The International Fuel Tax Agreement (IFTA) is a crucial regulatory framework for commercial motor carriers operating across multiple jurisdictions in North America. Established to simplify the fuel tax reporting for interstate trucking companies, IFTA requires carriers to report and pay fuel taxes based on the miles driven in each jurisdiction.
Adhering to IFTA requirements ensures fair distribution of fuel tax revenues among states and provinces, maintains a level playing field for all carriers and helps fund essential infrastructure maintenance and improvements. The consequences of non-compliance can be severe and far-reaching, potentially jeopardizing a company’s operations, finances and reputation.
Below, we’re going to explore the penalties associated with IFTA non-compliance and provide practical guidance on how to avoid these pitfalls, helping you maintain good standing and focus on what matters most – running your business.
What are the Penalties of IFTA Non-Compliance?
The International Fuel Tax Agreement imposes strict penalties on motor carriers who fail to comply with its regulations, including fines, interest and license revocation. Penalties are usually similar from jurisdiction to jurisdiction, but it’s always important to check with your jurisdictions’ unique regulations. Let’s look at some examples of each:
Fines
IFTA has a quarterly fuel tax schedule where members are required to file fuel use tax reports for the designated timeframe. The IFTA Aritcles of Agreement states that “the base jurisdiction may assess the licensee a penalty of $50 or 10 percent of delinquent taxes, whichever is greater, for failing to file a tax return, filing a late tax return, or underpaying taxes due.”
Interest
Interest continues to accrue for delinquent taxes. The IFTA Aritcles of Agreement states that “the base jurisdiction, for itself and on behalf of the other jurisdictions, shall assess interest on all delinquent taxes due each jurisdiction except taxes collected directly by other jurisdictions.”
License Revocation
Failure to comply with IFTA regulations can additionally lead to the revocation of your fuel tax license. The IFTA Aritcles of Agreement states that “if a tax delinquency has not been satisfied, or the licensee has not filed a written appeal within a 30-day period from the notification of delinquency, a notice of revocation will be sent in accordance with the base jurisdiction’s statutes for such notices advising the licensee of the immediate revocation of the fuel tax license.”
When an IFTA license is revoked, all member jurisdictions are notified, and it becomes illegal for the carrier to operate qualified motor vehicles in any IFTA jurisdiction.
Additional Penalties
Many jurisdictions carry their own additional penalties for non-compliance, like in California, where if you enter the state without a valid California Fuel Trip Permit, or IFTA credentials, you are subject to a penalty ranging from $100 to $500. As mentioned above, it’s always important to check with your jurisdiction’s unique regulations.
These consequences underscore the importance of maintaining IFTA compliance. Not only can non-compliance lead to immediate financial burdens, but it can also threaten the very existence of a trucking operation. So, what are the common causes that get businesses into hot water?
Common Causes of Non-Compliance
Non-compliance with IFTA regulations often stems from several common factors. Lack of understanding or awareness of IFTA requirements can be a primary reason, particularly for smaller carriers or new entrants to the industry. To help, The IFTA website has a section with various manuals to keep members up to date.
Additionally, the complex reporting requirements and the burden of maintaining detailed mileage and fuel records across multiple jurisdictions can be overwhelming, especially for carriers with limited administrative resources. Further, inadequate training of staff responsible for IFTA reporting and record-keeping can result in errors and omissions.
Addressing these issues through education, improved systems and a commitment to compliance is crucial for carriers to avoid the significant consequences of IFTA non-compliance. Let’s talk through some specific ways on how to do so.
How to Avoid IFTA Non-Compliance
Avoiding IFTA non-compliance can take many forms. We have listed out ways you can avoid non-compliance through a few strategies.
Timely filing of IFTA reports is crucial for maintaining compliance. Start by clearly marking IFTA deadlines on your business calendar, ensuring these important dates are never overlooked. IFTA filing due dates fall on the last day of the month following the end of every quarter.
Here is a quick review of the IFTA filing due dates for 2024:
| Quarters | Due Dates |
| January - March 2024 | April 30, 2024 |
| April - June 2024 | July 31, 2024 |
| July - September 2024 | October 31, 2024 |
| October - December 2024 | January 31, 2025 |
It’s also important to Implement proper record-keeping systems, as this is the backbone of IFTA compliance. Establish a clear, standardized process for collecting and storing fuel receipts, whether digital or physical, to ensure no purchases are missed.
Beyond that, make sure you have a comprehensive system for tracking miles traveled and fuel purchased, ensuring every trip and every gallon is accounted for. Consider investing in GPS-based tracking systems, which can provide highly accurate mileage reporting and often integrate seamlessly with IFTA reporting software.
Finally, the easy way: Implement a software solution that is your all-in-one IFTA reporting and compliance power tool, like ProTransport.
ProTransport Makes IFTA Reporting and Compliance Easy
Maintaining accurate IFTA records is crucial for avoiding penalties. Carriers should implement a robust record-keeping system that includes detailed mileage and fuel records for each vehicle. That’s where ProTransport comes in.
With ProTransport, you can easily calculate your quarterly IFTA report using existing data in just a few clicks. With excellent service and affordability, alongside leading integration capabilities including fuel cards, ELDs and more, our technology integrates different aspects of trucking operations into one user-friendly, centralized platform, including everything you need to stay IFTA compliant.
Remember, IFTA compliance is not just about avoiding penalties. It's about running a responsible, efficient and sustainable trucking operation. By making compliance a priority and implementing the strategies discussed in this post, you can focus on what you do best: keeping your fleet on the road and your business moving forward.
If you are ready to avoid costly IFTA penalties and optimize your operations, we have a dedicated team of representatives here to learn more about your business and show you how ProTransport can help.