Navigating IFTA Reports: A Comprehensive Guide

What is IFTA? An Overview for Transportation Professionals

The International Fuel Tax Agreement is an accord governing qualifying motor carriers who pay fuel taxes in more than one state or provincial jurisdiction in the United States and Canada. It simplifies tax collection by applying fuel tax payments to an ongoing account and using quarterly reports to assess tax liabilities to each jurisdiction.

Operators pay taxes and receive refunds from the jurisdiction where their vehicles are based for registration purposes, where their operational control is centered and their records are stored or accessible, and where some travel is accrued. This is known as their base jurisdiction. Jurisdiction commissioners may elect to consolidate fleets based on multiple jurisdictions.

IFTA applies to the 48 contiguous United States and the 10 Canadian provinces bordering the U.S. Other parts of the U.S. and Canada participate voluntarily.

IFTA applies to qualified motor vehicles (QMV) used, designed, or maintained for the transportation of persons or property and meeting one of the following additional criteria:

• Two axles with a gross vehicle or registered gross vehicle weight over 26,000 lbs. or 11,797 kgs; or
• Three axles regardless of weight; or
• Combined weight or gross weight exceeding 26,000 lbs. or 11,797 kgs.

IFTA carriers receive a license and decals to display compliance. Licensees file taxes once quarterly from their base jurisdiction, which handles payments, refunds, and audits.

Why Was IFTA Created?

The states of Arizona, Iowa, and Washington created IFTA in 1983 to simplify fuel tax reporting in the transportation industry. At that time, the industry was struggling with excessive paperwork stemming from obligations to comply with regulations in multiple jurisdictions and had asked Congress to intervene. Following 1984 federal legislation authorizing a review of state tax collection methods, IFTA gradually received nationwide adoption, completed in 1996.

Why Accurate IFTA Reporting Matters

Accurate IFTA reporting saves you time correcting paperwork, helps ensure you remain in compliance, avoids costly financial penalties, and can save you money if you're entitled to refunds.

Key Components of an IFTA Report

IFTA reports vary by jurisdiction, but they generally include:

• Total IFTA miles
• Total non-IFTA miles (traveled in areas outside IFTA jurisdiction)
• Taxable miles
• Taxable gallons (based on dividing taxable miles by miles per gallon)
• Tax paid gallons
• Net taxable gallons (taxable gallons minus tax-paid gallons)
• Tax rate
• Tax or refund due
• Interest
• Total tax or refund due after interest



IFTA forms collect this information for each jurisdiction traveled.

Mileage Tracking

IFTA requires you to track mileage for each jurisdiction traveled. Under federal law, most carriers must use an electronic logging device (ELD) to track mileage, with some exemptions, as in cases of temporary device malfunction.

Fuel Purchases and Receipts

To comply with IFTA, you must keep all receipts to maintain records on where and when you purchased fuel, what type of fuel you purchased, price per gallon, and total gallons bought.

Jurisdiction Breakdown

IFTA requires you to record information for all jurisdictions traveled. IFTA forms break down jurisdictions in rows so you can enter data for each row. IFTA reporting software can simplify this process.

The biggest IFTA reporting challenges include:



• Estimating mileage and gallons
• Remembering to log all miles, including unloading or personal miles
• Remembering to record odometer or GPS problems
• Meeting reporting deadlines
• Failing to ensure up-to-date compliance for any software used to collect data

Failing to address these challenges can trigger an audit of your company.

Best Practices for Simplifying IFTA Compliance

You can simplify IFTA compliance by adhering to recommended best practices:

• Use routing software to optimize your mileage and minimize your fuel taxes
• Use electronic logging devices compatible with the Federal Motor Carrier Safety Administration (FMCSA)
• Equip drivers with paper logs for backup in the event of ELD malfunction or other emergencies
• Use IFTA reporting software to automate your reporting processes
• Integrate your ELD and fuel card data with your reporting software
• Maintain all fuel receipts for at least four years after your filing date or due date (whichever comes first) in the event of an audit (six-and-a-half years is better to simultaneously ensure compliance with the International Registration Plan)
• Conduct periodic IFTA audits to verify the accuracy of your recordkeeping system
• Use automated notification systems to ensure you meet filing deadlines
• Create at least three backups of all records in at least two different media (such as your local device and the cloud), with at least one copy stored in a different physical location
• Work with a transportation tax consultation specialist to review your compliance procedures



Following these best practices can save you significant labor while increasing the accuracy of your reporting and improving the efficiency of your reporting processes.

Leverage Technology for Accurate Tracking

Technology such as ELDs and IFTA reporting software can increase the accuracy of your tracking.

Organizing and Maintaining Records

IFTA requires you to keep records of driving mileage and fuel purchases. You must maintain records for at least four years, but six-and-a-half years will also ensure International Registration Plan compliance.

Consequences of IFTA Non-compliance

IFTA non-compliance can trigger financial penalties, audits, IFTA license revocation, impoundment of loads, having vehicles placed out of service, and ultimately, being put out of business.

Streamline Your IFTA Reporting with Transportation Tax Consulting

Given the consequences of IFTA non-compliance and the labor involved in achieving compliance, streamlining your IFTA reporting should be a priority for your business. Transition Tax Consulting provides you with motor fuel tax advisory services to assist you with achieving compliance efficiently. We reduce your risk of non-compliance by providing you with accurate calculations, compliance guidance, and audit support for fuel taxes. We leverage our expertise and industry insights to offer tailored strategies and solutions, ensuring your transportation tax needs are met efficiently and effectively. To further assist you, our site includes state tax forms, industry resources, and answers to FAQs. Contact us to schedule a consultation and discuss how we can help you streamline your IFTA reporting processes to save you time and money.