IFTA (an International Fuel Tax Agreement) is one of the main drivers’ permissions. Company fleet managers track these compliance regulations, but anyway drivers should be well informed too. Experts from a freight dispatch service agency gathered the necessary information about IFTA for truckers.
How IFTA Helps Truckers?
IFTA is a contract between 48 states of the US and 10 provinces of Canada. It lets OTR truckers pay for gasoline with only one tax license instead of multiple in every single state. Before this agreement was confined, drivers had to receive a license in every state where they stayed. Now, this single license helps businesses in many ways:
- saves time and fuel on visiting permitting centers;
- eliminates clerical work for fleets;
- saves a great deal of money for businesses every year.
How Is IFTA Applied?
It is not only useful for companies but states too. It compensates for the usage of their roads by heavyweights. Companies must obtain this license if they are operating in two or more jurisdictions and if they are based in one of these 48 states.
Remember that ‘qualified motor vehicles’ that transport people or freight include trucks that weigh more than 26,000 pounds, or trucks with a gross vehicle weight of 26,000 or more and two axles, or any truck with three axles.
These kinds are known as heavy transporters and should have an IFTA license.
How To Calculate IFTA?
IFTA requires calculating tax reports, and here is how to do it.
- Record miles you travel in each state.
- Count the fuel you’ve bought and confirm it by original paychecks.
- Count the fuel you’ve spent in each state.
- Using the previous metrics, calculate how much taxes should be given to each province or state.
- Hold back taxes you’ve already paid (use fuel paychecks) and get the final number of dollars you must pay.
If calculations seem to be difficult, use truck driver accounting services to avoid human error.