When do you have to file for IFTA & what are the consequences for submitting late?

Whether you are new to IFTA fuel tax reporting, or already understand it, we’d like to use this message to expand on some common IFTA questions.

If you are a motor carrier or trucking company that does interstate and/or interprovincial work, you must apply for an IFTA registration. You apply to the jurisdiction where you have registered your motor carrier/trucking business or your home-based jurisdiction. This way, you can work through all the IFTA member jurisdictions and only submit one IFTA report, instead of reporting fuel taxes to all the individual states or provinces you work through. Your report is submitted to your home-based jurisdiction.

If you are based in a jurisdiction that is not a member of IFTA, you can still apply for an IFTA registration to any member jurisdiction in which you operate.

Once your application is approved, you will receive your IFTA license and IFTA decals that you must always carry and display in your tractor/truck. You also must renew your IFTA registration every calendar year and submit your IFTA reports quarterly on time.

The IFTA member jurisdictions are 48 neighboring US states and 10 Canadian provinces. These jurisdictions are:

US States: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

Canadian Provinces: Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan.

The filing deadlines for each quarter are:

  • Quarter One (January, February, March) – April 30th
  • Quarter Two (April, May, June) – July 31st
  • Quarter Three (July, August, September) – October 31st
  • Quarter Four (October, November, December) – January 31st

The reason why your interstate or interprovincial trucking company must submit quarterly fuel tax reports is because jurisdictions redistribute the fuel taxes you have paid at the fuel pump. They do that amongst themselves, based on the states and/or provinces you drove and purchased fuel.

You are running a business in which you move cargo from an origin point to a destination point and make money on it while using public roads that jurisdictions are responsible for maintaining. So, the IFTA operating principle is as follows:

  • Fuel tax owed is calculated based on where the fuel was consumed.
  • Tax credit is determined by where the fuel was purchased.
  • IFTA finds the difference between fuel consumed and fuel purchased for each jurisdiction.

To understand this principle let’s look at an example. Let’s say your company is based out of Arizona and it runs through California, New Mexico, and Texas. Since your company is based in Arizona, your trucks drive West to California and East to New Mexico and Texas. These states are large so depending where you are going in a specific state you might have to go across two states. Let’s say one of your main routes is Phoenix to Dallas and back. You buy fuel only in Arizona and Texas and most of your mileage is driven in Arizona and Texas on this route.

For IFTA, this means you are only getting credit where you purchased fuel, that is, only in Arizona and Texas. So, for New Mexico you will owe fuel tax as you drove through there but did not purchase any fuel. Your IFTA report will find the difference between fuel consumed and fuel purchased for each jurisdiction. This means if you bought more fuel than you consumed in Texas you will end up with a credit for Texas.

Consequences for submitting late or failure to submit IFTA reports before the deadlines will be late penalties or interest charges and any taxes due will be considered delinquent. You can expect a $50 late fee or 10% of your net tax liability, whichever is greater. On top of this late filing penalty, an accumulative 0.7% penalty is also due to each jurisdiction traveled where you owed fuel taxes, for every month that your IFTA report is late, until you pay what is owed in full.

If you continue to submit late you might be subjected to an IFTA audit, especially if your IFTA reports are wrong or have missing information.  This will not only lead to thousands of dollars in past taxes due but suspension or revocation of your IFTA license which means you will not be able to operate interstate.

We want to make IFTA reports and other fuel tax reports easy for you. Why not take advantage of our 31-day free trial?