IFTA Simplified: How a Bookkeeper Can Help Your Trucking Business
The International Fuel Tax Agreement (IFTA) is a cooperative agreement among U.S. states and Canadian provinces that simplifies the reporting of fuel used by motor carriers operating in multiple jurisdictions. By registering for IFTA, carriers can submit a single quarterly fuel tax return rather than dealing with individual state and provincial tax authorities.
Benefits of IFTA Membership
Simplified reporting: Carriers submit only one quarterly fuel tax return to their base jurisdiction.
Reduced paperwork: Eliminates the need for multiple fuel tax returns.
Fairer tax distribution: Ensures that fuel taxes are distributed equitably among jurisdictions.
Eligible Carriers and Vehicles
To qualify for IFTA registration in Alberta, a carrier must:
Operate one or more qualified motor vehicles based in Alberta or the Northwest Territories.
Travel to at least one other IFTA jurisdiction.
Allocate some income to Alberta for income tax purposes.
Have no outstanding IFTA obligations.
A qualified motor vehicle is typically a heavy-duty truck used for transporting people or property and meeting one of the following size and weight requirements:
Two axles and a gross vehicle weight or registered gross vehicle weight exceeding 11,797 kg (26,000 lbs.)
Three or more axles regardless of weight
A combination of vehicles with a combined weight exceeding 11,797 kg (26,000 lbs.)
IFTA and Recordkeeping Challenges
Despite the benefits, IFTA compliance can be complex. Many carriers struggle with:
Inaccurate mileage: Failure to record mileage when crossing borders or on specific routes.
Bulk fuel reconciliation: Difficulty tracking fuel purchases and usage.
Fuel type discrepancies: Mixing fuel between IFTA vehicles and TEFU vehicles.
These issues can lead to significant problems during IFTA audits.
Consequences of Non-Compliance
Operating a vehicle without proper IFTA registration can result in:
Trip permits: Carriers may need to purchase trip permits for each jurisdiction they enter.
Penalties and fines: Non-compliance can lead to significant financial penalties.
Operational disruptions: Audits and potential legal issues can disrupt business operations.
The Role of a Bookkeeper
A professional bookkeeper can help carriers navigate the complexities of IFTA by:
Maintaining accurate fuel and mileage records.
Reconciling fuel purchases and usage.
Staying updated on IFTA regulations.
Preparing and filing IFTA returns.
Assisting with audits.
By outsourcing IFTA management to a bookkeeper, carriers can reduce the risk of errors, penalties, and audits while focusing on core business operations.
Don't let IFTA compliance be a headache. Contact a professional bookkeeper today to streamline your fuel tax reporting.