What is IFTA and How Does It Impact Me?
In the United States, there are more than 3.5 million truck drivers moving freight from state to state.
If you’re a truck driver, plan to be, or are involved in the financial operations of a trucking company, IFTA is important. Before IFTA anywhere a trucker went they had to pay taxes on their fuel. Now the IFTA makes it easier to deal with the rigors of interstate commerce.
Here’s why IFTA is important to anyone involved in the trucking industry.
What Is the IFTA?
The IFTA is a single fuel permit which means taxes only have to be paid on that permit, not to each location where a trucker fuels up. It is an agreement between 48 states and ten provinces in Canada. Before the creation of the IFTA, each state and province had its own fuel permit.
The IFTA is a fuel tax collection and sharing agreement between the states and provinces. Having this agreement has cut down on a lot of hassle and fees that trucking companies once had to pay. It has saved the trucking industry millions of dollars.
Who Needs IFTA?
Any trucker that expects to do business in more than one state or province benefits from IFTA. Even bus drivers that plan to transport people between locations need IFTA. There are some definitions and requirements that relate to IFTA.
To qualify for an IFTA license the vehicle you use must:
- Have at least two axles
- Weigh over 26,000lbs
- Any vehicle with three or more axles
- Any vehicle that exceeds 26,000 lbs
Once you meet these requirements, you can apply for an IFTA license.
How to Get an IFTA License
To apply for an IFTA license, you’ll need to get a license in the state where your types of muscle pumping company or truck is based out of. To get this license you’ll have to fill out an application. If you move states, you’ll need to change the base state of your IFTA license.
Once you have submitted your application, and it has been accepted, you’re ready to move on. You’ll receive a temporary license online, and IFTA decals will be sent to you.
IFTA works because each jurisdiction collects the total taxes for fuel in their area. They then share that tax revenue with the other states or provinces. To keep all of this straight, you’ll be filing quarterly IFTA taxes.
This can become complicated, so a trucking accountant can come in handy during tax season. You’ll need to retain original receipts of all fuel you got and where you got it from. Also, the amount of miles traveled in each state or province is important.
All of this goes into the proper distribution of the tax money.
IFTA and You
The only states not in IFTA are Hawaii and Alaska. If you plan on doing business anywhere else in the United States or Canada you should see if IFTA can save you money. Don’t spend more time trying to follow regulations that you could be spending to make money.
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