The International Fuel Tax Agreement (IFTA) is a base state agreement among states and Canadian provinces to simplify the reporting of fuel use taxes by interstate motor carriers.
The advantage of IFTA is that it allows a base jurisdiction to:
Issue IFTA credentials (license and decals) which allow operation in all member jurisdictions;
Require only one quarterly tax report for your operation in all member jurisdictions; and
Perform fewer audits.
IFTA allows the consolidation of fuel tax reporting for member jurisdictions, which leads to savings in time and costs for both the interstate carrier and the base jurisdiction.
Iowa is your base jurisdiction for IFTA licensing and reporting if:
You have an established place of business in Iowa from which motor carrier operations are performed;
You maintain the operational control and records for qualified motor vehicles in Iowa or can make those records available in Iowa; and
You have qualified motor vehicles which actually travel on Iowa highways and at least one other IFTA jurisdiction.
Qualified Motor Vehicle
“Qualified motor vehicle” means a motor vehicle used, designed, or maintained for transportation of persons or property and having two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms; or having three or more axles regardless of weight; or is used in combination, when the weight of such combination exceeds 26,000 pounds or 11,797 kilograms gross vehicle weight or registered weight. Qualified motor vehicle does not include recreational vehicles.
Application for IFTA License
A permanent fuel license may be obtained from the Office of Motor Carrier Services. The cost of a permanent fuel license is $10 and the application must be complete and include, but not be limited to, the following information:
Name and address of company, corporation, or owner who operates or controls the qualified vehicle(s);
Name(s) and address(es) of principal or corporate officers;
Signature and telephone number of contact person; and
A power of attorney if someone other than an officer or employee of the company will be completing quarterly reports or requesting information from the department.
Decals must be renewed and paid for annually. An application for IFTA decals will be mailed in September with the third quarter tax report. One decal must be placed on EACH exterior side of the vehicle cab. Decals are sold in sets of two at 50 cents a set.
Account Identification
An account number will be established to identify the licensee. This 11-character identification will include an IA prefix followed by a nine-digit federal tax identification number ( TIN). The Internal Revenue Services ( IRS) issues the TIN.
Bond Requirements
Bonds shall be required in the following situations:
When a previous fuel licensee is reapplying for a permanent fuel license and has two or more outstanding billings due for periods within the three years previous to the date of application for a new permanent license;
When a previous fuel licensee is reapplying for a new permanent fuel license and has failed to file two or more reports for a calendar year within the three years previous to the date of application for new permanent license;
When a previous permanent fuel licensee is reapplying for a new permanent license and has filed reports late for two or more reporting periods for a calendar year within the three years previous to date of application for a new permanent fuel license.
When an audit indicates problems severe enough that a bond is required to protect the interests of member jurisdictions.
Bonds required shall be payable to the State of Iowa, in the minimum of $500 or the equivalent to at least twice the estimated average tax liability for the reporting period which the licensee will be required to file a tax return, whichever is greater.
A copy of such bond shall be filed with the Office of Motor Carrier Services before a new license shall be issued. This office shall be notified of bond cancellation 30 days before the cancellation is effective.
IFTA License (Cab Card)
In order for a license to be valid, it must be carried in the vehicle at all times. Several vehicles can be operated and reported under the same license by making a photocopy of the license and carrying it in each vehicle operating under said license. A license or a copy of a license shall be void if altered. A duplicate license can be purchased from the Office of Motor Carrier Services for a charge of 50 cents.
Failure to produce a copy of the license and to display the decal may result in the vehicle operator being subject to a citation and being required to purchase a fuel tax trip permit.
The license is valid for the calendar year January 1 through December 31. The new IFTA license must be with the vehicle by March 1 of each year.
IFTA Decals
A decal must be displayed on each vehicle operating under the agreement. Decals are not vehicle or carrier specific. Decals must be renewed yearly. Decals are valid for the calendar year January 1 through December 31. Decals can be displayed upon receipt and must be displayed by March 1.
Adding A Vehicle
If a qualified vehicle is added to the licensee’s IFTA fleet during the license year, you must obtain credentials.
IFTA License ................. Photocopy current license to carry in new vehicle.
IFTA Decals ................... Order an additional set of decals from the Office of Motor Carrier Services at 50 cents a set. You may want to keep a limited supply of decals on hand in your office for replacement vehicles. Refunds will not be issued for over-purchases or lost orders. Decals are not carrier or vehicle specific.
IFTA Temporary Decal ... A temporary can be faxed to a carrier who needs to start immediately. An IFTA temporary is good for 30 days as long as all other requirements have been met. You need to supply the unit number and the last 5 digits of the serial number. The 50-cent decal fee must be sent in immediately with an IFTA decal request form.
Reporting Requirements
Quarterly Reports
The licensee must file an IFTA quarterly tax report. The forms will be furnished by the Iowa Department of Transportation prior to the close of the quarter being reported. Fuel types and rates are available at www.IFTACH.org.
Reporting Quarter
Due Date
Reporting Quarter
Due Date
January – March
April 30
July – September
October 31
April – June
July 31
October - December
January 31
The licensee will be subject to the IFTA penalty and interest provisions if the report is not filed in a timely manner. Quarterly tax reports are required to be filed on time even though no operations were conducted during the reporting period. Actual base state miles and fuel purchases must be reported, even if there is no out-of-state activity. If the last day of the month falls on a Saturday, Sunday or legal holiday, the next business day shall be considered the final filing date.
Penalties and Interest
Penalties for filing a report late, failure to file a report, or underpayment of taxes due is $50 or 10% of the delinquent taxes, whichever is greater. Interest will accrue at a rate of one percent per month.
Measurement Conversion
All IFTA licensees are required to report based on United States measurements. Conversion rates are:
1 liter = .2642 gallons
1 kilometer = .62137 miles
Refunds
Refunds shall be computed separately for each fuel type. If a refund for a fuel type does not exceed $10, it shall not be processed unless there is more than one type of fuel reported on one return and the combined refunds for all fuel types exceeds $10.
Failure to File
Failure to file quarterly fuel tax reports will result in the revocation of the carrier’s IFTA license. To reinstate the license, a bond must be posted in addition to paying delinquent taxes, penalties, and reinstatement fees.
License Cancellation
The licensee may cancel an IFTA license at any time, provided all reporting requirements and tax liabilities to all member jurisdictions have been satisfied. A written request is required to cancel. All IFTA licenses and unused decals must be returned upon cancellation. A final audit may be conducted by any member jurisdiction upon cancellation. The records must be retained for four years after the due date of the final quarterly tax report.
License Revocation
An IFTA license may be revoked for any of the following reasons:
Failure to file a quarterly report;
Failure to pay tax due to all member jurisdictions;
Failure to adhere to record-keeping requirements; and
Failure to pay or protest an audit assessment within the established time period.
Reinstatement
To reinstate your IFTA license after being revoked you must:
Pay all taxes in full;
File all required reports;
Submit any records requested;
File a new application;
Submit a reinstatement fee ($10) and decal fee (50 cents per set); and
Post a bond.
Record-Keeping Requirements
The records required to be kept shall be preserved for a period of four years after a return is filed unless otherwise stated and shall be open for examination by the Department during this period. A licensee shall retain invoices or other proofs of purchase. The fact that the tax has been paid shall appear on the proof of purchase.
Records To Be Kept and Preserved
Every person required to file a quarterly report shall keep and preserve the following records:
Fuel purchase invoices or documentation of fuel withdrawn from bulk storage; and
Trip sheets or other documentation of mileage activity.
Whenever an invoice is required to be kept, the following shall be the minimal requirements that must be complied with:
It must include the seller’s name and address.
It must include the purchaser’s name and address.
It must contain a vehicle serial number, fleet number, or vehicle license number.
It must include the calendar date of purchase.
It must indicate the type of fuel purchased.
It must indicate the quantity of fuel purchased.
It must indicate the total purchase price.
If the purchase is special fuel, the fact that the fuel tax is included in the purchase price must be indicated.
Whenever an invoice is required to be kept, the original or duplicate copy must be kept. If the original or duplicate copy is lost or destroyed, a copy certified by the seller as being a true copy of the original shall be acceptable.
A copy of any invoice, which is required to be kept by the purchaser, must be kept by the seller for the same period of time.
Credit card invoices are acceptable if they meet all the requirements listed above.
Separate totals must be maintained for the different fuel types that include:
Gasoline
Gasohol
Diesel
Kerosene
Propane (LPG)
Compressed Natural Gas (CNG)
Separate totals must also be maintained for fuel received at bulk storage sites in addition to over-the-road ( OTR) purchases.
Bulk Fuel Storage
A licensee who maintains a bulk fuel storage facility may obtain credit for tax paid on fuel withdrawn from that storage facility if the following records are maintained:
Date of withdrawal;
Number of gallons withdrawn;
Fuel type;
Unit number of vehicle receiving fuel; and
Purchase and inventory records to substantiate that tax was paid on bulk fuel purchases.
The licensee must show adequate records are maintained to distinguish fuel placed in qualified and non-qualified motor vehicles for all member jurisdictions.
Audit
Any IFTA licensee may be subject to an audit. Licensees selected for an audit will be contacted in writing 30 days prior to the audit date. The auditor(s) will notify the licensee of the time period to be audited and the records to be reviewed.
After the audit, the licensee will be advised of the audit findings, including adjustments to fuel tax liabilities for any affected jurisdictions, and suggestions for record-keeping improvements. The other member jurisdictions will be notified of the results. The licensee may be subject to a supplemental audit if any member jurisdiction disagrees with the audit results.
Appeal
A licensee may appeal an audit finding issued by any IFTA member by submitting a written requires for a hearing within 30 days after receipt of the original finding.
The licensee will be given at least 20 days written notice of the time and place where the hearing will be given. The hearing may be rescheduled if either party has a reasonable cause. The licensee may appear in person and/or be represented by counsel at the hearing and is entitled to present witnesses, documents, or other pertinent material to substantiate the appeal.
The licensee will be notified of the findings of fact and the ruling of the appeal. If the licensee still disagrees with the original finding, the licensee may request each jurisdiction audit its own portion of the licensee’s operations. Each jurisdiction may accept or deny the request. Further appeal of any jurisdiction’s finding will proceed in accordance with that jurisdiction’s laws.
