How IFTA Works: Fuel Tax, Mileage, and Multi-State Reporting Explained

The IFTA Core Concept: Simplified Fuel Tax Apportionment

The International Fuel Tax Agreement is an agreement between the 48 contiguous U.S. states and 10 Canadian provinces. Prior to IFTA, a motor carrier was required to file separate fuel tax returns and purchase permits for every single jurisdiction travelled through, which was a major administrative headache.

IFTA does much to simplify this with the base jurisdiction system:

• Single Filing: You get one IFTA license and a decal for each Qualified Motor Vehicle from your home state or province (base jurisdiction).
• Quarterly Report: You file one, consolidated fuel tax report with your base jurisdiction four times a year.
• Tax Equalization: Your base jurisdiction calculates and distributes all the taxes on your behalf, taking care of it like a clearinghouse. It will give you credit for the fuel tax paid at the pump and then charge you tax on fuel consumed in other IFTA jurisdictions. This is called fuel tax equalization.

Quarterly IFTA Deadlines

An IFTA report needs to be filed quarterly, on a calendar-year basis. Missing these deadlines will likely result in substantial penalties and interest: usually $50 or 10% of net tax due, whichever is greater.

Reporting Period	Due Date
January 1 – March 31 (Q1)	April 30
April 1 – June 30 (Q2)	July 31
July 1 – September 30 (Q3)	October 31
October 1 – December 31 (Q4)	January 31

Mileage and Fuel: The Data Required for IFTA Calculation

The entire IFTA process depends on the exact and precise capture of two main streams of jurisdictional data for every Qualified Motor Vehicle-usually defined as commercial vehicles with two axles and a gross vehicle weight rating over 26,000 lbs, or three or more axles.

Accurate Mileage Records

You are required to accurately record total miles driven in each IFTA jurisdiction you travel. This covers all miles, whether the truck is loaded, empty, or even driven for personal conveyance, unless an exemption is otherwise given by the jurisdiction.

• Requirement: The mileage log must record odometer readings at the start and end of the quarter, and when crossing every state or provincial line.
• Approach: While paper trip sheets are acceptable, the industry has adopted ELDs and GPS tracking to capture and record, in an automated fashion, jurisdictional distance data for an audit trail.

Records of Specific Fuel Purchases

You must keep a record of all fuel purchases for the quarter, no matter where purchased. This record-keeping is essential in proving tax-paid gallons.

• Requirements: The following information must be on every fuel receipt: date, seller's name and address, type of fuel, number of gallons/litres purchased, the price per gallon/litre, and the unit number of the truck.
• Best Practice: Integrating fuel card data with your reporting system streamlines this data ingestion process.

Whether owner-operator or large fleet, embracing compliance automation is the surest way to avoid stiff IFTA penalties, stay audit-ready, and turn what was once such a time-consuming chore into a well-oiled, low-risk component of successful fleet management.