What Trucking Companies Must Know About IFTA And The Filing

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Every trucking company must abide by the rules of the roads to avoid hefty fines and legal issues that may cause problems later. As the trucking industry is responsible for hauling virtually all the freight across the country, compliance is all the more necessary to reduce hazards and obstacles in the way of truckers. 

According to Trucking.org, 71.4% of the total freight weight in the country is moved by trucks, as per the reports by the American Trucking Association. In 2017, about 36 million trucks were used for business purposes, which constitute 24% of the total number of registered large vehicles. There’s not a speck of doubt that these trucks can make or break any industry that involves transportation of consumer goods and essential supplies. Hence, it’s important to ensure all the trucking companies, fleet managers, and truckers maintain compliance with licenses, HOS rules, USDOT numbering, freight regulations, and of course, the International Fuel Tax Agreement or IFTA.  

In this post, you’re about to learn the key facts regarding IFTA and its filing along with the benefits it provides the trucking companies and truckers with. Scroll on! 

Why IFTA is so important?

Previously, the truckers needed to get fuel permits from each state they entered and endured inconsistency in the process of filing, which made it quite a hassle for them, not to mention the loss of time and money that the businesses suffered from. With IFTA in place, uniformity in tax rules, filing processes, timings, and requirements is established, thus automatically improving efficiency. The motor vehicles traveling through numerous states need not report to all of them but to one alone – the base state from where they mainly operate. This apart, IFTA also ensures that each state gets its share of tax through the base state, which collects all the information from the trucking company. Hence, it simplifies the procedure for the company, fleet managers, and drivers by saving them a lot of time, paperwork, and the headache that comes with it. 

Which states have approved the IFTA agreement?

IFTA has been approved by all the states of the US except the District of Columbia, Hawaii, and Alaska. It has also been accepted internationally by 10 Canadian provinces, namely Alberta, Manitoba, Newfoundland, Nova Scotia, British Columbia, New Brunswick, Quebec, Prince Edward Island, Ontario, and Saskatchewan. 

How the IFTA stickers work for the truckers

Suppose you ask one of your truckers to deliver freight from Oklahoma to Illinois. If he fills up the fuel tank in Oklahoma and enters Illinois with the same fuel, the former state will keep a track of the miles covered in the latter one and distribute the taxes accordingly. However, the trucker need not report to two different states. He will be submitting all the fuel reports to the jurisdiction in the parent state, i.e. Oklahoma, and from there, the tax will be distributed to the other states. You should note here that all the vehicles that are IFTA certified in your fleet should have two stickers to maintain 100% compliance and operate across as many member states as possible. 

Do all commercial motor vehicles need IFTA stickers?

No, not all of them! The definition of a ‘qualified motor vehicle’ is mentioned in the agreement clearly, like any vehicle that’s responsible for transporting goods or people from one state to another. This apart, the vehicle should also have two axles and weigh over 26,000 pounds. Regardless of weight, if the vehicle has three or more axles, it will also be considered as a ‘qualified’ one for IFTA. Lastly, any vehicle that exceeds 26,000 pounds in weight will need to apply for IFTA compliance. 

How to apply for IFTA license and decals?

You would need to fill out the application form in your base state using information, like the registered name of the company, the federal business number, mailing address, and the USDOT number. Once you have filled up the form, you can send it to the jurisdiction office through the mail, fax it or visit the taxpayers’ service office to submit it manually. This application will then be processed and approved before you get your IFTA license for the year. You can also get a temporary license to start operations right away, while your application is being processed. 

Some common IFTA reporting mistakes

While sending IFTA fuel tax reports, you should be aware of the following mistakes that may create blocks in the process. 

  • Miscalculating fuel consumption – Incorrect calculations that don’t match the original reports can invite unwelcome audits of the entire fleet. 
  • Faulty Odometer or GPS readings – These can lead to inaccurate fuel calculations and should be regularly monitored for inefficiencies. 
  • Miles driven for personal reasons – The trucker should log all the miles driven, even those for personal reasons, like getting food, to prevent discrepancies in the mileage reports. 
  • Not reporting on time – it can take a toll on the company to do this at the last minute, which also increases the chances of committing errors in calculations. Hence, it’s best to do the reporting on time. 

When it says that all miles driven in a quarter should be recorded and reported to the jurisdiction, it literally means “all miles” with no exemptions. There’s no postponing a few miles for the next quarter, as it creates inconsistency in the reports. Further, you should also install IFTA-compliant GPS trackers in the vehicles that use only IFTA-approved methods to calculate fuel taxes. Seems like too much of a headache? Well, it’s better than the mounds of paperwork, tax receipts, and excessive calculations in a pre-IFTA world any day.