Understanding the Gas Tax
What is the International Fuel Tax Agreement?
The International Fuel Tax Agreement is a treaty between the United States and Canada that helps the collection of taxes on fuel. It helps organize and distribute those taxes to the proper state authorities through the consolidation of reporting and licensing functions.
Now, we normally don’t like to endorse other companies, but below is a great overview from Interstate Authority on their setup of IFTA. You can go with them or do it yourself, we do not really care. What we do care about is that you understand IFTA and can easily apply it to your situation. So, please read the article below and use it as a learning tool for your specific situation.
The International Fuel Tax Agreement or IFTA setup is for vehicles over 26,000 pounds crossing state lines.
What is IFTA?
The International Fuel Tax Agreement (IFTA) is a cooperative program to collect and distribute fuel tax revenue between member states and Canadian provinces. The program benefits carriers by consolidating licensing and reporting requirements through the base (home) state.
What will I receive once I have the IFTA account set up?
For IFTA, you will receive a set of decals (stickers) for you power unit and an IFTA license to be kept in the cab.
Why should I let Interstate Authority setup my IFTA account?
IFTA applications can be very confusing, complicated, and time consuming if you have never completed one before. We setup hundreds of accounts every year, so you know your application will be completed properly and will not be rejected due to common application errors. Since we do these every day, we know exactly what supporting documents each individual state requires for a new account and we always complete a preliminary audit of your application to ensure the state will have sufficient supporting documentation to setup your account.
What do I need to have in place before applying for IFTA?
Before we can submit your IFTA application, you must first have an IRP (Apportioned Plate) account with your state. If you do not have an IRP account at this time, click here to go to our IRP and IFTA setup page.
How does the process work if Interstate Authority handles the IFTA setup?
Once we receive your order, we will determine what supporting documents the state will require to be submitted with your application. You will receive an email from our IRP/IFTA department requesting these documents. If there is a document on the list that you do not have, please contact us. We can usually figure out a solution that will satisfy the state’s requirements.
Once we have the supporting documents, we will submit the application to your state for processing. Generally the state will take 3-5 days to workup your account and send out your IFTA decals and license.
Once I have the IFTA account set up, what do I need to do?
Once you have your IFTA account setup, you will need to display your IFTA decals on each side of your vehicle and keep the license inside the cab. You will need to keep track of the mileage traveled in each state and the fuel purchased in each state. You will receive an IFTA quarterly report from your state each quarter to determine if you owe fuel taxes or if you get a fuel tax refund.
Generally, if you purchase most of your fuel in a state that has low fuel taxes and run most of your miles in states that have higher fuel taxes, you will owe taxes to those states with the higher fuel tax rates. If you purchase most of your fuel in a state with a high fuel tax rate and run most of your miles in states that have a lower fuel tax rate, those state will owe you a refund. For a list of current fuel tax rates by state, click here.