IFTA, IRP, 2290, UCR

---

Understanding the International Fuel Tax Agreement

• IFTA requires carriers to keep standardized records of fuel usage and the miles traveled in each jurisdiction while operating within member regions.
• An agreement involving the 48 contiguous U.S. states and Canadian provinces, excluding Alaska, Hawaii, the District of Columbia, Northwest Territories, Nunavut, and Yukon Territory.
• The agreement requires commercial carriers to pay fuel taxes based on the miles driven in each state or province, ensuring that each jurisdiction receives a fair portion of revenue for roads and transportation. Traditionally, fuel taxes have funded transportation projects. The first fuel taxes in 1919, along with the 1-cent gas tax established in 1933, were introduced to help balance the federal budget and finance public works to stimulate the economy. In 1956, it was determined that fuel tax revenues should go toward the newly created Highway Trust Fund to support the expanding Interstate System and highways.
• Under the IFTA agreement, qualified motor carriers can obtain an IFTA license for their vehicles, enabling them to travel through other IFTA jurisdictions and file a single quarterly fuel tax return in their base jurisdiction for fuel usage. Without IFTA registration, carriers must follow the fuel tax reporting rules of each jurisdiction they travel through, which may involve buying fuel trip permits. IFTA is a key aspect of fleet compliance, along with the ELD mandate and Hours of Service regulations.

You can also visit the official IFTA, Inc. website for tax rates by state and other resources: IFTACH.org.

The IFTA Reporting Process – Must file even if there is no activity!!!

Under IFTA, commercial carriers are required to maintain detailed records of miles driven, fuel purchased, and fuel taxes paid in each state or province their vehicles operate in. These records are submitted quarterly to the carrier’s base jurisdiction for review, which then determines whether the carrier owes taxes or is entitled to a credit. Due to the complexity of tax allocation, IFTA, along with the International Registration Plan (IRP), manage the process and offer support and guidance to states and provinces in administering their programs.

Do I Need an IFTA Licence?

Yes, you likely need an IFTA (International Fuel Tax Agreement) license if your business involves operating a qualifying vehicle across state or provincial borders for commercial purposes. You will need an IFTA license if:

1. You operate in more than one jurisdiction: IFTA applies to motor carriers that travel across multiple states or Canadian provinces.

2. Your vehicle meets the following criteria:

   – A vehicle with two axles and a gross vehicle weight (GVW) exceeding 26,000 pounds.

   – A vehicle with three or more axles, regardless of weight.

   – Any vehicle used in combination (like a truck and trailer) with a combined weight exceeding 26,000 pounds.

Benefits of an IFTA License:

– It simplifies fuel tax reporting by allowing you to file a single tax return covering all the jurisdictions where your vehicles operate, rather than having to deal with multiple tax authorities.

If your operations stay within a single state or province, or if your vehicles are below the weight thresholds, you may not need an IFTA license. Always check the specific regulations in your jurisdiction.

IFTA Exemptions

IFTA offers several vehicle, fuel, and distance exemptions, but these exemptions differ across jurisdictions. For instance, recreational vehicles, farm-plated vehicles, school buses, tow trucks, and government-owned vehicles are exempt in some states or provinces, but not in others. Additionally, biodiesel was listed as an IFTA exemption in 2017. You can find the complete list of IFTA exemptions on the International Fuel Tax Association’s website.

IFTA Fuel Tax Reporting and Due Dates

Under the International Fuel Tax Agreement (IFTA), carriers must report fuel taxes quarterly. Each quarter, you are required to file a report detailing fuel purchases and miles traveled in each jurisdiction where your vehicle operated. Here’s a breakdown of the due dates for filing 

IFTA reports:

1. 1st Quarter (January – March): Due by April 30

2. 2nd Quarter (April – June): Due by July 31

3. 3rd Quarter (July – September): Due by October 31

4. 4th Quarter (October – December): Due by January 31 of the following year

Timely reporting is crucial to avoid penalties and interest charges. When filing, you calculate how much fuel tax is owed or if a refund is due based on the fuel used and miles traveled in each IFTA jurisdiction.

What Are the Consequences for Non-Compliance with IFTA?

Penalties are imposed for failing to comply with IFTA regulations or filing late. While each jurisdiction has its own rules, many follow a common framework. For instance, California and New York both impose a penalty of either $50 or 10% of the total tax due if you miss the filing deadline, fail to file a return, or don’t pay the amount owed. In Texas, the rule extends further, stating that if tax non-payment is due to fraud, the penalty can be doubled to twice the amount of tax owed.

Traveling through an IFTA jurisdiction without a permit may result in fines, penalties, or citations, depending on local laws. In California, this penalty can range from $100 to $500.

Dreaded IFTA Auditing and annoying Letters

The dreaded IFTA audits and frustrating letters refer to the anxiety-inducing process of being audited for compliance with IFTA regulations, along with receiving official notices or reminders that can be bothersome for carriers. These audits can be stressful, as they require thorough record-keeping and can result in penalties if discrepancies are found.

Each IFTA member jurisdiction is required to audit 3% of its licensed carriers annually to verify compliance and ensure accurate tax payments. Though the idea of an IFTA audit might be stressful for some, these audits play a vital role in maintaining proper tax reporting and fairness.

Of the 3%:

25% of audits must involve high-distance accounts

15% of audits must involve low-distance accounts

What is IRP? IFTA vs. IRP

 What is IRP?

The International Registration Plan (IRP) is a registration reciprocity agreement among the U.S. states, the District of Columbia, and Canadian provinces. It allows commercial vehicles to be registered in multiple jurisdictions with a single license plate and registration fee. The fees are distributed to the states or provinces based on the miles traveled in each jurisdiction, ensuring that vehicle operators contribute to the road maintenance funds of the places where they drive.

IFTA vs. IRP

Purpose:

• IFTA (International Fuel Tax Agreement) focuses on fuel tax collection and distribution for commercial vehicles operating in multiple jurisdictions. It simplifies the reporting of fuel taxes for carriers that travel across state or provincial borders.
• IRP (International Registration Plan) deals with the vehicle registration and apportioned fees based on the distance traveled in each participating jurisdiction.

What They Cover?

• IFTA covers fuel taxes. It requires carriers to file quarterly reports detailing fuel usage and mileage to ensure that fuel taxes are fairly distributed across the jurisdictions where the vehicle operates.
• IRP covers vehicle registration fees. It ensures that fees are distributed according to the miles driven in each state or province, contributing to road maintenance and infrastructure costs.

Key Differences:

– IFTA focuses on fuel usage and taxation, while IRP is about vehicle registration and fee allocation.

– IFTA involves quarterly tax filings, whereas IRP requires annual vehicle registration renewals.

In short, IFTA ensures correct fuel tax payments, while IRP handles fair distribution of registration fees for commercial vehicles across jurisdictions. Both are essential for carriers operating interstate or internationally.

Data retention / Record keeping by type of document

• Weight-Mile/Distance Tax – Three (3) years 
• IRP – Five (5) years 
• IFTA – Four (4) years 
• Income Tax – Seven (7) years

IFTA vs. Weight-Distance Taxes

IFTA (International Fuel Tax Agreement) and weight-distance taxes are two distinct methods used by states to collect taxes from motor carriers (commercial trucks) that operate across state lines. Here’s a breakdown of the key differences:

1. IFTA (International Fuel Tax Agreement):

• – Purpose: IFTA is designed to simplify fuel tax reporting for motor carriers that operate in more than one jurisdiction (U.S. states and Canadian provinces). Instead of filing fuel taxes in every state or province a truck operates in, carriers file a single quarterly fuel tax return with their base jurisdiction (state/province).

– How It Works: 

  – Carriers report the total miles driven in each participating jurisdiction and the total fuel purchased.

  – Fuel taxes are then calculated based on the fuel consumption and miles driven in each jurisdiction.

  – If more fuel tax is owed than what was paid at the pump, the carrier pays the difference. If they paid more than owed, they get a refund or credit.

– Participating Jurisdictions: All U.S. states (except Alaska and Hawaii) and most Canadian provinces participate in IFTA.

– Advantages:

  – Simplifies tax reporting for interstate carriers.

  – Reduces the administrative burden of reporting to multiple states.

  – Ensures fair distribution of fuel tax revenue to the states where miles are driven.

2. Weight-Distance Taxes:

• – Purpose: Weight-distance taxes are based on the weight of the truck and the miles driven in a particular state. Unlike IFTA, these taxes are imposed directly by certain states, and the carrier pays based on the vehicle’s gross weight and the miles traveled within that state.

• – How It Works:

  – Carriers report the total miles driven in the state and pay a tax rate that is calculated based on the truck’s weight and distance traveled.

  – These taxes are separate from fuel taxes and are imposed on top of any fuel tax obligations.

States that Implement Weight-Distance Taxes: Only a few states currently have weight-distance taxes, such as:

  – New York, Kentucky, New Mexico, Oregon, and Connecticut (work in progress)

– Advantages:

  – Ensures that heavier trucks, which cause more wear and tear on roads, contribute more to road maintenance.

  – Tax burden is based on actual road usage and vehicle size.

Key Differences:

– Tax Base: IFTA is a fuel tax, while weight-distance taxes are based on the truck’s weight and miles driven.

– Scope: IFTA is a multistate agreement covering all participating jurisdictions, while weight-distance taxes are state-specific.

– Reporting: IFTA simplifies tax reporting for fuel, whereas weight-distance taxes require separate reporting to each state that imposes them.

In summary, IFTA simplifies fuel tax reporting across multiple jurisdictions, while weight-distance taxes impose a tax based on a truck’s weight and distance traveled in certain states. Carriers may be subject to both depending on their operations.

Fuel Tax Breakdown

Fuel tax breakdown refers to the different types of taxes imposed on fuel, which can vary by jurisdiction and type of fuel. Here’s a general overview of how fuel taxes are structured:

1. Federal Fuel Taxes:

– Gasoline: 18.4 cents per gallon.

– Diesel Fuel: 24.4 cents per gallon.

– Special Fuels (e.g., Liquefied Petroleum Gas – LPG): Varies by type, but generally aligned with diesel fuel rates.

These federal taxes are collected by the Internal Revenue Service (IRS) and are used to fund the Highway Trust Fund, which supports federal transportation infrastructure.

2. State Fuel Taxes:

Each state imposes its own fuel taxes, which can include:

– Excise Taxes: Charged per gallon of fuel. The rates vary by state and fuel type. For example, a state may charge 30 cents per gallon on gasoline and 35 cents per gallon on diesel.(Ex. California: 77.0 cents per gallon, Pennsylvania: 75.8 cents per gallon, Ohio: 39.5 cents per gallon, Oklahoma: 19.0 cents per gallon)

– Sales Taxes: Applied as a percentage of the price per gallon. Some states have sales tax applied to fuel, which can fluctuate with fuel prices.

– Environmental Taxes: Additional taxes to fund environmental initiatives related to fuel use, such as emissions control programs or clean-up funds.

3. Local Taxes:

Some local jurisdictions impose additional fuel taxes. These can include:

– City or County Fuel Taxes: Extra charges applied at the local level, often used to fund local transportation projects or road maintenance.

4. International Fuel Tax Agreement (IFTA):

For commercial carriers operating across multiple jurisdictions, IFTA helps streamline fuel tax reporting by:

– Collecting Fuel Taxes: Carriers pay fuel taxes based on the jurisdictions they travel through.

– Reporting Fuel Usage: Carriers file quarterly reports detailing miles traveled and fuel purchased in each jurisdiction.

– Calculating Taxes Due: Taxes are calculated based on fuel consumption and mileage in each participating jurisdiction.

5. Weight-Distance Taxes:

Some states use weight-distance taxes in addition to fuel taxes:

– Tax Basis: Based on the weight of the vehicle and the distance traveled in the state.

– Application: These taxes are charged separately from fuel taxes and are used to fund road maintenance based on the wear and tear caused by heavier vehicles.

6. Breakdown Example:

Gasoline in a State with the Following Tax Structure:

– Federal Excise Tax: 18.4 cents per gallon

– State Excise Tax: 30 cents per gallon

– State Sales Tax: 6% (applied to the retail price of the fuel)

– Total Tax per Gallon: $0.18 (federal) + $0.30 (state excise) + $0.06 (sales tax on price of fuel)

Diesel in the Same State:

– Federal Excise Tax: 24.4 cents per gallon

– State Excise Tax: 35 cents per gallon

– State Sales Tax: 6% (applied to the retail price of the fuel)

– Total Tax per Gallon: $0.24 (federal) + $0.35 (state excise) + $0.06 (sales tax on price of fuel)

Fuel tax rates and structures can be complex and vary widely by location (50 states in US). It’s important for businesses and consumers to stay informed about the specific taxes applicable in their areas to ensure compliance and accurate tax reporting.

The International Fuel Tax Agreement (IFTA) simplifies fuel tax reporting for motor carriers operating across multiple U.S. states and Canadian provinces. Each state has its own IFTA portal where carriers can file their quarterly fuel tax returns.

For example:

• Washington offers IFTA services through its Department of Licensing, allowing carriers to file reports and manage fuel tax payments (WA Department of Licensing).
• Iowa provides a dedicated portal for IFTA filings, offering resources for new applications, quarterly returns, and other administrative processes​ (iowadot).
• California requires online quarterly filings for all registered IFTA vehicles and includes additional guidelines like fuel tax surcharges and tax-exempt miles (CA Tax Dept).

---

Here are some helpful tips and tricks for managing trucking taxes, particularly :

• Leased Truck 30-Day Rule for leased truck drivers and owner-operators: If you’re working under a lease but leave within 30 days, you are responsible for filing your own IFTA (International Fuel Tax Agreement) reports.
• Bulk Diesel Purchases: Diesel fuel is written off as it’s used, not when purchased. Keep this in mind when tracking expenses.
• IFTA License and IRP Plate Renewals: Always check with your state’s DMV for the deadlines and opening dates for IFTA license and IRP (International Registration Plan) plate renewals. Some states offer automatic renewal if there are no suspensions, cancellations, or missed reports. However, any revocation or Out of Service violations can affect the renewal process.
• Closing IFTA Accounts: If you stop driving interstate or close your business, be sure to close your IFTA account, as reports are required even if your truck isn’t in use. Failing to close your account can result in fines, surcharges, and audits initiated by the state.
• Data Management: ELD (Electronic Logging Device) providers (tracking miles) and fuel card companies (purchase records) do not store your data indefinitely. Make it a habit to download and save this information for at least four years. Doing so could save you thousands in potential audit fees and compliance issues. Also, always keep proof of payment, as some states have long record-keeping periods or may not provide easy access to old records when needed.
• Manual Tracking of Miles: If you manually track miles, you are required to maintain both a trip report log and a separate hours of service log as mandated by DOT. Keep both as distinct records.
• IFTA Audits: If an audit finds no discrepancies, you’ll receive a “no action” report, allowing you to continue your business smoothly. If discrepancies are found, you can either agree to pay or dispute the findings with the auditor or in court.

These small actions can help you stay compliant and avoid costly mistakes in managing trucking taxes.

---

A Fuel Tax Excise Surety Bond is a financial guarantee required by certain states or federal agencies from businesses that sell, distribute, or transport fuel. This bond ensures that fuel distributors, suppliers, or carriers will comply with applicable tax laws and pay the appropriate fuel taxes on time.

Purpose of the Fuel Tax Excise Surety Bond:

• Tax Compliance: The bond guarantees that fuel-related businesses will collect, report, and remit fuel excise taxes properly to the relevant tax authority.
• Protection: It protects the government against financial losses due to non-payment, underpayment, or fraudulent reporting of fuel taxes.
• Legal Requirement: Many states require this bond as a prerequisite for issuing a fuel tax license or permits for businesses involved in the sale, distribution, or transportation of motor fuels.

Who Needs a Fuel Tax Excise Surety Bond?

Businesses involved in the fuel industry may need this bond, including:

• Fuel distributors and wholesalers
• Fuel importers/exporters
• Trucking companies and other businesses that transport fuel across state lines
• Gas stations
• Bulk fuel sellers

How the Bond Works:

• Principal: The fuel-related business (the entity required to obtain the bond).
• Obligee: The government agency (state or federal) that requires the bond to ensure tax compliance.
• Surety: The bonding company that guarantees the principal’s tax obligations to the obligee.

If the fuel business fails to pay taxes or comply with the rules, the government may file a claim against the bond to recover unpaid taxes. The surety company will pay the claim, but the business (principal) is then responsible for reimbursing the surety.

Why the Fuel Tax Excise Bond is Important:

1. Avoiding Penalties: The bond helps businesses avoid penalties and legal consequences for non-compliance with fuel tax regulations.
2. License and Permitting: It is often a requirement for obtaining necessary operating licenses, like IFTA (International Fuel Tax Agreement) permits or fuel distribution licenses.
3. Protecting the Business: By ensuring tax compliance, it protects the business from further liabilities that could arise from fuel tax disputes or audits.

The bond amount and requirements vary by state, so it’s crucial for businesses involved in fuel transportation or sales to confirm the specific bonding requirements of their jurisdiction.

---

The process of calculating and submitting IFTA tax forms, which varies by state, involves several key steps:

• Miles Traveled: You need to report the total number of miles driven in each jurisdiction.
• Fuel Purchased: Report the total fuel purchased and consumed in each jurisdiction as part of the fuel tax reporting.
• Tax Calculation: Calculate the fuel taxes owed based on the specific rates for each jurisdiction where the vehicle was operated.

IFTA reports are based on miles per gallon (MPG), typically ranging from 3 to 6.5–7, and occasionally up to 12. Any MPG figures that fall outside this range may indicate a calculation error. Other potential causes for such discrepancies could include inefficient fuel consumption (suggesting the truck may need maintenance) or fuel theft, pointing to possible misconduct.

IRP >>> Form 2290 >>> Vehicle Identification Number (VIN) Make and Model

IFT >>>IRP Account >>>Vehicle Identification Number (VIN) Make and Model

---

Violating IFTA (International Fuel Tax Agreement) regulations can result in significant legal and financial consequences, including criminal charges and prosecution, particularly for severe or intentional non-compliance. Here’s a breakdown of potential outcomes for IFTA violations:

1. Fines and Penalties

• Late Filings or Non-Filings: If you fail to file IFTA returns on time, you may incur late fees, penalties, and interest on unpaid taxes. These penalties can accumulate over time and become substantial.
• Underpayment of Taxes: If the taxes owed are not fully paid, you can be subject to additional fines and interest charges.

2. License Suspension or Revocation

• Non-compliance with IFTA regulations, including failure to file reports, pay taxes, or submit payments, can lead to suspension or revocation of your IFTA license. This means you would be prohibited from operating your fleet across state lines until compliance is restored.

3. Criminal Charges for Fraud or Intentional Violations

• Tax Evasion: Deliberately underreporting miles or fuel purchases, falsifying records, or attempting to avoid paying taxes can lead to tax evasion charges. Tax evasion is a serious criminal offense and can result in significant fines, prosecution, and imprisonment.
• Fraud: Submitting false information or falsified documents in an attempt to avoid paying IFTA taxes or to claim refunds unlawfully is considered fraud. This can lead to criminal prosecution, especially if the fraudulent activity is widespread or intentional.

4. Civil and Criminal Prosecution

• Civil Penalties: In cases of non-compliance, the state may initiate civil action to recover unpaid taxes, penalties, and interest. This could involve property liens or garnishment of wages.
• Criminal Prosecution: In cases of egregious or repeated violations, especially those involving fraud or tax evasion, criminal prosecution may be pursued. Conviction for IFTA fraud can result in:
• Jail time
• Hefty fines
• Permanent revocation of the IFTA license
• Criminal record that affects your ability to operate in the transportation industry

5. Audits and Investigations

• Audits: If discrepancies or suspicious activity are discovered, an IFTA audit may be triggered. If the audit uncovers fraudulent or illegal practices, it could lead to criminal investigations.
• Investigations: Intentional misreporting or fraudulent activity could result in criminal investigations by state or federal authorities, leading to formal charges.

6. Examples of Criminal Violations

• Failure to Pay Taxes: Failing to remit the proper amount of fuel taxes can result in prosecution for tax evasion.
• Falsified Reports: If an individual or company submits falsified mileage or fuel reports, they could face charges of fraud.
• Operating Without a License: Continuing to operate after an IFTA license has been revoked or suspended may result in additional legal action, including criminal charges.

In summary, while many IFTA violations result in civil penalties, fines, and suspensions, serious infractions—such as tax evasion or fraud—can lead to criminal charges and prosecution. It is crucial for trucking companies and owner-operators to maintain accurate records and adhere to IFTA regulations to avoid these severe consequences.

An IFTA (International Fuel Tax Agreement) license is a crucial document that must be carried in the truck at all times for vehicles operating across state or provincial lines in IFTA jurisdictions. This ensures compliance with fuel tax reporting requirements. Here’s a breakdown of key points regarding the IFTA license in a truck:

1. Carrying the IFTA License

• Mandatory Requirement: A copy of the IFTA license must be kept in the truck, typically in the cab, to provide proof of registration when requested by law enforcement or during inspections.
• Official Copy: Make sure it’s an official copy of the license, as failure to present it during a roadside check or inspection may result in fines or penalties.

2. IFTA Decals

• In addition to the license, IFTA decals are required to be affixed to the truck, one on each side of the vehicle. These decals visually indicate that the vehicle is registered for IFTA fuel tax reporting.

3. Penalties for Not Carrying the License

• Fines: If the IFTA license is not present in the truck, drivers may be fined or cited for non-compliance.
• Out of Service: In some cases, the vehicle may be placed “out of service” until the proper documentation is provided, leading to delays in operations.

4. Electronic Copies

• While some states may allow electronic copies of the IFTA license, it’s always a good practice to carry a physical copy to avoid any issues with enforcement officers, as acceptance of digital versions can vary by jurisdiction.

5. Renewal of IFTA License

• Be sure to renew the IFTA license annually and update it in the truck. Renewal periods vary by state, so tracking the renewal deadlines is important to avoid any lapses.

In summary, having a valid and current IFTA license in the truck is essential for compliance. Failure to carry the license or display the proper IFTA decals can result in fines or operational interruptions.

An IRP (International Registration Plan) license, also known as an apportioned registration, must also be carried in the truck for vehicles that operate across multiple states or Canadian provinces. The IRP license helps ensure proper distribution of registration fees based on the miles traveled in each jurisdiction.

Key Points about the IRP License:

1. Carrying the IRP License:

• Mandatory Requirement: A copy of the IRP cab card (registration) must be kept in the truck at all times. This card provides proof that the vehicle is legally registered under the IRP for the jurisdictions it operates in.
• Cab Card Details: The cab card includes essential information such as the registered vehicle’s plate number, VIN, and the specific states or provinces where the truck is registered to operate.

1. IRP Plate:

• The vehicle must also display an IRP apportioned license plate that signifies the truck is properly registered for multiple jurisdictions.
• This plate allows the vehicle to travel freely between IRP member jurisdictions, avoiding the need for separate registrations in each state or province.

1. Penalties for Not Carrying the IRP License:

• Fines: If the IRP cab card is not present in the truck during an inspection or stop, law enforcement may issue fines or citations for non-compliance.
• Out of Service: In some cases, failure to produce the IRP registration may result in the vehicle being placed “out of service,” causing delays and additional costs until proper documentation is provided.

1. Renewal of IRP License:

• The IRP license must be renewed annually, and the updated IRP cab card should be kept in the truck as soon as it’s issued. Renewal periods vary by state, so keeping track of expiration dates is critical.
• Failure to renew the IRP registration on time can lead to legal issues, including fines, and may result in being prohibited from operating in certain jurisdictions.

1. Electronic Copies:

• Similar to the IFTA license, while some states or provinces may accept electronic versions of the IRP cab card, it’s best to have a physical copy on hand to avoid potential issues during inspections.

Summary:

Carrying a valid IRP cab card in the truck is essential for vehicles that operate in multiple states or provinces. Failure to keep this document in the truck can result in fines, operational delays, or being placed out of service. Make sure the IRP registration is current and easily accessible during inspections to maintain compliance with interstate travel regulations.

---

IRP and IFTA Audits

IRP (International Registration Plan) and IFTA (International Fuel Tax Agreement) audits are commonly conducted together and are often handled by the same auditor. Since both IRP and IFTA deal with mileage and fuel usage in multiple jurisdictions, combining these audits makes the process more efficient for both the trucking company and the tax authorities. Here’s an overview of how these audits typically work:

Why IRP and IFTA Audits Are Held Together:

1. Similar Record-Keeping Requirements: Both IRP and IFTA require tracking of miles traveled and fuel purchased across jurisdictions, making it practical to audit these records at the same time.

• IRP: Focuses on how registration fees are apportioned based on miles traveled in each jurisdiction.
• IFTA: Focuses on fuel tax reporting, ensuring fuel taxes are paid based on fuel consumption across different jurisdictions.

1. Same Documentation: The same trip logs, mileage records, and fuel receipts are required for both IRP and IFTA audits, so reviewing them simultaneously minimizes disruption to the business and avoids duplicative work.

• Common records include:
  • Distance records (mileage logs)
  • Fuel receipts and fuel purchase records
  • Trip reports
  • Vehicle records

1. One Auditor for Both: Many states and provinces use the same personnel to conduct both IRP and IFTA audits. This reduces redundancy and ensures a comprehensive review of all relevant data in a single process.

What to Expect in an IRP/IFTA Combined Audit:

• Preparation: Auditors will request various documents like trip logs, odometer readings, fuel purchase receipts, and detailed records of mileage by jurisdiction. You should maintain these records for a minimum of 4 years, as required by both IRP and IFTA.
• Consistency Check: Auditors will cross-check mileage records reported for IRP and fuel purchases recorded for IFTA to ensure consistency. Any discrepancies, such as unusually high or low miles per gallon (MPG) figures, will be investigated.
• Audit Findings:
• If the records are accurate, the auditor may issue a “no action” report, allowing you to continue your operations without further changes.
• If discrepancies are found, you may be asked to either agree to corrections and pay additional taxes or penalties, or challenge the findings through a formal dispute process.

Benefits of Combined IRP/IFTA Audits:

• Streamlined Process: Conducting both audits at the same time reduces the number of audits and minimizes business interruptions.
• Cost-Effective: It’s more efficient for both the trucking company and tax authorities to have one auditor review all relevant documents rather than scheduling separate audits for IRP and IFTA.
• Comprehensive Review: Since both audits rely on the same data, a combined review ensures consistency in the reporting of mileage and fuel consumption, reducing the risk of future compliance issues.

In summary, IRP and IFTA audits are often performed together because they share many of the same data requirements, making the audit process more efficient for both the company and the auditor. Proper record-keeping and ensuring consistency between mileage and fuel reporting can help ensure a smooth audit process.

---

An audit for IFTA (International Fuel Tax Agreement) or IRP (International Registration Plan) requires accurate, well-organized paperwork to demonstrate compliance with tax reporting and operational requirements. Proper documentation is essential for ensuring smooth audits and avoiding penalties. Below is a breakdown of the key paperwork you need to maintain for IFTA/IRP audits, along with practical tips for staying compliant.

Key Paperwork to Maintain for Audits

1. Trip Reports (Distance and Mileage Records)

• Purpose: To track and report the miles traveled in each jurisdiction.
• What’s Needed:
  • Start and end location
  • Date of the trip
  • Odometer readings (beginning and end)
  • Routes taken (including state lines crossed)
  • Total miles traveled in each state or province
• Retention: Keep records for at least 4 years.
• Tip: Ensure these reports are detailed and consistent with your ELD and fuel records.

2. Fuel Receipts and Purchase Records

• Purpose: To provide proof of fuel purchases and tax-paid fuel.
• What’s Needed:
  • Date and location of fuel purchase
  • Gallons/liters purchased
  • Seller’s name
  • Price per gallon/liter
  • Fuel type (diesel, gas, etc.)
• Retention: Keep these for at least 4 years, ensuring they match fuel card reports.
• Tip: Use digital copies alongside physical ones for quick retrieval during audits.

3. Fuel Card Statements/Purchase Reports

• Purpose: To provide a clear summary of all fuel purchases made using a company fuel card.
• What’s Needed:
  • Cardholder’s name
  • Date, location, and amount of fuel purchased
  • Detailed transaction reports from the fuel card company
• Tip: Download and save monthly reports, as fuel card companies may not keep these records indefinitely.

4. Toll Receipts

• Purpose: To verify miles traveled, especially on toll roads, and to ensure accurate reporting of trip routes.
• What’s Needed:
  • Date, location, and toll amount
  • Vehicle identification
• Tip: Keep both physical and digital toll receipts, and cross-reference them with trip reports for consistency.

5. Decal Assignment Paperwork

• Purpose: To show proof of decal assignment for IFTA compliance.
• What’s Needed:
  • Documentation that IFTA decals were properly assigned to each vehicle
  • Date of issuance and decal number
• Tip: File these with other IFTA-related documents and make sure they match the vehicles’ operating records.

6. Electronic Logging Device (ELD) Reports

• Purpose: To track hours of service and miles traveled electronically.
• What’s Needed:
  • Date and time of each trip
  • Start and stop times
  • Jurisdictional mileage reports (state-by-state breakdown)
  • Odometer readings
• Retention: ELD data should be stored for a minimum of 4 years for audit purposes.
• Tip: Regularly download and back up ELD data. ELD providers may not retain data indefinitely.

7. Quarterly IFTA Returns

• Purpose: To summarize and report fuel taxes owed for each jurisdiction.
• What’s Needed:
  • Mileage and fuel purchases for each jurisdiction
  • Calculation of fuel tax liability or refunds
• Tip: Double-check the accuracy of your records before submitting the quarterly reports to avoid triggering audits.

8. Annual Vehicle Inspection Reports

• Purpose: To verify that your vehicle meets safety and operational standards.
• What’s Needed:
  • Date of inspection and results
  • Repair records (if applicable)
• Tip: Keep inspection reports organized and in line with vehicle operation dates.

9. Proof of Payment (IFTA/IRP Taxes)

• Purpose: To show that all required taxes have been paid.
• What’s Needed:
  • Copies of payment confirmations for IFTA and IRP taxes
• Tip: Ensure all payments are well-documented, matching your quarterly IFTA filings and annual IRP registration.

Additional Compliance Tips

• Consistency Across Records: Ensure that all documents – including trip reports, fuel purchases, ELD data, and toll receipts – are consistent. Discrepancies can raise red flags during audits.
• Digitize Records: Maintain digital backups of all paper documents. This not only prevents loss but also ensures quick retrieval during an audit.
• Regular Record Checks: Schedule routine reviews of your paperwork (monthly or quarterly) to make sure everything is up to date and filed correctly.
• Audit Readiness Policy: Create a formal policy for downloading, storing, and organizing your records. This might include reminders for downloading ELD data, backing up fuel card statements, and verifying decal assignments.
• Retention Period: Retain all relevant records for at least 4 years, as this is the minimum required retention period for IFTA and IRP audits.
• Consult Professionals: Work with a specialized IFTA or IRP accountant or consultant to ensure that your documentation is complete and accurate.

Summary

Maintaining comprehensive audit paperwork, such as trip reports, fuel receipts, ELD data, toll receipts, and proof of IFTA/IRP compliance, is not just about “clicking buttons.” It’s about ensuring accurate record-keeping and avoiding penalties. By staying organized and keeping records up to date, you ensure a smooth audit process and reduce the risk of financial penalties or operational disruptions.

---

A trip permit and an IFTA license serve different purposes for fuel tax compliance in trucking:

• Trip Permit: A temporary permit that allows a vehicle to operate in a state or jurisdiction where it is not registered under IFTA. It is typically used by trucks that don’t regularly travel through that state and don’t have an IFTA license for that jurisdiction. It is valid for a short period (e.g., 3-10 days).
• IFTA License: A permanent fuel tax registration that allows a truck to operate across multiple states or provinces that are part of the IFTA agreement. It simplifies fuel tax reporting by requiring the company to file a single quarterly report, covering all jurisdictions.

In short, a trip permit is a short-term solution, while an IFTA license is for ongoing, multi-jurisdictional operations.

---

How IFTA Works – system of netting fuel taxes

The International Fuel Tax Agreement (IFTA) operates on a system of netting fuel taxes paid against miles driven across participating jurisdictions. Here’s a brief explanation of how this works:

1. Netting Concept:

• Fuel Taxes Paid: IFTA allows motor carriers to pay fuel taxes based on where they operate, rather than where they purchase fuel. This means that if a carrier pays fuel tax in one jurisdiction but drives significant miles in another, the taxes are adjusted accordingly.
• Miles Driven: The miles driven in each jurisdiction are tracked to determine the appropriate fuel tax owed or refunded. Carriers calculate the total miles traveled in each jurisdiction and the fuel consumed during those trips.

1. Quarterly Reporting:

• Carriers must file a quarterly IFTA tax return, summarizing total miles traveled and fuel purchased in each jurisdiction.
• The return calculates the total fuel taxes owed based on the rates of each jurisdiction, allowing for credits or refunds for fuel taxes already paid in states where the carrier operates.

1. Tax Settlement:

• If a carrier has paid more in fuel taxes than owed based on mileage, they may receive a refund. Conversely, if they owe more tax than they’ve paid, they must remit the difference to the appropriate jurisdictions.

Summary

In essence, IFTA facilitates a streamlined approach to fuel tax reporting and payments by netting the fuel taxes paid against the miles driven in various jurisdictions. This system simplifies compliance for trucking companies operating across state lines, ensuring they pay the correct amount of tax based on actual use.

---