers before submission.

Step 6: Submit the return and payment (if tax is due) by the deadline. Pay any tax due through the portal using electronic payment methods. Save your confirmation and receipt immediately for your records.

Recordkeeping Essentials for IFTA

Keep trip sheets or ELD data showing miles driven per jurisdiction. Each trip should include date, origin, destination, jurisdictions traveled, odometer readings, and total miles. ELD systems can export this data automatically, making recordkeeping easier.

Maintain fuel receipts with date, location (city and state/province), seller name, fuel type, price per gallon, and total gallons purchased. Receipts must be legible and show all required information. Organize receipts by jurisdiction and date for easy retrieval.

Retain all IFTA records for at least four years (some jurisdictions require six years). This includes returns, supporting documentation, receipts, trip sheets, and any correspondence with tax authorities. Keep both paper and digital copies in secure, accessible locations.

Be prepared to present records during audits. IFTA audits can occur randomly or if discrepancies are detected. Having well-organized, complete records makes audits go smoothly and helps avoid penalties for missing documentation.

Document any unusual circumstances, such as off-road fuel usage, fuel theft, or vehicle breakdowns that affect fuel consumption. These notes can help explain discrepancies during audits and may qualify for tax credits in some jurisdictions.

Common IFTA Filing Mistakes to Avoid

Missing quarterly deadlines is the most critical mistake. Set calendar reminders and plan ahead to gather information and file on time. Late filings result in interest charges and potential penalties.

Inaccurate mileage reporting can cause significant problems. Use reliable sources like ELD data or detailed trip sheets rather than estimates. Round numbers or suspiciously low mileage can trigger audits.

Missing or incomplete fuel receipts make it impossible to claim fuel tax credits. Ensure drivers collect receipts for every fuel purchase and that receipts include all required information. Implement a system to verify receipt collection.

Filing in the wrong base jurisdiction causes processing delays and potential penalties. Your base jurisdiction is where your vehicles are registered and where you maintain operational records, not necessarily where your business is incorporated.

Not reporting all jurisdictions traveled can result in penalties. Even if you only drove a few miles in a jurisdiction, you must report it. Failure to report all jurisdictions can trigger audits and penalties.

Best Practices for IFTA Compliance

Use ELD systems or fleet management software that automatically tracks miles by jurisdiction. This reduces manual data entry errors and provides accurate records for filing and audits. Many systems can export data directly in formats compatible with IFTA filing.

Implement a fuel receipt collection system. Require drivers to collect receipts for every fuel purchase and submit them regularly. Use mobile apps or digital systems to capture receipt images immediately, reducing the risk of lost receipts.

Set up a quarterly filing schedule. Designate specific days each quarter to gather records, complete calculations, and file returns. Make this part of your regular compliance routine to avoid last-minute rushes.

Review returns before submitting. Double-check all calculations, verify that all jurisdictions are included, and ensure that receipt totals match your records. Even small errors can cause processing delays or trigger audits.

Maintain organized records throughout the year, not just at filing time. Set up filing systems for trip sheets and fuel receipts as you go, making quarterly filing much faster and more accurate.