Rajan Wilcox
The International Fuel Tax Agreement (IFTA) is an agreement among jurisdictions in the United States and Canada to simplify the reporting of fuel use taxes by interstate carriers. IFTA streamlines paperwork and compliance burdens for reporting fuel tax liability for various fuel types. Each member jurisdiction sets its own tax rate, and qualified motor vehicles operating in more than one IFTA jurisdiction must have an IFTA license and decals to operate. IFTA returns are due quarterly, and a penalty is imposed for late or incomplete payments. The cost of an IFTA license varies depending on the jurisdiction, but additional costs include a $400 subscription fee for access to benefits on the IFTA website.
| Characteristics | Values |
|---|---|
| IFTA subscriber fee | $400 |
| IFTA subscriber benefits | Access to jurisdiction contact information, discounts on events, receipt of the IFTA newsletter, access to meeting and training materials, access to an IFTA subscriber message board |
| IFTA license requirements | Operate a qualified motor vehicle in California and any other U.S. state or Canadian province that is a member of IFTA; vehicle must meet specific weight requirements |
| IFTA license exceptions | Diesel-powered vehicles restricted to Mexico and California; vehicles restricted to California only |
| IFTA reporting | Quarterly fuel tax reports due on the last day of the month following the close of the calendar quarter; reports must be filed electronically |
| IFTA tax rates | Each member jurisdiction sets its own tax rate |
| IFTA tax penalties | $50 or 10% of delinquent taxes, whichever is greater; interest is assessed on all delinquent taxes with a current annual interest rate of 9% and a monthly interest rate of 0.75% |
| IFTA license cancellation | Must be done within 15 days of the cancellation date |
| IFTA license renewal | Renewal and decals are valid from November of the preceding calendar year through February of the next calendar year |
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What You'll Learn
IFTA license requirements for vehicles
The International Fuel Tax Agreement (IFTA) is a fuel tax reciprocity agreement among the contiguous 48 states in the US and the 10 Canadian provinces. It simplifies fuel tax reporting for interstate carriers. Commercial motor vehicles are IFTA-qualified if they are used, designed, or maintained for the interstate transportation of persons or property and meet certain requirements.
IFTA licenses are required for vehicles that meet the following criteria:
- Have two axles and a gross vehicle weight (GVW) or registered GVW exceeding 26,000 pounds;
- Have three or more axles, regardless of weight;
- Are used in combination with a trailer, for a combined GVW or registered GVW exceeding 26,000 pounds;
- Are operated in two or more member states or provinces; and
- Are not exempt from IFTA licensing requirements.
Exemptions
Certain vehicles are exempt from IFTA licensing requirements, although these may vary by jurisdiction. Generally, exempt vehicles include:
- Recreational vehicles not used for business purposes;
- Government-owned vehicles;
- Vehicles owned by licensed motor vehicle dealers operated for demonstration or sales purposes without compensation; and
- Farm trucks or tractor trucks licensed for farm use only.
Obtaining an IFTA License
To obtain an IFTA license, you must choose one IFTA-member state or province as your base jurisdiction. You will then obtain a single fuel tax license for all your qualified motor vehicles, which will allow them to operate in all IFTA jurisdictions. The cost of an IFTA license varies by jurisdiction, with some states offering it for free while others charge a small fee. Additionally, you will need to purchase decals for each qualified vehicle, which must be displayed on the vehicle along with a copy of the license.
Record-Keeping Requirements
IFTA licensees must maintain detailed records of their vehicle operations, including mileage, routes, and fuel purchases. These records must be kept in the base jurisdiction and are used to report fuel usage and mileage for all IFTA member states and provinces. IFTA returns are due quarterly, and penalties may be imposed for late or missing reports.
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IFTA tax rates and penalties
The International Fuel Tax Agreement (IFTA) is an agreement between the lower 48 states of the US and 10 Canadian provinces to simplify the reporting of fuel use by motor carriers that operate in more than one of these jurisdictions. IFTA applies to most states and Canadian provinces.
IFTA Tax Rates
Each member jurisdiction sets its own tax rate. Interstate carriers based in Texas report fuel tax paid in all member jurisdictions. Tax rates for current and prior periods can be found at IFTA Inc.
IFTA Filing
IFTA returns are due quarterly, on the last day of the month following the end of the calendar quarter. If the due date falls on a weekend or holiday, the next business day is considered the due date. IFTA returns should be filed online. This is a free service offered by the California Department of Tax and Fee Administration (CDTFA) that allows a California-based IFTA carrier to quickly and accurately file their quarterly IFTA return using a computer with an internet connection. The tax forms are filed electronically so there is no need to worry about the tax forms being lost or delayed in the mail.
IFTA Penalties
A penalty of $50 or 10% of delinquent taxes, whichever is greater, is imposed for failure to file a report, for filing a late report, or for underpayment of taxes due. Interest is assessed on all delinquent taxes for each month or fraction of a month beginning on the first day after the due date. The current annual interest rate is 9%, with a monthly interest rate of 0.75%.
IFTA License
Qualified motor vehicles operating in more than one IFTA jurisdiction must have an IFTA license and decals to operate on New York State public highways. A qualified motor vehicle is a motor vehicle, other than a recreational vehicle, that is used, designed, or maintained for the transportation of persons or property and that meets certain weight criteria.
To qualify for an IFTA license, your vehicle must meet the following weight requirements:
- A vehicle used or designed to transport people or property must have two axles and a gross vehicle or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms.
- A vehicle used in a combination must have a combined or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms.
Vehicles that do not qualify for an IFTA license include recreational vehicles such as motor homes or pickups with campers when used exclusively for personal pleasure. Vehicles used in connection with a business operation are not considered recreational.
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IFTA license renewal and cancellation
An IFTA license is valid for a calendar year, from January 1 to December 31. The renewal process starts in November, when the Fuel Tax Unit conducts a review of all IFTA licensees for the auto-renewal process. Issuance of IFTA renewal licenses begins in December for the upcoming year.
IFTA License Renewal
To renew your IFTA license, you must submit the following by December 31 of the current year:
- A completed IFTA License Renewal Application, which has been modified to allow carriers to identify the fuel types used
- The IFTA filing fee of $10.00
- If you are requesting an address change for the business location, verification of the physical address is required
- If you are requesting an address change for a residency address, proof of residency is required
IFTA License Cancellation
To cancel your IFTA license, you must satisfy all requirements and tax liabilities to all member jurisdictions and provide a completed IFTA-3 indicating cancellation. You must also:
- Mark your request for cancellation and the date of closure on your final tax report
- Submit a written request for cancellation
- Return your license and any unused decals
- Keep all records for four years from the due date of your final tax return or the date filed, whichever is later
- Any jurisdiction may conduct a final audit once your license has been canceled
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IFTA subscriber benefits
The International Fuel Tax Agreement (IFTA) offers several advantages to interstate motor carriers operating in two or more member states or provinces. Here are the benefits of becoming an IFTA subscriber:
Single Fuel Tax License
Under IFTA, motor carriers can choose one IFTA-member state or province as their "base jurisdiction". This base jurisdiction will issue a single fuel tax license that authorizes their qualified motor vehicles to travel in all IFTA jurisdictions. This simplifies the licensing process and eliminates the need to obtain separate licenses for each jurisdiction.
Streamlined Tax Reporting
With an IFTA license, carriers only need to file one tax return each quarter with their base jurisdiction. This return reports the fuel usage and mileage for all IFTA member states and provinces in which the carrier operates. This streamlined process reduces the administrative burden of complying with fuel tax regulations in multiple jurisdictions.
Online Filing and Payment
IFTA returns and payments can be conveniently filed online through the California Department of Tax and Fee Administration (CDTFA) website. This electronic filing system offers several advantages over paper filing, including faster processing, reduced risk of loss or delay in the mail, and email reminders for upcoming due dates.
Access to Resources and Information
IFTA subscribers can access various resources and information through the IFTA website. This includes jurisdiction contact information, meeting and training materials, the IFTA Newsletter, and a subscriber message board where industry professionals can connect and share best practices. These resources can help subscribers stay informed, make industry connections, and improve their operational efficiency.
Discounts and Events
IFTA subscribers may also receive discounts on attending IFTA events, providing opportunities for networking and staying up-to-date with industry developments. Additionally, IFTA offers awards and recognition, such as the Richard L. Reeves Leadership Award and the Charles M. Mills Award, to highlight outstanding contributions within the IFTA community.
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IFTA tax reporting and payment
IFTA, or the International Fuel Tax Agreement, simplifies fuel tax reporting for motor carriers travelling both inside and outside California. It applies to most states in the US and Canadian provinces.
IFTA Tax Reporting
Motor carriers are required to file a consolidated report of motor fuel taxes (e.g. gasoline, diesel fuel, liquefied gas, compressed natural gas, and liquefied natural gas taxes). This is done by choosing a single base jurisdiction to report all fuel use taxes owed to that state and other jurisdictions. This means that, instead of filing multiple fuel tax reports, you only need to file one tax return each quarter with your base jurisdiction, reporting your fuel usage and mileage for all IFTA member states and provinces.
IFTA License
To qualify for an IFTA license, your vehicle must meet specific weight requirements. A vehicle used or designed to transport people or property is a qualified motor vehicle if it:
- Has two axles and a gross weight of more than 26,000 pounds or 11,797 kilograms
- Is used in a combination that has a combined gross weight of more than 26,000 pounds or 11,797 kilograms
Vehicles that do not qualify for an IFTA license include recreational vehicles such as motor homes or pickup trucks with campers, when used exclusively for personal pleasure.
IFTA Tax Payment
IFTA returns should be filed online. This is a free service offered by the California Department of Tax and Fee Administration (CDTFA). You will receive an email reminder on the 10th day of the month the return is due. You can pay online using electronic funds transfer (EFT) or a credit or debit card. Alternatively, you can pay by check or money order by submitting Form IFTA-21-V, Voucher and Instructions for International Fuel Tax Agreement (IFTA) Licenses and Decals Renewed Electronically, with your payment.
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Frequently asked questions
The International Fuel Tax Agreement is an agreement among jurisdictions (US states and Canadian provinces) to simplify the reporting of fuel use taxes by interstate carriers.
To qualify for an IFTA license, you must operate a qualified motor vehicle in a US state or Canadian province that is a member of the International Fuel Tax Agreement. Your vehicle must also meet certain weight requirements.
You can apply for an IFTA license by filling out an application form and submitting it online or by mail. You will need to create an online profile and register for an account if you don't already have one.
The cost of an IFTA license is not fixed and each member jurisdiction sets its own tax rate. However, there is a $50 penalty or 10% of delinquent taxes, whichever is greater, for failing to file a report, filing late, or underpaying taxes.
An IFTA license offers several advantages to interstate motor carriers who operate in two or more member states or provinces. With an IFTA license, you only need to obtain a single fuel tax license for all of your qualified motor vehicles, and you only need to file one tax return each quarter with your chosen base jurisdiction.
