Taxes are a way of life in the great United States. We pay taxes on our income, taxes on our food, and soon taxes on the bags we put the food in. The trucking industry is used to taxes as their way of doing business. One tax that interstate truckers are used to is the International Fuel Tax Agreement, or IFTA. What is IFTA and what purpose does this agreement serve in the world of taxes for the trucker industry? This week will help understand IFTA and how it is enforced in Illinois…
The International Fuel Tax Agreement started in the 1980’s to evenly distribute fuel taxes across the lower 48 states and Canada. Originally each state required a commercial vehicle to purchase a fuel sticker as it entered the state. This was time consuming and cumbersome. The United States and Canada agreed to utilize a non-profit organization to oversee fuel taxes.
Although it simplifies the process, anyone who is involved in paying IFTA fees would agree it is still confusing. The goal is to ensure that a state with higher fuel taxes gets its fair share when a truck operates on its roadways.
For example, if a truck fills up in Wisconsin and then drives straight south through Illinois, the company would have to pay the difference in tax to Illinois. And if the reverse occurred, then money would be owed back to the company as the rates in Wisconsin are less than Illinois. The drivers are required to document how many miles are travelled in each state with the fuel purchased in a different state in order to correctly reimburse the states for their share of fuel taxes.
Lost? Well don’t forget about Indiana, Kentucky, and Virginia. Those states keep some of the fuel tax as a surcharge no matter where its used. And Oregon doesn’t participate in IFTA at all. These are some of the confusing ways states work to even the taxing playing field in the world of interstate commerce.
Without IFTA, companies near the border of a state with lower fuel taxes would fill up in that state regardless of where they operate. This means that a state would receive no fuel tax revenue even though a company operated within their state.
For law enforcement, they are out there looking for that sticker on the sides of the cab. The one that shows the vehicle is current in the IFTA program when it operates in more than one state. Officers can check the status of an IFTA license to ensure compliance.
If the IFTA sticker is suspended or not valid, the officer will issue traffic citations and notify the Department of Revenue which means more fines. An astute truck officer looks at the side of the cab for that current sticker every time an apportioned semi drives by him.
Of course, IFTA allows for a delay in displaying the stickers. Because trucks that run across the country can’t always get to the mailbox on January 1 to get the stickers and display them, IFTA allows until March 1 to display them.
Police will be out there in March looking at those cabs, so truckers make sure you are proudly displaying that IFTA sticker with your home state outlined on it. Avoid the fine, stick it on in time!
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