The International Fuel Tax Agreement is an arrangement between tax departments in Canadian provinces and US states. It is designed to simplify the paperwork that arises from each province or state having its own policy and rates for charging fuel taxes. The agreement allows haulage firms to make a single quarterly report from which the taxes owed in each jurisdiction are calculated.
Once a carrier is registered under the International Fuel Tax Agreement, they no longer have to file fuel use records with their home state or province. Instead they file a single set of quarterly records which detail their fuel use. Following this they make a single fuel tax payment for the quarter which is then divided between the states and provinces appropriately.
It’s important to note that the carrier still pays the same fuel tax that would have been due in each individual state or province, based on their activity there. The International Fuel Tax Agreement is simply a way of simplifying the administration. Without it, carriers would have to file separate reports and make separate payments for each state or province in which its vehicles had traveled.
Registering and paying tax under the scheme is mandatory for any vehicle with at least three axles. Those with two axles must also register if their weight is above 26,000 pounds (11,793 kilograms). Where two or more vehicles are joined together, the owner must register if the combined weight exceeds the limit of 26,000 pounds. There are exemptions to this rule for non-commercial vehicles such as motorhomes, as well as vehicles which aren’t used on the public highway.
The 48 contiguous states are all members of the International Fuel Tax Agreement. That includes every US state except for Alaska and Hawaii. The District of Columbia is not covered by IFTA. The agreement also covers the ten provinces of Canada. It does not cover the three territories of Canada, which are the Yukon, Northwest Territories or Nunavut.
Once a carrier registers with the scheme each year, it will be issued with registration stickers. One of these stickers is then displayed on either side of each vehicle covered by the registration. The stickers include a two-letter abbreviation indicating the state or province in which the carrier is based. They also displays the year in which the sticker was issued. The color of the sticker changes each year, meaning officials can see at a glance if a carrier tries to get by with an old sticker.
