When trucking and transportation companies operate across multiple U.S. states and into Canada, managing fuel taxes and securing permits individually for each jurisdiction would be extremely time-consuming and could cripple operations. The International Fuel Tax Agreement (IFTA) simplifies this process by allowing truckers to operate under a single license and file one consolidated fuel tax report covering 48 U.S. states and all Canadian provinces (territories are not included).
This agreement significantly expands opportunities for drivers, eliminating the need for lengthy, repetitive applications in each state or province. With IFTA, drivers enjoy streamlined access across the continental United States and most of Canada, giving them greater flexibility to meet client needs over a vast area. However, while IFTA makes cross-border operations much more convenient, it still comes with important reporting responsibilities that trucking companies must manage carefully.
Businesses holding an IFTA license continue to purchase fuel as usual but receive credit for the fuel taxes they’ve already paid. Each fiscal quarter — by the end of April, July, October, and January — they must file an IFTA fuel tax report. This report details the distance traveled and the amount of fuel purchased in each IFTA jurisdiction.
Using a standardized formula based on average fuel mileage, the tax liability for each state or province is calculated. The report then shows whether the carrier has overpaid or still owes taxes to any jurisdiction. The base jurisdiction — where the carrier is licensed — handles any refunds for overpayments and collects any amounts due, redistributing funds to or from other member jurisdictions as needed.
As you can see, the system depends heavily on the accuracy and timely submission of the carrier’s quarterly report.
Do you need to file an IFTA fuel tax report and apply for the IFTA license? Not all vehicles are subject to this requirement, and most drivers can move between states and provinces with ease, without the need for additional licensing and reporting. The IFTA applies to commercial vehicles in specific classes or vehicles designated for particular use cases.
Since jurisdictions set their own rates, the system revolves around properly completed IFTA reports. Failure to follow the requirements not only has the potential to be quite costly to you if you owe fuel taxes in any member jurisdiction, but it can also affect the reputation of your business. For many trucking companies, even though you can complete and file a lot of the required paperwork and the report online, all of this tedious administrative stuff takes up valuable time the business would rather focus on actually driving and making money. That’s why Logity Dispatch is happy to take the IFTA reporting requirement off your hands.
This is what the IFTA Fuel Tax Reporting Service from Propel Logistics is all about. We believe in making life easy for our clients and taking away many of the obstacles they face when they head out on the road. We understand that you love to drive and provide great results for your customers — this is the way you make your living. You didn’t get into truck driving because you love applying for permits and filing fuel tax reports.
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