Last week, I was delighted to be a guest on Road Dog News with Mark Willis. In the two-hour segment, we dived into the International Fuel Tax Agreement (IFTA), the International Registration Plan (IRP), and Electronic Logging Devices (ELDs). Joining me were:
- Carmen Martorana, Executive Director, International Fuel Tax Association, Inc.
- Tim Adams, CEO, IRP, Inc.
What IFTA is and how it helps
IFTA is a fuel tax regulation encompassing all 48 states in the contiguous United States and ten Canadian provinces and territories. It is a streamlined process for reporting fuel use for motor carriers operating in more than one jurisdiction. All carriers participating in IFTA receive a license that is good in all 58 jurisdictions (the 48 states and ten provinces, combined), along with individual decals to be displayed on each of the vehicles in their fleet.
Every quarter, a motor carrier must submit a quarterly fuel tax report that includes information about fuel purchases and miles traveled in each state, province, and territory for the covered period. IFTA professionals review the report to determine the net fuel tax payable or refund due and redistribute taxes to the appropriate jurisdictions.
Since 1999, IFTA has simplified the fuel tax collection process. Previously, drivers who crossed state or provincial lines had to obtain permits and pay individual fuel tax amounts for each state or province they traveled in — a time-consuming and taxing process.
Motor carriers qualify for IFTA licensing if they own a commercial motor vehicle (CMV) with one of the following:
- Three or more axles
- Two axles and a gross vehicle weight of over 26,000 pounds
Any carrier meeting these criteria must have an IFTA license.
How IRP makes life easier
While IFTA is focused on fuel tax, IRP is focused on vehicle and license plate registration. It is a reciprocity agreement among the 48 contiguous United States, District of Columbia, and ten Canadian provinces and territories. IRP grants CMV registration across all jurisdictions.
Under IRP, jurisdictions can get their share of revenue by sharing fees based on the percentage of miles traveled by a registrant’s fleet in each member jurisdiction. The criteria to qualify for IRP are nearly identical to IFTA. Similar to IFTA, all carriers meeting these criteria must have an IRP license, most often referred to as “apportioned plates.”
IRP has introduced uniformity and consistency to the registration process for both the registrant and jurisdiction. Under the plan, motor carriers only need one license plate and one cab card obtained from the motor carrier’s “base state.” Once registered, motor carriers receive apportioned license plates, allowing their drivers to freely travel through participating jurisdictions based on the information disclosed on the cab card that must be retained within each vehicle and surrendered upon request of a safety official.
What you need to know about IFTA and IRP audits
Like many formerly in-person processes, IFTA and IRP audits somewhat halted at the beginning of the pandemic. Since then, both entities have adapted processes for virtual audits. It is imperative to maintain historical records, as most carriers will be audited at some point, and recordkeeping is essential in ensuring compliance.
Here are several flags that may trigger an audit:
- Miles per gallon (MPG) numbers that are too low or too high
- Tax-paid fuel purchases exceeding total fuel used
- Large fluctuations in historical records
Fortunately, there are additional solutions you can seek for enhanced recordkeeping and IFTA reporting.
Rest easy with the right solutions for your operation
An ELD maintains electronic records related to miles traveled within the various jurisdictions traveled by a driver. An ELD can be “IFTA-compliant,” but that does not necessarily mean it retains the information long enough to meet the record retention requirements for IFTA and IRP. For all audits, you need the ability to access your historical records for up to six years. Seek out robust ELD solutions to help meet these requirements, and speak to your ELD provider of choice to ensure your ELD provider can maintain those compliance records for a recommended six years.
Manual IFTA recordkeeping processes can also greatly hinder your operation. This would be counterproductive, given that participating in IFTA can bring many efficiencies to the way your teams work. To eliminate manual obstacles, consider utilizing enhanced IFTA technology solutions to automatically capture every mile driven per jurisdiction, retrieve tax information within 24 hours, and instantly import critical fleet data.
We hope this information was helpful this IFTA season! Here are some additional useful resources:
- Omnitracs support: Reach out to our dedicated support teams with your questions, and they’ll be happy to provide some helpful answers!
- International Fuel Tax Association website: Find lots of great information, and contact individual team members with your most pressing questions.
- IRP website: Learn more about IRP’s background, access staff listings, and gain helpful IRP resources.