Motor Carrier Services Manual
WHAT IS "IFTA"?
The International Fuel Tax Agreement (IFTA) is an
agreement between jurisdictions to simplify the reporting of motor fuels taxes.
Under this agreement, one quarterly fuel use tax report is filed representing
miles traveled, fuel purchased and used, and taxes/credits due in each member
jurisdiction. The base jurisdiction then distributes the funds to each affected
jurisdiction according to information contained in the quarterly fuel use tax
reports. A complete listing of the IFTA jurisdictions can be found in appendix
B. Alaska,
HOW DO I DETERMINE MY BASE JURISDICTION?
Your base jurisdiction is determined by your answers to the following questions:
1. In what state/province do you have an established place of business?
2. Where do you maintain the operational control and operational records for your qualified motor vehicles? Where can you make the records available?
3. In what jurisdiction is your qualified motor vehicle(s) registered under the IRP?
Please remember that in order for a jurisdiction to be designated as the base jurisdiction, there must be some accrued travel in the jurisdiction by the qualified motor vehicles within the fleet.
QUALIFIED MOTOR VEHICLE
A qualified motor vehicle is a motor vehicle used, designed, or maintained for transportation of persons or property having:
1. Two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms; or
2. Having three or more axles regardless of weight; or
3. Is used in combination, when the weight of such combination exceeds 26,000 pounds, or 11,797 kilograms gross vehicle or registered gross vehicle weight.
Qualified Motor Vehicle does not include recreational vehicles unless they are used in conjunction with any business endeavor. Recreational vehicles are vehicles such as motor homes, pickup trucks with attached campers and buses when used exclusively for personal pleasure by an individual.
EXEMPT VEHICLES
In addition to the exemption for recreational vehicles
allowed by the IFTA Articles of Agreement, there may be vehicles that are exempt
from the motor fuels tax laws in the member jurisdictions. The following
vehicles are exempt in the State of
• Any motor vehicle owned and operated by any department, board, bureau, commission, or taxing area or other agency of the federal government;
• Any motor vehicle owned and operated by any department,
board, bureau, commission, or taxing area or other agency of the State of
• Any school bus operated by the State of
If you have a question regarding exempt vehicles in other member jurisdictions you must contact the jurisdiction.
Please see the list of jurisdictions and telephone numbers in appendix B.
LICENSE APPLICATION PROCEDURES
To receive IFTA credentials (license and decals), complete an IFTA license application form (MV:IFTA-1), and submit it to the MCS office. If any information is omitted from the license application, the application will be returned, thus delaying processing. Please see a sample of a completed application in appendix C.
Credentials will be issued provided all quarterly fuel tax
reports have been filed, and all liabilities have been paid. Upon approval of
the completed application, IFTA credentials will be mailed within thirty (30)
days. Temporary permits may be requested while waiting for the credentials to
be issued. A carrier will not be issued IFTA credentials from
POWER OF ATTORNEY FORMS
A Power of Attorney form must be completed annually if a licensee prefers a Reporting Service to fulfill its responsibility for filing tax returns, receiving confidential tax information, and paying liabilities. The filing of the Power of Attorney does not relieve the licensee of the legal obligation associated with the IFTA license. The licensee is ultimately responsible for the reporting and payment of taxes as well as acts of omissions of the Reporting Service. The Power of Attorney does not authorize the designee to sign the IFTA license application.
The application must be signed by the owner, all partners, or a corporate officer listed in the corporate charter. These individuals must be listed in item 10 on the application. Applications will be returned for improper signatures.
GRACE PERIOD
The IFTA license year is January 1 through December 31. IFTA allows carriers a two-month grace period (January and February) to display the renewal IFTA decals to all qualified motor vehicles in the fleet.
Carriers renewing credentials may operate with the new IFTA decals and license one month (December) prior to the effective date shown on the credentials. However, those carriers are responsible for filing a fourth quarter tax return for the previous license year, including the last month of the fourth quarter. Carriers must also have the current license year credentials visible.
ACCOUNT IDENTIFICATION NUMBER
The account identification number is determined by using the prefix designated for Alabama (AL) followed by the licensee’s nine (9) digit taxpayer identification number (TIN). For corporations, the TIN should be the Federal Employee Identification Number (FEIN) issued by the Internal Revenue Service (IRS). All business entities should have a FEIN. If a FEIN is not available, a Social Security Number (SSN) of the individual, owner or company officer will be used. The licensee must notify the Alabama MCS office in writing regarding any changes to the licensee’s TIN. The IFTA account identification number should be included in all correspondence submitted to the MCS Section.
IFTA LICENSE
A new IFTA license will be issued annually to each IFTA licensee. The license is valid for the calendar year January 1 through December 31. Licensees are to make legible photocopies of the original license and place one in each of the qualified motor vehicles. The original should be kept in a safe place. The original should be used to make additional copies when adding a qualified motor vehicle to the fleet during the license year. If a carrier is found operating a qualified motor vehicle without an IFTA license in the motor vehicle, the vehicle operator will be subject to a citation, and court fines.
IFTA DECALS
Two (2) decals will be issued for each qualified motor vehicle operated by the IFTA licensee. IFTA requires that one decal be placed on the exterior portion of the passenger’s side of the power unit. The second decal must be placed on exterior portion of the driver s side of the power unit. A licensee may request extra decals for fleet additions by completing the Request for Additional IFTA Decals form (see Appendix C). IFTA decals are not vehicle specific. Please ensure that the truck surface is clean, dry, and wax free before affixing the decals. Complete instructions for affixing decals are printed on the back of each decal set. The decal fee is based upon administrative costs relative to IFTA, and may change from year to year.
LICENSE CANCELLATIONS
An IFTA license may be canceled at the request of the licensee provided all reporting requirements and tax liabilities to all member jurisdictions have been satisfied. A licensee should check the cancellation box on the final IFTA quarterly fuel use tax return in order to cancel a license. The licensee may also elect to submit a written request for cancellation. Cancellation requests will not be taken over the telephone. The licensee must return the original IFTA license and all IFTA decals to the Department. A final audit may be conducted by any member jurisdiction upon cancellation of an IFTA license.
ACCOUNT CHANGES
Any changes to the IFTA account must be submitted to the MCS office in writing. Changes will not be accepted over the telephone. These changes include, but are not limited to: mailing address, telephone/fax number, contact person, and business location. It is the responsibility of each licensee to ensure that the account information is current and accurate.
If there is a change in the ownership of the business, the IFTA account in the former name must be closed, and a new application must be completed in the name of the new business. Upon approval of the new application, credentials will be issued.
LICENSE REVOCATION
An IFTA license may be revoked for any of the following reasons:
• Failure to file an IFTA quarterly fuel use tax return or provide additional information, upon request, related to the report filed;
• Failure to remit all taxes due all jurisdictions; or
• Failure to pay and/or protest an audit assessment within the established time period.
Appeal rights of the license revocation will be included with the notification of the Department’s action.
The Department will notify all jurisdictions when a revocation has occurred or has been released. Interstate operation of a qualified motor vehicle, while revoked, may result in a citation, and court fines. The Department may reinstate an IFTA license once the licensee files all required reports and remits all outstanding liabilities due all jurisdictions.
QUARTERLY RETURNS
All licensees must file an IFTA quarterly fuel use tax return (IFTA-100 and IFTA-101) with the Department.
The quarterly fuel use tax return indicates the tax or refund due each member jurisdiction. Only one payment is submitted to the Department for the net tax due. If a net refund is due to the licensee, upon request, the Department will issue a payment to the licensee.
The IFTA quarterly fuel use tax return will be sent to all IFTA licensees at least thirty (30) days prior to the due date. Failure to receive the quarterly fuel use tax return does not relieve the licensee from reporting obligations. Instruction sheets are provided with each quarterly fuel use tax return. The instructions outline how the figures for each column are to be determined. Column headings give the mathematical calculations to be performed for the particular column. The MCS section will answer questions related to the IFTA return, but cannot prepare tax returns for licensees.
A quarterly fuel use tax return must be filed even if the licensee does not operate or purchase taxable fuel in any IFTA member jurisdiction in a given quarter. Failure to file a quarterly return will result in applicable penalties and interest being applied.
The due date for the quarterly fuel use tax return is the last day of the month immediately following the close of the quarter for which the return is being filed. These dates are as follows:
Reporting Quarter
Due Date
January, February, March April 30
April, May, June July 31
July, August, September October 31
October, November, December January 31
The quarterly fuel use tax return must be postmarked or hand delivered to the MCS Section by the due date.
Returns will be considered filed and received on the date shown by the U.S. Postal Service or the Canada Post or Delivery Service cancellation mark stamped on the envelope that contains the return and is properly addressed. Company postage meter stamps will not be used in determining the receipt date of the return.
If the return is hand-delivered, it will be considered filed and received on the date it was delivered to an employee of the MCS Section. If the due date is a Saturday, Sunday, or legal holiday listed in appendix A, the next business day is considered the final filing date. The licensee will be subject to the IFTA penalty and interest provisions if the return is not filed in a timely manner.
PENALTY AND INTEREST PROVISIONS
When a licensee fails to file a return, files a late return, or fails to remit any or all tax due, the licensee is subject to penalty and interest. The penalty is the greater of fifty dollars ($50.00) or ten percent (10%) of the net tax due to all member jurisdictions. Interest is computed on all delinquent taxes due each jurisdiction at a rate of one percent (1%) per month. The Department will assess interest for a full month for any part of a month for each member jurisdiction.
IFTA REFUNDS/CREDITS
A refund may be claimed on the IFTA quarterly fuel use tax return for any overpayment of tax in a reporting period, or a written request for the refund may be submitted. Please complete Line 11 of the IFTA-100 if a refund is requested. A refund will be issued once the Department determines that all tax liabilities, including any outstanding audit assessments, have been satisfied to all member jurisdictions. A refund may be denied if the licensee is delinquent in filing any quarterly fuel use tax return.
Refunds will not be processed until accumulated credits total more than $10.00. If a refund is not requested, the credit will be carried forward to the next period. Earned IFTA credits will expire after eight quarters. It is the responsibility of each licensee to monitor the credits printed on the quarterly fuel use tax report. No notification of expiring credits will be sent to the licensee.
If the licensee feels that the credit has been issued in error, please contact the MCS Section to determine the proper credit due. The licensee will be responsible for all taxes, penalty, and interest due resulting from the improper use of a credit.
MEASUREMENT CONVERSION TABLE
1 liter = .2642 gallons
1 kilometer = .62137 miles
All numbers must be rounded to the nearest whole gallon or mile.
EXEMPT FUEL USE
TAX EXEMPT MILES
IFTA recognizes that some jurisdictions have unique economic and geographic characteristics, which have given rise to various definitions of tax exempt miles. If you have questions concerning tax exempt miles, please contact the individual member jurisdictions. All jurisdictions require supporting documentation (i.e., trip permits) for all claims of tax exempt miles. Please refer to appendix B for a complete listing of the IFTA jurisdictions and the telephone numbers. Please refer to the IFTA website at www.iftach.org for mileage exemptions in each IFTA jurisdiction.
SHORT TERM LEASES
For motor vehicle leases of 29 days or less where the lessor is regularly engaged in the business of leasing, or renting motor vehicles without drivers, for compensation to licensees or other lessees, the lessor will be responsible for reporting and paying the fuel use tax unless the following two conditions are met:
1. The lessor has a written rental contract, which designates the lessee as the party responsible for reporting and paying the fuel use tax; and
2. The lessor has a copy of the lessee’s IFTA fuel tax license, which is valid for the term of the rental.
LONG TERM LEASES
For motor vehicle leases of 30 days or more where the
lessor is regularly engaged in the business of leasing, or renting motor
vehicles without drivers for compensation to licensees or other lessees, the
lessor may be deemed to be the licensee, and the lessor may be issued a license
if an application has been properly filed and approved by the base
jurisdiction.
