The International Fuel Tax Agreement (IFTA) is an agreement among states to report fuel taxes by interstate motor carriers.
To register, you must:
- Have an established place of business in the State from which motor carrier operations are performed,
- Mileage must be accrued in your State,
- Your operating records of the fleet must be maintained or can be made available in your State, and
- You must operate in at least one other IFTA jurisdiction.
Under the IFTA, you are issued an IFTA license and one set of your State IFTA decals for your truck, which will allow you to operate in all other IFTA jurisdictions without buying additional decals from those jurisdictions. A copy of the IFTA license may be used in your truck instead of the original license.
The carrier is required to file a mandatory IFTA quarterly report even if there was no operation to avoid a late fling penalty and interest. 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.
In other words to elaborate on how IFTA works; As commercial motor vehicles 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.