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What is the International Fuel Tax Agreement (IFTA) and How Does It Work?
Definition & Meaning
The International Fuel Tax Agreement (IFTA) is a cooperative agreement among Canadian provinces and U.S. states designed to simplify the reporting and payment of fuel taxes by interstate motor carriers. Under IFTA, carriers can obtain an IFTA license and receive a decal for each vehicle that qualifies. This allows them to file a single quarterly fuel tax report, which calculates the net tax or refund owed to each jurisdiction. The agreement facilitates the redistribution of fuel taxes from states that collect them to those that are entitled to receive them.
Table of content
Legal Use & context
IFTA is primarily used in the context of transportation law and tax compliance for motor carriers operating across state and provincial lines. It streamlines the fuel tax process, reducing the administrative burden on carriers. Businesses involved in interstate trucking or transportation should be familiar with IFTA regulations and may benefit from using legal forms to ensure compliance with tax reporting requirements.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
For instance, a trucking company operating between California and Texas can file a single quarterly fuel tax report under IFTA instead of separate reports for each state. This simplifies their tax obligations and ensures they are compliant with both states' regulations.
Relevant laws & statutes
Pursuant to 49 USCS § 31701, the term "International Fuel Tax Agreement" is defined as the interstate agreement on collecting and distributing fuel use taxes paid by motor carriers. This statute outlines the framework for IFTA's implementation and enforcement.
Common misunderstandings
What to do if this term applies to you
If you operate a motor carrier business that travels between states, you should register for an IFTA license. Ensure that you maintain accurate records of your fuel purchases and miles traveled in each jurisdiction. Consider using US Legal Forms to access templates for the necessary reports and licenses. If your situation is complex, consulting a legal professional may be beneficial.
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