Forty-eight American states and ten Canadian provinces (known as member jurisdictions) created and signed IFTA to allow drivers to cross borders without worrying about what fuel tax applies.
So far, so good.
Unfortunately, IFTA means that license holders must keep detailed records of distances traveled by jurisdiction, the fuel they’ve bought, trip permits, monthly/quarterly summaries, and Individual Vehicle Distance Records (IVDRs). Once all this information is collected, it has to be gone through with a fine-tooth comb to enable the company to file its IFTA returns every quarter.
Electronic Logging Devices and the IFTA Return
However, when the Federal Motor Carrier Safety Administration (FMCSA) ELD mandate became federal law collecting mileage figures became easier. This was because commercial motor vehicle operators covered by the mandate had to use compliant electronic logging devices (ELD) to record the miles traveled in each jurisdiction and by each vehicle. These devices meant that mileage logging was automated.
The FMCSA is part of the US Department of Transportation (DoT). It works to improve road safety and reduce accidents in the United States. So, the main reason for the ELD mandate was to create a safe environment for commercial drivers, reduce driver fatigue, enforce Hours of Service rules, and minimize road accidents.
Although some are exempt, most commercial vehicle operators have to comply with the FMCSA’s mandate. The ELD is tied to a vehicle’s engine and provides information on the number of miles traveled – vital for completing the IFTA return.
Getting an IRP License
Before being DoT compliant with the quarterly IFTA returns, vehicles that travel across state or province borders must have a license number assigned by the International Registration Plan (IRP) organization. This registration number is used for paying operator license fees based on the total distance driven in all jurisdictions. That means a jurisdiction will receive a portion of the total license fee an operator pays apportioned to the distance the operator’s fleet or vehicle traveled in that jurisdiction. This license fee is separate from the IFTA return.
As you can imagine, managing IFTA returns is not completely straightforward. You have to bring together the miles your vehicles travel in each jurisdiction with the amount of fuel they pay for in each of those jurisdictions.
This can be a little confusing as many states have different tax rates. That means that if you pay for fuel in a low-tax jurisdiction and use it in a high-tax jurisdiction, you could end up owing tax.
As you only complete your own IFTA returns once a quarter, you’re unlikely to become an expert on them. Running a business with all its operational issues makes it easy to forget to fill out the return or complete it wrongly. Unfortunately, there are penalties for incorrect information on your IFTA return and for late filing.
Penalities for incorrectly filed or late IFTA returns are a major risk if you’re trying to complete them yourself while still earning a living as an owner/operator or small to the mid-sized fleet operator.
It is recommended that you use electronic filing for your IFTA return. However, there are sometimes circumstances (for example, the IFTA returns server for your base jurisdiction is down) when you might need to use a paper return.
Your IFTA Manager
Many companies offer a service where they manage different aspects of a vehicle or fleet business, with IFTA returns being one. However, IFTA returns are often dealt with by sending you the details and asking you to fill out your IFTA return yourself, although they will file the return when it’s completed.
If you’re making a paper IFTA return, you’ll need to remember that Virginia and Kentucky have an additional fuel tax, making the return a little more complex.
Purcell Compliance Services
Purcell Compliance Services is unusual as it gives you an account manager for IFTA management. The IFTA manager sets up IFTA , IRP and your state portal. Then manager completes the entire IFTA return on your behalf using your ELD data and Excel fuel card download data. The account manager calculates and confirms that the IFTA is DoT compliant and submits it on your behalf.
The account manager has significant experience with IFTA returns, which means you can be reassured that your return is completed accurately and promptly.
Purcell has an online portal and easy to upload forms which are sent to your company before important IFTA filing dates. Your IFTA account manager sends you reminders and makes sure you never file a late return.
Make an appointment today click here to discuss hiring your own IFTA management team for a low price.