IFTA

IFTA stands for International Fuel Tax Agreement, a cooperative framework among jurisdictions in the United States and Canada to simplify the reporting and payment of motor fuel taxes by interstate carriers. The aim is to consolidate several state and provincial fuel tax filings into a single quarterly return and to allocate fuel tax revenues to the jurisdictions where the fuel is used.

Under IFTA, a motor carrier that operates qualified vehicles across multiple jurisdictions must obtain an IFTA license from its base jurisdiction and display IFTA decals on its qualified vehicles. The carrier maintains records of fuel purchases and miles traveled in each jurisdiction. Each quarter, the carrier files an IFTA fuel tax return with the base jurisdiction, listing gallons of fuel consumed and miles driven by jurisdiction. Taxes due are calculated by applying the respective jurisdiction’s fuel tax rate to the gallons used there. The base jurisdiction collects the net tax and distributes the revenue to the member jurisdictions according to the reported fuel use and applicable rules.

Eligibility and scope: Qualified motor vehicles, typically those with a certain minimum gross vehicle weight rating used for transporting goods or passengers, are subject to IFTA. The agreement covers motor fuels such as gasoline and diesel, and may include some alternative fuels. The IFTA system reduces the administrative burden on carriers and on governments by standardizing reporting across jurisdictions.

Administration and compliance: IFTA is administered by the member jurisdictions, and enforcement, audits, and penalties for noncompliance are handled at the base jurisdiction level. The agreement facilitates cross-border motor fuel taxation and is widely used in North America to streamline tax collection for carriers operating in multiple jurisdictions.