The International Fuel Tax Agreement (or IFTA) is an agreement between the

lower 48 states The contiguous United States, also known as the U.S. mainland, officially referred to as the conterminous United States, consists of the 48 adjoining U.S. states and the District of Columbia of the United States in central North America. The ter ...

of the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

and the

Canadian provinces Canada has ten provinces and three territories that are sub-national administrative divisions under the jurisdiction of the Canadian Constitution. In the 1867 Canadian Confederation, three provinces of British North America—New Brunswick, N ...

, to simplify the reporting of fuel use by motor carriers that operate in more than one jurisdiction. Alaska, Hawaii, and the

Canadian territories Canada has ten provinces and three territories that are sub-national administrative divisions under the jurisdiction of the Canadian Constitution. In the 1867 Canadian Confederation, three provinces of British North America—New Brunswick, N ...

are not required to participate, however all of Canada and Alaska do. An operating carrier with IFTA receives an IFTA license and two decals for each qualifying vehicle it operates. The carrier files a quarterly

fuel tax A fuel tax (also known as a petrol, gasoline or gas tax, or as a fuel duty) is an excise tax imposed on the sale of fuel. In most countries, the fuel tax is imposed on fuels which are intended for transportation. Fuel tax receipts are often dedica ...

report. This report is used to determine the net tax or refund due and to redistribute taxes from collecting states to states that it is due. This tax is required for motor vehicles used, designed, or maintained for transportation of persons or property and: *The Power Unit has two axles and a

gross vehicle weight Vehicle weight is a measurement of wheeled motor vehicles; either an actual measured weight of the vehicle under defined conditions or a gross weight rating for its weight carrying capacity. Curb or kerb weight Curb weight (American English) or k ...

or registered gross vehicle weight in excess of 26,000 pounds, and/or *The Power Unit has three or more axles regardless of weight, and/or *Is used in combination, when the weight of such combination exceeds 26,000 pounds gross vehicle or registered gross vehicle weight.http://www.iftach.org/manuals/2010/AA/Articles%20of%20Agreement%20FINAL%20-%20January%202010.pdf Exceptions exist for

recreational vehicles A recreational vehicle, often abbreviated as RV, is a motor vehicle or trailer that includes living quarters designed for accommodation. Types of RVs include motorhomes, campervans, coaches, caravans (also known as travel trailers and camp ...

such as motor homes, pickup trucks with attached campers, and buses when used exclusively for personal pleasure by an individual. Some states have their own exemptionshttp://www.iftach.org/exempt/view/general.php that often apply to farm vehicles or government vehicles.

Promulgation

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 interstate commerce carried special plates ("Bingo Plates") upon which each state's permit sticker was affixed. The states eventually found this both costly and inefficient.

How it works

Simply stated, IFTA works as a "pay now or pay later" system. As commercial motor vehicles buy fuel, any fuel taxes paid are credited to that licensee's account. At the end of the fiscal quarter, the licensee completes a fuel tax report, listing all miles traveled in all participating jurisdictions and lists all gallons purchased. 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) is then paid to (or received from) the base jurisdiction which 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.

References

External links

* {{Official website Taxation in the United States Taxation in Canada Canada–United States treaties Trucking industry in the United States