Understanding IFTA and The Value of IFTA Application

Understanding IFTA and The Value of IFTA Application

TMS Digital has helped trucking companies manage their IFTA reporting for well over 35 years. As the trucking industry has evolved, so have we. No more doing manual data entry from driver sheets and fuel reports. Our TMS Digital IFTA Manager program will let you import both your fuel and your ELD information, which includes the states your truck has driven through, as well as the mileage breakdown. The fuel and mile data are merged to create trips. IFTA Manager acts as an IFTA calculator, and all you have to do is run reports! The IFTA mileage is calculated using the most recent IFTA formulas. All you do is just file! You will log in and do your IFTA online filing using the totals calculated for you by IFTA Manager.

IFTA – International Fuel Tax Agreement

The International Fuel Tax Agreement (IFTA), is a tax collection agreement by and among the 48 contiguous states and Canadian provinces, bordering the United States, to simplify the reporting and collection of motor fuel use IFTA fuel tax when a motor carrier operates in more than one jurisdiction. People who operate qualified motor vehicles are subject to IFTA licensing.

IFTA defines a “qualified motor vehicle” as:

  • A vehicle having two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms;
  • A vehicle having three or more axles regardless of weight;
  • When the weight exceeds 26,000 pounds or 11,797 kilograms gross vehicle or registered gross vehicle weight;
  • When the vehicle is not a recreational vehicle.

What is IFTA Reporting?

To cite the Arizona Department of Transportation

“The International Fuel Tax Agreement (IFTA) is an agreement between the member jurisdictions (all contiguous states, the District of Columbia, and participating Canadian provinces) to simplify the reporting of motor fuel taxes by interstate motor carriers. IFTA reporting significantly reduces the paperwork and standardizes motor fuel tax reporting for both carriers and jurisdictions.

Before the adoption of IFTA, motor carriers operating in multiple jurisdictions were required to apply for an IFTA license and file and remit their fuel taxes in accordance with each jurisdiction’s laws. Complying with these varied requirements was a difficult and extremely time-consuming process for an interstate carrier.”

In a nutshell, 48 states in the US (except for Hawaii, Alaska, and the District of Columbia) and ten Canadian provinces require that you report how many miles you have driven through each state, and how much fuel you have purchased, again in each state. You are required to report this information quarterly to pay or receive a tax credit. Failure to do so can result in huge fines! The fuel tax you pay is to compensate states for the use of their roads by your heavy equipment. In the past, each state had its own formula for calculating the tax due, as well as its own due date. With IFTA, a more uniform system was set in place to make reporting easier.

TMS Digital IFTA Manager

IFTA is not the only one that made reporting easier. TMS Digital’s IFTA Manager Program, has transitioned from our users doing manual entry based on driver’s paperwork to importing fuel directly from your fuel card company and importing odometer readings and miles driven in each state from your ELD and merging them. In addition, those crazy formulas? Yeah, you can import them, too! Right from the IFTA site. In regards to all that messy paperwork and receipts, you just scan and save the images to your IFTA Manager folders. Then, by selecting your trip and pressing the Image button, you can see all of the trip’s backup documents.

Why do I need IFTA?

If you are new to the world of trucking, you might be trying to figure out the complicated IFTA requirements. You may have asked, “Why do I need IFTA and why do I pay taxes to other states?”

The short answer is because you are running heavy vehicles over different states and/or jurisdictions, which causes wear and tear to their roads. Someone has to pay for that.

The importance of having IFTA Manager is knowing you have the tools you need to be sure you are relying on accurate data for your IFTA filing. IFTA Manager alerts you to missing data on your fuel downloads and has reports to allow you to be sure you don’t have uncommitted fuel that for example, the ELD didn’t bring in corresponding trip data for. Or, visa versa, our color-coded screens alert you when the trip miles and the fuel purchases (or lack of) don’t jive. It is no fun having to file an amended fuel tax document. Moreover, it is even less fun to be audited! TMS Digital IFTA Manager, by importing the data directly from your fuel purchases and your truck’s ELDs, provides you with the verifiable data you need, saves you time, and does all the heavy lifting with the calculations.

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