If you are in the trucking industry, you have heard of the International Fuel Tax Agreement. It is an agreement between Canada and the 48 contiguous states. It was designed to make paying fuel tax easier for owner-operators and trucking companies.
According to Simplex Group, the IFTA was enacted in 1983. Prior to that, trucking companies had to obtain a fuel permit in every state that they drove through and pay taxes on that fuel directly to the state. This wasted time for the state and the drivers.
The IFTA created local offices across the country that issues a single fuel tax permit to truck drivers. The drivers file a fuel purchase report to their local office quarterly. They pay their taxes to the office and the IFTA office pays each state the taxes that they are owed. If a trucking company is owed a refund, the IFTA office will issue that refund.
Your state’s local IFTA office can also perform audits. If a trucking company doesn’t file its report quarterly, it will face major fines. If you go long enough without filing a tax report, the FMCSA may even shut you down.
What if All My Trucks Are Intrastate?
You will only need to participate in the IFTA if your vehicles weigh over 26,000 pounds and your trucks cross state lines. If you never leave your home state, then you will not have a reason to join the IFTA, you will just pay taxes to your home state. If you take occasional hauls to other states, you will purchase a temporary permit. Most states will offer a temporary permit that lasts for 72 hours. You should order yours as far in advance as possible.
Do Interstate Truck Drivers in the Lower 48 States Have to Participate in the IFTA?
The only states that do not participate in the IFTA are the District of Columbia, Hawaii, and Alaska. Trucking companies are not legally required to join the IFTA. However, almost every trucking company that makes interstate hauls on a regular basis joins voluntarily. There would be no reason not to join as trucking companies must pay their fuel taxes. The IFTA makes everything easier for everybody.
What Is the Best Way to Stay Compliant?
Trucking compliance can be a very complicated thing. Any trucking company will need several different permits and licenses in order to operate. It is best to hire a professional compliance company to manage compliance and permitting for you. A professional compliance company will make sure that you have All the documentation you need to operate.
If you are interested in taking your trucking company to the next level by taking interstate hauls, a compliance company can give you all of the tools and assistance you will need to get started. Joining the IFTA is one of the first things you should do to run a successful trucking company.