What Is IFTA and Who Needs It?

IFTA stands for the International Fuel Tax Agreement. It simplifies the reporting and payment of fuel-use taxes for qualified motor vehicles operating in more than one participating jurisdiction.

Instead of obtaining a separate fuel-tax license and filing a separate return in every participating state or province, a carrier receives an IFTA license from its base jurisdiction and files one consolidated quarterly return.

IFTA does not create an additional fuel tax. It provides a system for distributing fuel taxes among jurisdictions based on where fuel was purchased and where the vehicle traveled. (DRIVE⁠)

Who Generally Needs an IFTA License?

A carrier generally needs IFTA credentials when:

  • It is based in an IFTA member jurisdiction.

  • It operates in two or more IFTA member jurisdictions.

  • It operates at least one qualified motor vehicle.

IFTA, Inc. states that a carrier based in a member jurisdiction and operating a qualified motor vehicle in two or more member jurisdictions should apply for an IFTA license. (IFTA, Inc.⁠)

What Is a Qualified Motor Vehicle?

A vehicle used, designed, or maintained to transport people or property generally qualifies when it:

  • Has two axles and a gross or registered gross vehicle weight exceeding 26,000 pounds;

  • Has three or more axles, regardless of weight; or

  • Is used in a combination with a combined gross or registered gross vehicle weight exceeding 26,000 pounds.

These qualification standards are reflected in official IFTA and state motor-fuel guidance. (Colorado Department of Revenue⁠)

What Must an IFTA Carrier Do?

An IFTA carrier generally must:

  • Maintain an active IFTA license.

  • Display two current IFTA decals on each qualified vehicle.

  • Keep a copy of the license in each qualified vehicle.

  • Track mileage traveled in every jurisdiction.

  • Maintain fuel purchase records.

  • File an IFTA return every quarter, including quarters with no operations when required by the base jurisdiction.

  • Pay any fuel-tax balance due.

  • Retain supporting records for the required period.

What Is Reported on an IFTA Return?

The return generally includes:

  • Total fleet miles.

  • Miles traveled in each jurisdiction.

  • Total fuel purchased.

  • Tax-paid gallons purchased in each jurisdiction.

  • Fleet fuel economy.

  • Taxable gallons allocated to each jurisdiction.

  • Tax due, tax credit, interest, or refund.

What If a Carrier Travels Interstate Only Occasionally?

A carrier that usually operates in one jurisdiction but occasionally travels into another may be able to purchase temporary fuel trip permits instead of maintaining an annual IFTA account. Requirements and permit costs vary by jurisdiction.