IFTA: Qualifications, Exemptions, and Quarterly Reporting

Most fleet managers may be familiar with the International Fuel Tax Agreement (IFTA), but that doesn’t mean they’re fully aware of all the reporting requirements. Even if a fleet is well-versed in IFTA, there are countless approaches to simplify the process. 

Keeping your fleet compliant with IFTA’s reporting requirements is easy with these few suggestions.

What is IFTA?

The International Fuel Tax Agreement was formed in 1983 between federal, state, and provincial governments, as well as representatives of the trucking industry. The objective was to simplify the distribution of tax revenues from fuel sales across all of the jurisdictions where fuel purchasers operate.

By 1996, IFTA was mandated for all fleets operating in the contiguous 48 states. Soon after, 10 Canadian provinces entered the agreement. While the policy is federally mandated, it is managed at the state and regional levels. Each jurisdiction is allowed to tailor requirements and exemptions, so there isn’t always an easy answer when it comes to IFTA  compliance.

Who’s required to report to IFTA?

First and foremost, you need to know if your fleet is even subject to IFTA reporting. Before diving into the specifics of your state’s rules and regulations, start off by reviewing the general guidelines that apply to every jurisdiction. You can save yourself a lot of time by first asking these questions:

  • Do your trucks operate in at least two IFTA member jurisdictions?
  • Do your trucks have: 
  • 3 or more axles?
  • 2 axles with a GVW of more than 26,000 pounds?
  • Uses in combinations that have a combined vehicle weight of 26,000 pounds?

If you answer yes to any of these questions then IFTA reporting is a requirement for your fleet. Next, check to see if your fleet is exempt from any specifications based on your region.

Who’s exempt From IFTA reporting?

Fleets may be exempt from IFTA reporting requirements for a variety of reasons, which vary by governing bodies. Fortunately, IFTA has put together a useful online resource to help fleet managers navigate these questions. Consider researching the information available at IFTA, Inc if you’re unsure of the regulations for your unique fleet.

On many occasions, it’s the type of vehicles running a fleet that impact IFTA compliance. Fleets are often exempt from IFTA reporting if they operate any of the following vehicles:

  • Owned by government entities or political subdivisions
  • School or charter buses
  • Special mobile equipment 
  • Farm vehicles or non-highway vehicles
  • Recreational vehicles
  • Temporary or dealer-registered plates
  • Tow trucks

The type of fuel your equipment is powered by also plays a factor in IFTA reporting. The following fuels are often associated with IFTA-related exemptions:

  • Off-road diesel
  • Gasoline
  • Gasohol
  • E-85
  • M-85
  • A-55
  • Biodiesel

Lastly, the distance traveled on certain roadways corresponds with state exemptions. Fleets that operate on any of the following types of roads could be entitled to IFTA exemptions:

  • Off-highway
  • Forest roads
  • Agricultural roads
  • Private roads
  • Federal property
  • Turnpikes
  • Trip permitted mileage

If any of the aforementioned exemptions pertain to some or all of your fleet’s equipment, take some time to peruse the IFTA state or provincial details that apply to you. Keep in mind that the jurisdiction in which your vehicles are registered will be the one you need to investigate.

Quarterly reporting: what you need to know

For each “qualified” motor vehicle in your fleet, based on IFTA requirements, you’ll need a valid IFTA decal. This requirement should not be overlooked, as failure to register a qualified vehicle can result in penalties, fines, or citations as determined by your jurisdiction. 

Decal-holding vehicles must be then covered by your quarterly reports. Non-compliance with quarterly reports will result in the revocation of your fuel tax license. Simply put, the vehicle(s) in question will be sidelined until you complete all the necessary steps to reinstate them.

Your fleet’s quarterly reporting will go through the state or provincial government that has authority over your headquarters or the equipment’s registered address. Each state and province make quarterly reporting forms easily accessible via their websites.

Unfortunately, obtaining the necessary forms is only a small piece of the quarterly reporting process. For most fleets, the most challenging facet of quarterly reporting is gathering all the data needed to properly complete the forms. Fortunately for fleet managers, ELDs and telematics software offer solutions to make the tedious process easier for everyone on your team.

How IFTA audits work

An IFTA audit verifies if a trucking company’s distance accounting process is effective. This data is what determines an organization’s tax obligations, so IFTA is regimented when it comes to audits, typically inspecting distance accounting systems every three months. Your state is required to give you a 30-day notice for audits, so you’ll have some time to prepare. 

Each jurisdiction is required to audit 3% of IFTA accounts each year, so being selected for an evaluation does not necessarily suggest misconduct. To prepare businesses for a prospective audit, it’s important to hang onto IFTA reporting cards for the past four years minimum, as well as the current year.

When an IFTA auditor begins an assessment of your fleet, they will need immediate access to preliminary information to first determine the scope of the full audit. Providing all adequate information and ensuring access to all records prior to the audit is the smartest way to avoid delays and hiccups in the inspection.

For more information on the IFTA audit process, refer to the IFTA Audit Manual on their website.

Reporting deadlines for IFTA

IFTA reports have to be submitted every quarter, even if your fleet hasn’t been active on the road during the said quarter. Regardless of whether you’ve logged zero or hundreds of miles, you will still need to file a report on all of the qualified vehicles in your fleet. 

When it comes to filing reports, it’s smart to plan far in advance. Reporting deadlines vary by state, so be sure to review your state’s DMV as well as the general IFTA website. Failure to properly file reports on time often results in hefty fines that can easily be avoided with careful preparation.

Manage your fleet’s IFTA reporting

As a fleet manager, it’s your job to not only be aware of the IFTA system but deeply comprehend it. Understanding the ins and outs of the International Fuel Tax Agreement will help you keep your fleet’s equipment in top working condition and your team up to date. Being familiar with the basics is one thing, but smart fleet managers seek out ways to streamline the process and boost efficiency.

With all of the modern technology at our fingertips, there are a plethora of tools available to fleets. With these resources, staying on top of IFTA reporting doesn’t have to be tedious or labor-intensive. When you choose Fleetpal and the telematics software it integrates with, reporting becomes simple and automated. Reach out and let us show you how easy IFTA reporting can be with Fleetpal.

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Mike Valnev