IFTA License, Decals & Quarterly Returns

The IFTA License: Your Passport for Interstate Travel

The IFTA license is the base document that gives the motor carrier the right to operate in all IFTA member jurisdictions-48 US states, excluding Alaska and Hawaii, plus 10 Canadian provinces-and file one combined fuel tax report.

Who Needs an IFTA License?

You must apply for an IFTA license from your base jurisdiction where the vehicles are based and operational records are maintained, if your vehicle is considered to be a Qualified Motor Vehicle (QMV):

• It is used to carry people or property.
• It has two axles and a Gross Vehicle Weight (GVW) or registered GVW over 26,000 pounds (11,797 kg), or
• It has three or more axles, regardless of weight, or
• It is used in combination, and the gross vehicle weight rating exceeds 26,000 pounds.

Application and Renewal

IFTA licensure is issued for one calendar year, which runs from January 1st through December 31st. The license needs to be renewed on a yearly basis.

• Process: Renewal generally requires only logging into your base jurisdiction's tax portal and confirming vehicle and business information. You must be up to date on all quarterly returns and have zero outstanding tax liabilities to successfully renew.
• Grace Period: The majority of jurisdictions have a grace period, usually through the end of February, in which carriers may operate on the prior year's decals while awaiting the new credentials. This is allowed as long as the renewal was timely filed, usually before December 31st.

IFTA Decals: The Proof of Compliance

The IFTA decal or sticker is the physical, visible proof that a motor carrier is licensed under the agreement.

• Requirement: For each QMV in your fleet, you need to issue two decals.
• Placement: Each decal should be placed on the outside part of the cab, one on the driver's side and one on the passenger's side. They need to be easily visible.
• Decal Year: Colour and design of decals change yearly, and this makes it easier for enforcement officers at weigh stations or at roadside inspections to verify current compliance.
• Important Notice: If you operate a Qualified Motor Vehicle in a member jurisdiction without a current IFTA license copy in the cab and valid decals displayed, you may be subject to a fine or citation, or you may be required to buy an expensive temporary trip permit for that state.

Quarterly Returns: The Engine of Tax Apportionment

The Quarterly Fuel Tax Return is the heart of the IFTA process, which dictates whether your fleet owes additional tax or is due a refund. It is a required filing, even if you had zero operations in a given quarter.

Important Notice: If you are found operating a Qualified Motor Vehicle in a member jurisdiction without a current IFTA license copy in the cab and valid decals displayed, you may be subject to fines, citations, or even be required to purchase an expensive temporary trip permit for that state.

The Data Foundation

The whole return is based on two sets of data points: for every mile and for every gallon used:

• Jurisdictional Mileage: Total miles travelled in each IFTA jurisdiction (state/province).
• Tax-Paid Fuel Purchases: All receipts proving the gallons/litres of fuel purchased and the associated tax already paid at the pump in each jurisdiction.

The base jurisdiction then takes this information to calculate the net tax liability, which involves reconciliation between the fuel tax you have paid versus the fuel tax you have consumed according to your miles driven.

The Risk of Non-Compliance

A late filing or incorrect data submission, poses the following risks:

• Late Filing Penalty: Usually, $50 USD or 10% of the net tax due, whichever is greater.
• Interest Charges: Interest accrues on a monthly basis (for example, at a rate of 1% per month) on any unpaid amount of tax liability.
• License Suspension: Continued non-compliance-Starting with failure to pay taxes and late filing-can lead to the revocation or suspension of your IFTA license, effectively halting all interstate activities.