Top 3 IFTA FAQs You Should Know

Motor carriers regularly need clarification on the International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA).

The programs affect interstate carriers that operate in the lower 48 United States and Canadian provinces. Each state or province operates as its own jurisdiction. IRP and IFTA both apply to the same kinds of vehicles, but as is often the case with regulations, there are some exceptions.

Additionally, IFTA and IRP involve extensive recordkeeping, including new rules effective January 1, 2024. We're talking about years of preserving fuel receipts and mileage data to satisfy the requirements of both programs.

Let’s look at the new rules and some FAQs about IFTA that we commonly receive from our customers.

Beginning January 1, 2024, new rules under both programs apply to distance records produced by vehicle tracking systems, including:

• Electronic logging devices (ELDs), and
• Global positioning systems (GPS).

Carriers must stay current with these changes since mileage records must contain specific elements to be considered adequate in an audit.

The new rules specify a minimum frequency for pings. This means that, when the vehicle’s engine is on, vehicle-tracking systems that utilize latitudes and longitudes must now create and maintain a record at a minimum of:

• Every 15 minutes to comply with IRP requirements, and
• Every 10 minutes to comply with IFTA requirements.

In addition, the mileage data must contain the following elements:

• Vehicle identification number or vehicle unit number,
• The date and time of each system reading,
• The latitude and longitude to a minimum of 4 decimal places of each system reading, and
• The odometer reading from the engine control module (ECM) of each system reading. If no ECM odometer is available, a beginning and ending dashboard odometer or hubometer for the trip will be acceptable.

Electronic file format has also been specified. The data must be accessible in an electronic spreadsheet format such as XLS, XLSX, CSV, or Delimited text file. Formats from a vehicle tracking system that provide a static image, such as PDF, JPEG, PNG, or Word, are not considered accessible to verify distances.

The bottom line is that carriers using ELDs and GPS for distance tracking should review their recordkeeping practices and communicate with their service providers to ensure the new standards are in place on January 1, 2024.

Vehicles that qualify for IRP and IFTA share the same characteristics. The vehicle needs to meet one of the following criteria:

• Has two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds;
• Has three or more axles regardless of the weight of the power unit; or
• Is used in combination with a trailer and the weight of such combination exceeds 26,000 pounds gross vehicle weight or registered gross vehicle weight.

When paying IFTA, each fleet’s vehicle miles and fuel must be reported to the base jurisdiction.

Carriers are determining how much fuel tax they owe by:

1. Recording total miles traveled in each jurisdiction and total gallons of fuel purchased in each jurisdiction to determine the fleet miles-per-gallon (MPG);
2. Compiling mileage in each jurisdiction for the entire quarter;
3. Calculating total gallons used in each jurisdiction during the quarter (miles divided by the MPG);
4. Subtracting from the total gallons burned in each jurisdiction in Step 3 to determine “net” taxable gallons (if fuel was purchased in a jurisdiction); then
5. Multiplying the net taxable gallons total by the tax rate in each jurisdiction to learn the amount owed or the amount to be credited on the IFTA return.

If more fuel is purchased than consumed in a jurisdiction, the carrier will have credit on the return for that jurisdiction. Tax is owed if less fuel is purchased than consumed in a jurisdiction. The credits and debits are calculated and summed on the return, so carriers have only one payment to make to — or one credit to receive from – their base jurisdiction.

Some states cost more to operate in than others. Like with IRP and registration fees per state, each state has a different fuel tax rate. So, taxes can change significantly depending on the states traveled in.

Need more details? Download the Top IFTA and IRP FAQs Whitepaper. It’s filled with top FAQs that fleets ask, including:

• Should I register my vehicle with IRP if it weighs less than 26,000 pounds?
• I rarely leave my jurisdiction. Is it cheaper to apportion or buy trip permits?
• How long do I have to retain my records for IFTA and IRP?
• What records do I need to keep?

Or talk with a compliance specialist about how the Encompass® Fleet Management System can automate IFTA and IRP reporting and recordkeeping, saving you time and improving compliance and accuracy, including the new 2024 changes!