What is IFTA?


The International Fuel Tax Agreement (IFTA) refers to the legal solution developed due to the difficulties the trucking industry had dealing with the varying state taxes on fuel. This difference lead to problems when commercial drivers attempted to file tax statements online for a deduction regarding the fuel they purchased for their vehicles. For drivers, who generally get a portion of their cash back, this procedure was unnecessarily complicated due to the various tax laws in each state. The IFTA was created to simplify this process.

States covered by IFTA

The IFTA includes all of the contiguous United States which do not include Hawaii or Alaska. The agreement also extends to Canada, with the exception of the Northwestern Territories, Nunavut, and Yukon. The IFTA contract states that specific drivers are required to have an IFTA license and must adhere to the terms and conditions of this agreement when confirming their fuel usage. This makes fuel tax related deductions easier to report to the Internal Revenue Services (IRS) when filing for a tax refund.

Who should get IFTA license?

For many drivers who operate commercial vehicles, an IFTA license is required. Any operator of a commercial truck which weighs over 26,000 pounds, a  vehicle with three or more axles, or a truck which is connected to two or more vehicles are required to carry an IFTA license.

IFTA Exceptions

There is an exception to the IFTA license rule. If a driver is driving his truck on public highways that does not take part in the International Fuel Tax Agreement Plan, then the driver won’t need an IFTA license. This regulation mainly applies to commercial vehicles. Those who drive trucks for leisure wouldn’t usually fall into this classification. In addition, truck drivers who are not filing for a refund on fuel taxes will not be required to have the license.

What is a fuel tax law?

The purpose of IFTA is to accommodate commercial drivers who travel to different locations and encounter a range of fuel taxation. Drivers under this agreement are required to have a tax permit for each location they operate their commercial vehicle in. Although some states aren’t supportive of the IFTA, they are still required to uphold fuel laws and regulations. This law was intended to make the tax process easier for drivers and streamline the tax-reporting process as applied to fuel usage.

What is a fuel tax-reporting rule?

The federal government is responsible for enforcing fuel tax reporting policies. It is up to the IRS to determine if the driver was truthful and rightly deserves a refund. They also decide if the driver owes a significant amount of taxes to the state or federal government.

In conclusion, some individuals believe that adjustments to fuel tax tracking and fuel tax interest rate should improve transportation developments. During the last couple of years, numerous fuel software programs have been developed. Many of these software programs help generate interest in fuel tax laws and have helped individuals become more knowledgeable process. Consider contacting a professional agency for all of your IFTA needs.

This article was contributed on behalf of ITS Dispatch, a solution provider for your IFTA needs. Check out their webiste at www.itsdispatch.com

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January 6, 2015 What is IFTA?