What Is the International Fuel Tax Agreement

Trucks that occasionally or rarely travel on Tennessee highways have a temporary permit to use fuel. The authorisation may be granted for a maximum period of seven consecutive days and shall apply only to the vehicle for which it was issued. The 7-day temporary fuel license is required before entering Tennessee. Instead of obtaining a license under IFTA, individuals can choose to comply with travel-per-trip fuel tax obligations. Canada`s 10 provinces are members of the agreement, as are the 48 neighbouring states of the United States. Alaska and Hawaii are not members. NOTE: Since April 2018, IFTA Inc. has added hydrogen and electricity fuel types to IFTA`s tax rate matrix. If your eligible motor vehicle only occasionally operates in more than one IFTA member jurisdiction, you can obtain a travel authorization for each jurisdiction to meet your fuel excise duty obligations. The International Fuel Tax Agreement (IFTA) is a tax collection agreement between and between the 48 contiguous states and Canadian provinces bordering the United States to simplify the reporting and collection of fuel taxes used by commercial airlines operating in more than one jurisdiction. Persons who drive qualified motor vehicles are subject to IFTA approval. Prior to the adoption of IFTA, road transport companies operating in multiple jurisdictions had to apply for a license and submit and transfer their fuel taxes in accordance with the laws of the respective jurisdiction. Meeting these different requirements has been a difficult and extremely time-consuming process for an intergovernmental carrier.

IFTA fuel tax reports can be submitted electronically using a web file or EDI software, or on paper using Form 56-101, Fuel Tax Report of the International Fuel Tax Agreement (IFTA) (PDF) and Form 56-102, Supplement to the IFTA Fuel Tax Report (PDF). If you are a trucking company, report to a single basic jurisdiction all fuel consumption taxes due in New York and other jurisdictions. IFTA applies to most Canadian states and provinces. New York State participates in IFTA to administer and collect its fuel consumption tax. Fuel taxes are levied in each state or province and paid at the time of purchase. Commercial truck operators hold permits that impose a certain tax rate on fuel, and their payments are recorded so that the total taxable amount can be calculated and adjusted quarterly (money owed or money credited). IFTA is the international convention on fuel tax. Through IFTA, member courts act cooperatively to manage and collect fuel consumption taxes. The International Fuel Tax Agreement (IFTA) is an agreement between U.S. states and Canadian provinces. Taxes are paid on fuels, and IFTA allows commercial road transport companies to register in a state and charge these tax notices to all participating territories in accordance with their fair share. Read our frequently asked questions about biodiesel and renewable diesel fuel to learn how to report biodiesel fuel in your quarterly IFTA return.

Since July 1, 2017, effective tax rates have changed and will increase each year over the next three years. Please see our Fuel Tax Dates and Rates page for more information. IFTA was created for truck drivers who often cross national borders on their routes. It simplifies the accounting and payment of fuel taxes and relieves transport companies of certain formalities. In the 1980s, some states entered into agreements to establish a common revenue distribution program and eliminate the requirement for individual fuel tax approvals. Over the years, this program has evolved into IFTA. Eligible commercial vehicles operating in more than one U.S. state The state or province of Canada is required to file a consolidated fuel tax report (p.B gasoline, diesel, liquefied petroleum gas, compressed natural gas and liquefied natural gas taxes) under the International Fuel Tax Agreement (IFTA). Under this program, a truck is registered with IFTA and receives a fuel tax permit from a state. If the vehicle passes through a participating state or province, the tax on the fuel purchased will be credited to the licensee`s account.

At the end of the quarter, a fuel tax report is prepared that shows the kilometres and gallons of fuel travelled for each region. The fee for a Tennessee Fuel Use Permit is $30 per permit plus the transfer fee and is available from the following contractors: An IFTA license allows any eligible vehicle to travel to all IFTA jurisdictions without the need to purchase fuel tax permits at ports of entry. It also standardizes reporting on fuel taxes. Simply file a set of tax forms in your base jurisdiction (Arizona) on a quarterly basis, rather than filing a return in each jurisdiction you travel to. All administrative costs for audits are reduced because fuel tax checks are carried out by your base state on behalf of all member jurisdictions Each member jurisdiction sets its own tax rate. Texas-based interstate airlines report on the fuel tax paid in all member countries. Tax rates for current and previous periods can be found at IFTA Inc. Before IFTA, each state had its own fuel tax system and a truck required tax permits for each state in which it operated. Most states have established ports of entry to issue permits and enforce the collection of taxes, which was costly for the freight transportation industry and states. Pre-IFTA trucks in interstate commerce carried special signs (“bingo plates”) on which each state`s permit sticker was affixed. It was inefficient and costly for any state to manage.

The International Fuel Tax Agreement (IFTA) is an agreement between the last 48 states of the United States and Canadian provinces to simplify the reporting of fuel consumption by motor vehicle companies operating in more than one jurisdiction. [1] Alaska, Hawaii and Canadian territories are not required to participate, but all of Canada and Alaska are. A carrier running with IFTA receives an IFTA license and two stickers for each eligible vehicle it operates. The carrier submits a quarterly report on the fuel tax. This report is used to determine the net tax or refund due and to redistribute taxes from collecting states to states that are due. Simply put, IFTA works like a “pay now or pay later” system. When commercial vehicles purchase fuel, all fuel taxes paid will be credited to that licensee`s account. At the end of the fiscal quarter, the licensee completes its fuel tax report, which lists all miles traveled in all participating countries and all gallons purchased.

Then, the average fuel consumption is applied to the kilometers traveled to determine the tax liability for each jurisdiction. Three states – Kentucky, New Mexico and New York – have “weight miles” taxes in addition to the standard fuel tax. Oregon only has a weight mileage tax. Any amount of fuel taxes (or refunds) due will then be paid to (or received from) the base jurisdiction that issued the license. The member courts then transfer the funds accordingly. Audits are only performed from the base state and fuel links are rarely required. For the filing of IFTA claims, licensee will prepare a fuel tax report at the end of the fiscal quarter detailing miles traveled and gallons of fuel purchased in all participating countries. Supporting documents include vehicle mileage, distance readings, fuel records, and retail tank purchase receipts paid by tax.

All relevant data such as kilometres of difference and fuel receipts must be included when reporting IFTA claims. IFTA helps calculate the amount of taxes or tax credits due for each state, determine the tax payable for each state, and monitor the distribution of funds accordingly. .