All About IFTA Taxes For Trucking Companies

All About IFTA Taxes For Trucking Companies


This video series, “What to Expect as a New
Entrant: A Guide to Running Your Trucking Company During the First Year” has been developed
by Apex Capital to help you understand the policies and procedures that you must have
in place in order to pass your safety audit and receive your permanent operating authority.
Today we’re talking to Reghan Orman about the International Fuel Tax Agreement, or IFTA.
Reghan is Associate General Counsel at Apex Capital and she also leads the Apex Startup
Program, a program designed to help those interested in starting a trucking company,
get their operating authority. IFTA stands for the International Fuel Tax
Agreement and what that is an agreement between the lower forty-eight states as well as Canadian
provinces that if you’re a motor carrier operating in more than one jurisdiction, helps you to
simplify your fuel tax reporting. Once you are registered with IFTA, they’re going to
send you a licence in the mail, as well as two decals that you can place on both sides
of your cab. There is a filing associated with IFTA and
that’s going to be your quarterly fuel tax report, so it’s due every quarter. What that’s
going to do is tell you if there are any taxes due or refund owed to you. You then pay that
to your base jurisdiction and the base jurisdiction redistributes that tax money accordingly.
Several components go into calculating your IFTA taxes but probably the most important
thing is to remember to keep the reciepts of all of the gallons you purchase and which
jurisdiction or which state you purchase those gallons in. You’re also going to need to know
the mileage you have in each particular jurisdiction for each quarter.
Say you have a round-trip run from Florida to Alabama twice each week. We start with
the current pump price and the state tax. Please keep in mind that the state taxes can
change every quarter and for the sake of this example, we’ll be using the state fuel tax
as of April 2016. But first, we calculate the ex-tax price by subtracting the state
tax from the pump price. At the end of this quarter, you’ve driven a total of 10,920 miles
in Florida, 8,450 miles in Georgia, and 6,500 miles in Alabama. Next, take the number of
miles driven in each state and divide that by your truck’s miles per gallon. For this
example, we’ll use 5.5 miles per gallon. Finally, to calculate the total taxes due to each state,
you multiply the state tax by the gallons used in each state. Adding the three states
together, you see you owe a total of $1,156.74 into your IFTA account.
Your base jurisdiction for IFTA purposes is the jursidiction where your qualified motor
vehicles are based out of for vehicle registration purposes. That might also be the location
where the operational control or the records of that qualifying motor vehicle are kept
so it’s just that particular state. Your IFTA tax report is going to be due following
each calendar quarter on the last day of the next month. So in other words, for the first
quarter, you have until April 30 to file your IFTA report. At the end of the second quarter,
you have until July 31. At the end of the third quarter, that’s October 31, and then
at the end of the fourth quarter, you have until the next January 31 to file that IFTA
report. Remember that even if you don’t have any re portable fuel tax activity for any
calendar quarter, you still need to file your IFTA tax return for that quarter and your
base jurisdiction is also going to help you remember that you need to file IFTA because
they’re going to mail a return to you. You have just watched one video in our series,
What to Expect as a New Entrant: A Guide to Running Your Trucking Company during the First
Year. Please see other videos in our series or download our whitepaper to learn more about
being a new entrant, insurance, alcohol and drug testing , taxes, IFTA, safety, the driver
qualification file, hours of service, the safety audit and additional filings.

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