If you’re in the trucking industry, you’re likely familiar with the International Fuel Tax Agreement (IFTA). For those new to it, understanding how to prepare your IFTA quarterly tax return is crucial for keeping your business compliant and avoiding penalties.
At OTR Solutions, we know that navigating the world of taxes can feel overwhelming, but we’re here to help guide you through it step by step. We’ve partnered with Simplex Group, a trusted leader in IFTA permitting, to offer you even more comprehensive support. You’ll gain access to their expertise through OTR Solutions, ensuring your business stays compliant.
In this article, we’ll break down how to prepare your IFTA quarterly return for January 2025, why it’s important, and what you need to know about deadlines, costs, and more.
What is IFTA and Why is It Important?
Before getting into the details of filing, let’s look at: what is IFTA and why is it crucial? The International Fuel Tax Agreement simplifies fuel tax reporting across multiple states and provinces, ensuring taxes are distributed fairly and efficiently.
If you’re new to the process or looking for assistance, OTR Solutions has partnered with Simplex Group to make obtaining your IFTA permits even easier. Through our partnership, Simplex Group ensures your IFTA application is completed accurately, preventing costly mistakes.
Simplifies Fuel Tax Reporting
IFTA allows truckers to file one quarterly return for fuel use and mileage across multiple jurisdictions rather than submitting separate reports for each state or province.
Fair Distribution of Taxes
Each state and province has its own tax rate. IFTA ensures that taxes are divided appropriately based on the mileage your truck covers in each area, simplifying tax compliance.
Reduces Administrative Burden
Without IFTA, truckers would face the complicated task of filing individual tax reports for each jurisdiction traveled. IFTA streamlines the process and reduces administrative workload.
Prevents Costly Penalties
Filing IFTA returns correctly helps truckers avoid fines or penalties. Proper filing is vital for keeping your business compliant and running smoothly, whether you’re just starting or have years of experience.
Who Needs to File an IFTA Return?
Not every truck on the road is required to file this return, so let’s be clear: You must file a quarterly return if you operate a “qualified motor vehicle,” which is defined as any of the following.
- A vehicle with two axles and a registered gross vehicle weight exceeding 26,000 pounds (11,793 kilograms).
- A vehicle with three or more axles, regardless of weight.
- Any combination of vehicles where the total weight exceeds 26,000 pounds (11,793 kilograms).
Suppose your vehicle meets any of these conditions and operates across more than one IFTA member jurisdiction (including all U.S. states except Alaska, Hawaii, the District of Columbia, and most Canadian provinces). In that case, you are required to file an IFTA return.
If you’re unsure whether your truck qualifies, our partners at Simplex Group can help clarify your requirements and ensure that your business complies with IFTA regulations.
Filing the IFTA Quarterly Tax Return
The IFTA quarterly tax return is a required filing that truckers must submit every quarter to report fuel purchases and miles driven across different states and provinces. These filings help ensure that fuel taxes are distributed to the appropriate areas where the fuel was used.
IFTA returns are filed four times per year:
- April 30 due date: for January through March
- July 31 due date: for April through June
- October 31 due date: for July through September
- January 31 due date: for October through December
1. Gather Your Records
The first step in preparing your IFTA Quarterly Tax return is gathering all your records.
Simplex Group, simplifies this process by managing your fuel receipts and assisting with IFTA compliance. Paired with the OTR Fuel Card, which provides detailed fuel purchase records, you’ll have everything you need to ensure your IFTA return is accurate and stress-free.
Mileage logs
Accurate records of miles driven in each state or province. It’s crucial that these are kept up to date throughout the quarter.
Fuel receipts
All receipts or transaction records showing the fuel purchased in each jurisdiction. These should include the date, location, amount of fuel, and cost.
It’s important to maintain accurate and detailed records. Any discrepancies between the mileage you report and what the authorities calculate can lead to penalties or additional audits.
2. Calculate Your Total Miles Driven
Once you have your records in order, the next step is to calculate your total miles driven across all jurisdictions during the quarter. This includes every mile driven in each state or province, whether you purchased fuel there or not. You’ll need to break down your mileage per jurisdiction so that taxes can be distributed appropriately.
3. Calculate Your Fuel Purchases
Now, it’s time to total up your fuel purchases. Go through all your receipts and determine how many gallons of fuel you bought in each state or province. This information is crucial for calculating your IFTA fuel tax obligation.
4. Determine IFTA Rates for Each Jurisdiction
Each state and province has its own tax rate under IFTA, so you’ll need to know the IFTA rates for each jurisdiction you operate in. You can typically find the latest rates on the IFTA website or through your fuel tax software. By multiplying the fuel purchased in each jurisdiction by that location’s tax rate, you’ll start to see what you owe.
5. Calculate Your IFTA Fuel Tax Owed or Credit
After gathering your mileage and fuel data, you can determine if you owe additional taxes or if you’re due a refund. This calculation involves comparing the taxes you’ve already paid at the pump with what you actually owe based on the miles you drove in each jurisdiction. If you paid more at the pump than you owe, you may be entitled to a credit. If you underpaid, you’ll need to pay the balance.
Partner with OTR Solutions and gain expert assistance from Simplex Group in filing your IFTA quarterly tax reports through us.
6. Complete and Submit Your Return
Once your calculations are done, it’s time to submit your return through your base jurisdiction’s IFTA portal. Be sure to double-check everything before submitting to avoid penalties.
If you’re unsure about the process, OTR Solutions can provide you access to Simplex Group, whose team of experts will handle the paperwork, ensuring everything is filed accurately and on time, so you can focus on running your trucking business.
What Happens if You Miss the Deadline?
Missing the IFTA quarterly tax deadline can result in penalties, interest, and even suspension of your IFTA license. If you fail to file on time, you’ll be hit with a late filing penalty, which is typically $50 or 10% of the tax due (whichever is greater).
In addition, interest will accrue on any unpaid taxes, which could quickly add up if you don’t act fast. The longer you wait, the worse it gets, so it’s essential to prioritize filing your International Fuel Tax return by the deadline.
You never have to worry about missing a deadline with our partner Simplex Group. They will ensure your return is submitted before the deadline, preventing delays or penalties.
Costs Involved in Filing IFTA
Filing your return may involve costs beyond just the taxes you owe. Here are some common expenses you might encounter.
Late filing penalties
The penalty for filing your quarterly return late is either $50 or 10% of the taxes due, whichever amount is greater. Missing the deadline not only incurs this fee but also increases your risk of further penalties and complications.
Interest on unpaid taxes
If you owe taxes, interest is charged at 1% per month on the total amount due. This means the longer you wait to pay, the more costly it becomes. It’s crucial to avoid delays to prevent escalating costs.
Fuel tax software
Many trucking companies invest in fuel tax software to accurately track miles and fuel purchases. While there’s an initial cost, the long-term savings in time, accuracy, and avoiding penalties make it a worthwhile investment for any trucking business.
While filing may involve costs such as penalties or interest, using a service like Simplex Group can help you avoid these expenses. By managing your IFTA compliance and fuel tax reports, they can prevent costly mistakes, saving you time and money in the long run.
Common Filing Mistakes to Avoid
When filing your return, some common mistakes can lead to problems down the road. Here’s what to avoid:
Inaccurate mileage tracking
Ensure your mileage logs are accurate and regularly updated. If your reported miles don’t align with your logs, you could face penalties or even audits. Proper tracking helps avoid discrepancies and keeps your returns accurate and compliant.
Missing receipts
Keep all fuel receipts well-organized and easily accessible. Losing or failing to record receipts could result in under-reporting fuel purchases, leading to higher taxes or penalties. Accurate record-keeping helps ensure a smoother filing process and protects you from mistakes.
Ignoring IFTA rates
Don’t assume that all states or provinces have the same tax rates. Use the correct rates for each jurisdiction to prevent overpaying or underpaying your fuel taxes. Mistakes in applying rates can lead to costly discrepancies or penalties.
Waiting until the last minute
Procrastinating can result in errors and rushed work, increasing the likelihood of mistakes on your return. Begin organizing your records and calculating your fuel taxes early to avoid stress and ensure an accurate, on-time submission.
OTR Solutions is Here to Help
At OTR Solutions, we take the stress out of IFTA compliance. By partnering with us, you’ll have access to expert services from Simplex Group, ensuring that your IFTA permits and returns are managed smoothly and efficiently. Let us handle the paperwork so you can focus on what matters most: running your business.
More Than IFTA Compliance – OTR’s Full Suite of Solutions
Beyond helping you stay compliant with IFTA, OTR Solutions offers a wide range of services designed to support your trucking business from every angle. When you partner with us, you gain access to a comprehensive suite of tools and resources:
Freight Factoring
We turn your unpaid invoices into immediate cash, helping you maintain a steady cash flow so you can keep your trucks moving without the wait.
OTR Fuel Card
With our OTR Fuel Card, you get instant fuel discounts at major truck stops across the country, saving you money on every trip. Need cash upfront? We also offer fuel advances to ensure your trucks stay fueled and on the road.
Dedicated Operations Team
Our dedicated team works closely with your business to make sure everything from your paperwork to your payments runs smoothly. We’re here to help you every step of the way.
Bolt Instant Payments
Cash flow is critical. That’s why our Bolt Instant Payments system ensures you get paid as soon as your invoices are processed, allowing you to keep operations running efficiently without delays. Whether you’re a small carrier or managing a large fleet, OTR Solutions provides the support you need to keep your business growing and thriving. We know the trucking industry, and we’re here to help you navigate every challenge, from cash flow issues to fuel savings.
Partner with OTR Today!