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IFTA Fuel Tax Reporting: What You Need To Know
The International Fuel Tax Agreement, or IFTA, is a cooperative agreement among the 10 Canadian provinces and 48 American states to make it easier for inter jurisdictional carriers to report and pay taxes on the motor fuels they use.
The agreement allows registered inter jurisdictional carriers to get one license, issued by their home jurisdiction and report and pay motor fuel taxes to a single jurisdiction. Though this sounds like a simple process, many carriers both new and existing regularly make mistakes that lead to inaccurate reporting and unnecessarily inflate their costs. This article will further explain the IFTA program and provide some helpful tips to ensure your fleet is reporting accurately.
IFTA: Who qualifies and what are the benefits?
As per IFTA regulations, a carrier should register with IFTA if your commercial vehicle is a motor vehicle used for business purposes and:
- Has two axles and a gross vehicle weight or registered gross weight of more than 11,797 kg (26,000 lbs)
- Has three or more axles regardless of weight, or
- Has a total registered gross vehicle weight of more than 11,797 kg (26,000 lbs) when used in combination with a trailer
If at least one of these conditions applies to your fleet, you should become an IFTA registrant. Though the diligent tracking of your fleets distance and fuel purchases can be a burden, registration into the program does give you numerous benefits. IFTA registration allows you to have just one IFTA license in order to travel in all member jurisdictions which can significantly reduce temporary permitting costs. The IFTA program also gives a carrier the benefit of dealing with one jurisdiction for the reporting and payment of their motor fuel taxes.
When do I file my quarterly tax returns?
Carriers must submit quarterly tax returns to their home jurisdiction, listing the kilometers operated and the fuel purchased in each jurisdiction capturing the following periods:
January 1 to March 31 – due by April 30th
April 1 to June 30 – due by July 31st
July 1 to September 30 – due by October 31st
October 1 to December 31 – due by January 31st
A failure to file your quarterly IFTA tax return or pay any taxes owing is not taken lightly. Delinquent carriers can be charged interest and penalty on any taxes they owe and even have their IFTA license canceled.
Accuracy goes a long way
IFTA regulations impose comprehensive record-keeping responsibilities on registrants. Individual vehicle distances, fuel purchases and toll highway use records need to be collected, utilized and maintained for four years from the return due date. Additionally, fleet level reporting requires proper segregation and management for accuracy as required by IFTA, International Registration Plan (IRP), the National Safety Code, vehicle insurance and many other purposes. Many carriers are unaware of the impact that inaccuracies in their fleet distance and fuel reporting data can have. Increased fuel and mileage taxes, apportioned plate fees and even insurance premiums can all contribute to inflated operating costs caused by inaccurate reporting.
IFTA Fuel Tax Reporting Services
TransReport offers comprehensive fuel tax reporting services, record-keeping and audit representation that relieves you of the regulatory compliance burden. We can save you money by ensuring you receive full credit for all tax paid fuel purchases and paid toll distance. We audit your trips, reconcile your GPS data and utilize our industry leading software to ensure you only pay the minimum tax required. By working with TransReport Fuel Tax Reporting Services, you will receive a timely refund when credit is due and be confident in the accuracy of your records.
Feeling frustrated with the management of your fleets IFTA fuel tax reporting or just looking to optimize your reporting practices? For over 25 years TransReport has been providing Canadian motor carriers with accurate and timely reporting that impacts decisions far beyond IFTA reporting. Contact us today to learn how your fleet can benefit from our IFTA reporting services.