Simply stated, IFTA works as a “pay now or pay later” system. As commercial motor vehicles (CMVs) buy fuel, any fuel taxes paid to the states is credited to that licensee’s account. At the end of the fiscal quarter, the licensee completes their fuel tax report, listing all miles traveled in all participating jurisdictions and lists all gallons purchased in the same. Then the average fuel mileage is applied to the miles traveled to determine the tax liability to each jurisdiction. Three states—Kentucky, New Mexico, and New York—have “weight-mile” taxes in addition to the standard fuel tax. Oregon has just a weight-mile tax. Any amount of fuel taxes due (or refund due) is then paid to (or ‘by’ in the case of a refund) the base jurisdiction who issued the license. The member jurisdictions then take care of transferring the funds accordingly. Audits are conducted only by the base state and fuel bonds are rarely required.
Prior to IFTA each state had its own fuel tax system, and a truck needed tax permits for each state in which it operated. Most states established Ports of Entry to issue permits and enforce tax collection, which was burdensome to the trucking industry and the states. Pre-IFTA trucks in inter-state commerce carried a special plate (“Bingo Plates”) upon which each state’s permit sticker was affixed. This was inefficient and proving to be costly for each state to manage.
Fast Truck Registration Services has the experience, expertise and the personal touch to ensure the trip sheets are completed correctly and filed appropriately for tax reporting. Fast Truck Registration Services maintains your information so that we can analyze the data and help you decide on the best states to buy fuel based on cost and the fuel tax rate. We track all of the information so that you get your best MPG for reporting purposes and get the most for your dollar. Contact us today to get started.