IFTA, or the International Fuel Tax Agreement, represents an agreement between the 48 contiguous United States and the 10 Canadian Provinces bordering the United States that focuses on an accurate and fair way of collecting taxes on fuel purchased in each state or province. IFTA is a quarterly tax on qualified highway motor vehicles that operate in at least 2 out of all 58 jurisdictions.
A vehicle is considered to be a qualified motor vehicle if it is used, designed, or maintained for the transportation of persons or property and has a gross vehicle weight or registered gross vehicle weight of more than 26,000 pounds. A Vehicle is also considered to be a qualified motor vehicle if it has three axles, regardless of its weight. Finally, a vehicle is considered to be a qualified motor vehicle if the combined weight of all of its parts is greater than 26,000 pounds.
How Does IFTA Work?
Each Vehicle has a Base Jurisdiction, which is the state or province in which the vehicle is registered. The Fuel Tax must be filed with each jurisdiction every quarter. Each state or province has a different Rate and those rates change quarterly. Each driver must keep a trip log of how many miles are traveled in each state or province, as well as how much fuel was purchased in each state or province.
What is IFTA’s Purpose?
The official purpose of IFTA is “to promote and encourage the fullest and most efficient possible use of the highway system by making uniform the administration of motor fuels use taxation laws with respect to qualified member vehicles operated in multiple member jurisdictions.” When IFTA is filed with the appropriate jurisdiction, The Fuel Tax Report is then used to determine the tax amount due as well as the refund due. It is also used to redistribute taxes from collecting jurisdictions to jurisdictions that it is due. One of the reasons for the Fuel Tax is to ensure that a vehicle pays taxes to all deserving jurisdictions. For Example: if a vehicle travels through a state, but buys no gas while in that state, then there was no fuel tax paid to that state through the purchase of gasoline. Part of their tax would then be redistributed to the state that received no fuel tax.
A simple solution for this tax is to use an online E-File Provider. The most advanced of the available services is www.expresstrucktax.com. Express Truck Tax acts as a one stop shop for all truck tax needs. Through them, you can E-File your Form 2290 with the IRS. It also provides a way to keep online records of your mileage and fuel purchases for IFTA reporting. This can make the IFTA process much easier.
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