International Fuel Tax Agreement (IFTA) Manual
|TABLE OF CONTENTS|
|IV. TAX REPORTING, REFUNDS AND CREDITS|
|V. FAILURE TO FILE, REVOCATION AND CANCELLATION|
|VI. RECORD-KEEPING REQUIREMENTS|
The International Fuel Tax Agreement (IFTA) is an agreement among jurisdictions (states of the United States and Canadian provinces) to simplify the reporting of the fuel use taxes by interstate carriers. IFTA may significantly reduce the paperwork and compliance burdens for reporting fuel tax liability for gasoline, diesel, propane, blended fuels (gasohol or ethanol), and compressed natural gas.
Advantages of IFTA Include:
- A single fuel tax license that authorizes your vehicles to travel in all member jurisdictions.
- A single tax report that details your operations in each of the member jurisdictions.
- Companies undergo fewer audits, generally performed only by tax examiners from one taxing jurisdiction.
Under IFTA you may license your vehicles in Connecticut if you are a Connecticut based interstate motor carrier;
- you keep the operational control and records for your vehicles in Connecticut or can make your records available to the Department of Revenue Services; and
- your qualified motor vehicles actually travel on Connecticut highways.
In place of motor fuel tax licensing under this agreement, persons may elect to satisfy fuel use tax obligations on a trip-by-trip basis.
This manual will explain your responsibilities as an IFTA-licensed motor carrier. If you have any questions about IFTA after reading this manual, call the Excise Unit at 860-541-3222 or 860-541-3223.
A person in whose name the fuel use tax licensing application is filed. The application is filed with a base jurisdiction for the purpose of fuel use tax reporting under IFTA.
A physical examination of the records and source documents supporting the licensee’s reports.
The member jurisdiction where qualified motor vehicles are based for vehicle registration purposes and:
- where operational control and operational records of the licensee’s qualified motor vehicles are maintained or can be made available; and
- where some mileage is accrued by qualified motor vehicles within the fleet.
The commissioners of two or more affected jurisdictions may allow a person to consolidate several fleets that would otherwise be based in two or more jurisdictions.
The annulment of a license and its provisions by either the licensing jurisdiction or the licensee.
The official designated by the jurisdiction to be responsible for administration of this agreement.
One or more vehicles.
The total number of miles operated by a licensee’s qualified motor vehicles within a jurisdiction. In-jurisdiction miles do not include miles operated on a fuel use tax trip permit or miles exempted from fuel use taxation by a jurisdiction.
A state of the United States, the District of Columbia or a province or territory of Canada.
A person who holds a valid license issued by the base jurisdiction.
All fuels used for the generation of power for propulsion of qualified motor vehicles.
An individual, corporation, partnership, association, trust or other entity.
Qualified Motor Vehicle
A motor vehicle or combination of vehicles used, designed or maintained for the transportation of persons or property having:
- two axles and a gross vehicle weight exceeding 26,000 pounds;
- two axles and a registered weight exceeding 26,000 pounds;
- three or more axles regardless of weight; or
- a combination weight exceeding 26,000 pounds.
Recreational vehicles are exempt from IFTA fuel tax reporting.
Vehicles such as motor homes, pickup trucks with attached campers and buses when used exclusively for personal pleasure by an individual. In order to qualify as a recreational vehicle, the vehicle may not be used in connection with any business endeavor.
The qualification of motor vehicles normally associated with a prepayment of licensing fees for the privilege of using the highway. Registrants will be issued a license plate and a registration card or temporary registration containing owner and vehicle data.
A period of time consistent with the calendar quarterly periods of January 1 through March 31, April 1 through June 30, July 1 through September 30 and October 1 through December 31.
The withdrawal of license and privileges by the licensing jurisdiction.
The temporary removal of privileges granted to the licensee by the licensing jurisdiction.
All miles traveled during the reporting period by every qualified vehicle in the licensee’s fleet, regardless of whether the miles are considered taxable or nontaxable by a jurisdiction.
The maximum weight of the loaded vehicle or combination of vehicles during the registration period.
Application for License
To receive your IFTA license and decals complete an application form (CT-IFTA-2) and send or deliver it to:
Department of Revenue Services
25 Sigourney Street
Hartford, CT 06106-5032
The application requests general information about your interstate operation. (A sample application is included in this manual.)
The IFTA account number will consist of eleven characters; the first two digits are CT, followed by the federal employer identification number (FEIN) that was issued to the licensee by the United States Treasury Department. If the company is a sole proprietorship and is not required to be issued a federal employer identification number, the social security number of the proprietor of the company may be used.
IFTA License (Cab Card)
You will be issued a single IFTA license (cab card) for your fleet of vehicles. The license is valid from January 1 through December 31. Make photocopies of the original license and place a copy in each of your vehicles. Keep the original license in a safe place. Use the original to make additional copies when adding a vehicle to your fleet during the license year. (A sample IFTA license is included in this manual.)
IFTA Identification Decals
Licensees are issued two vehicle identification decals for each qualified vehicle in their fleet. An identification decal must be placed on the lower rear exterior portion of each side of the vehicle’s cab. Failure to display the IFTA identification decals in the required locations may result in the vehicle operator being compelled to purchase a fuel use tax trip permit or in the issuance of a citation.
First-time applicants for an IFTA license are not required to furnish a bond unless the applicant has a prior history of delinquency in reporting or payment of taxes to the State of Connecticut.
License holders must furnish a bond if they are delinquent in reporting or paying a tax liability for any two reporting periods during a 12-month period. A bond, if required, must be maintained for two calendar years and shall be equal to twice the average quarterly tax liability for the taxpayer.
Any IFTA licensee who is required to furnish a bond will be required to maintain timely filings and payments for two calendar years before the bond requirement will be waived.
The requirement for bond may be satisfied by a cash bond, a bond issued by a corporate surety or a certificate of deposit endorsed in favor of the State of Connecticut. The payee of the certificate shall receive any interest payable on it.
The report forms will be mailed to each licensee during the last week of the current quarter (for example, during the last week of March, the report for the first quarter will be mailed). All tax rates shown on the IFTA-105, IFTA Final Fuel Use Tax Rate and Rate Code Table, enclosed with the report will be the current tax rates of all IFTA jurisdictions. A sample quarterly tax return is included in this manual. Pay all taxes due to all member jurisdictions with one check made payable to the Commissioner of Revenue Services and include the check with the quarterly report.
Reports are due on the last day of the month immediately following the close of the quarter for which the report is due. Every licensee must submit a tax report, even if no taxable fuel was used. Failure to receive the authorized report form does not relieve the licensee from the obligation of submitting a report. The licensee may submit a written report setting forth all information required, which will be accepted in place of a report on the prescribed form.
At this time, the State of Connecticut has chosen not to allow annual filing for two reasons:
A taxpayer would have to file four different returns at the end of the year because the tax rate and conversion rate for the Canadian jurisdictions changes quarterly;
IFTA requires each state to submit a carrier's request for annual filing to every other jurisdiction. If even one jurisdiction objects to the carrier's request, it is denied. The amount of time and staff it would take to continually check with as many as 58 jurisdictions makes this option cost-prohibitive.
Late Reporting (Penalties and Interest)
Penalties will be imposed for failure to file a report or filing a report after the due date.
You will pay:
- A minimum penalty of $50.00 or 10% of your total tax liability, whichever is greater; and
- Interest on all late taxes due EACH JURISDICTION. The interest rate is 1% per month. Under IFTA, you are charged a full month's interest for each month or part of a month your report is late.
To file on time you must correctly address your report and ensure that it is postmarked by the due date. If your report is hand delivered (or is delivered other than by the United States Postal Service), it must be received by the due date. If the due date falls on a Saturday, Sunday or legal holiday, the next business day is the due date.
Connecticut filers must report fuel and distance traveled in U.S. measurements. Convert fuel and distance by using the table below. Round your totals to the whole gallon or mile. Convert:
- One liter to .2642 gallons
- One kilometer to .62137 miles
Tax Exempt Miles
IFTA exempts fuel from fuel use tax when your vehicles operate under a fuel use tax trip permit.
Fuel Use Tax Trip Permit and Non-Highway Miles
Include fuel trip permit and private road/driveway miles and fuel when calculating your fleet average miles per gallon (MPG). Also include trip permit miles when reporting total miles for each IFTA Jurisdiction. Deduct exempt miles from the total miles for each jurisdiction to obtain your taxable miles. Taxable miles are the miles used to calculate your taxable gallons.
When completing your tax report, apply any overpayment in one jurisdiction to the taxes owed in another jurisdiction. If taxes owed are more than any overpayments, send one check for the net tax owed. If overpayments are more than any taxes owed, send no money. Your account will be credited for the amount of the overpayment.
You may request a refund of your credit balance or you may carry this balance over to the next period. To request a refund, enter the amount you wish to have refunded on Line 11 of your IFTA Quarterly Fuel Use Tax Report (IFTA-100). You may only request a refund within two years of filing the report; the overpayment will not be refunded or credited thereafter.
Failure to File
If you do not file a tax report when due, your tax liability for each jurisdiction will be estimated. This estimate will be made by reviewing available information, including your filing history or the history of other filers with operations similar to yours. It will be your responsibility to prove that the estimate is incorrect. You will be subject to a penalty of $50 or 10% of your tax liability, whichever amount is greater. Interest will also accrue on your tax liability at the rate of 1% per month or fraction of a month. Your decals may be withheld from you or you may be required to post a bond if you have not filed your tax reports and paid your tax liability.
Revocation or Suspension of Your License
If you fail to comply with all applicable provisions of IFTA, your license may be suspended or revoked. You will be given written notice of your right to request a hearing at which the suspension or revocation of your license will be considered.
To have your revoked fuel use tax license reinstated you must:
- pay all taxes due in full;
- file all reports; and
- provide all records that are requested.
In addition, you must file a new application form accompanied by a bond in an amount sufficient to satisfy any potential liabilities to all member jurisdictions.
You may cancel your IFTA account if you are no longer operating qualified motor vehicles in two or more IFTA jurisdictions. To request the cancellation of your fuel license, check the box in the upper right hand corner of your IFTA tax report. Attach your license to the report with a written statement giving the last date of operations and attesting that all Connecticut IFTA decals were removed from the motor vehicles.
You must maintain records to document that the information reported on your tax report is accurate. You must maintain IFTA records for four years from the date of filing. You may keep your records on microfilm, microfiche, paper or digital imaging.
Acceptable Source Documents
Your records must contain mileage data on individual vehicles for each trip and also monthly fleet summaries. The records must reflect the taxable and non-taxable usage of fuel, as well as miles traveled for taxable and nontaxable use.
Your records must support the information you include on the fuel tax report, including fuel receipts and daily mileage records.
All trip reports must include:
- Date of trip (starting and ending)
- Trip origin and destination
- Routes of travel or beginning and ending odometer readings or both
- Total trip miles
- Mileage by jurisdiction
- Vehicle unit number
- Vehicle fleet number
- Licensee’s name
You must maintain complete records of all fuel purchases as reported on the IFTA tax report. Included fuel types are:
- Compressed Natural Gas
Keep separate totals for each fuel type you use in your qualified motor vehicles. Keep separate your receipts for fuel purchases made over the road (at the pump) and for bulk fuel purchases.
All fuel receipts must include:
- Date of each purchase of fuel
- Vendor/wholesaler's name and address
- Number of gallons purchased
- Type of fuel
- Price per gallon or total dollar amount of sale
- Unit number of vehicle purchasing fuel
- Purchaser’s name (In case of a lessee/lessor agreement, receipts will be accepted in either name, provided a legal connection can be made to the reporting party.)
Bulk Storage of Fuel
Fuel purchased in bulk fuel storage facilities owned or maintained in Connecticut must have had the motor fuel taxes paid to the supplier at the time of the delivery. For bulk fuel storage facilities in another jurisdiction, the fuel tax(es) may or may not have been paid to the supplier at the time of delivery, depending on the jurisdiction's motor fuel tax laws. To qualify a purchase as a tax-paid fuel purchase, documentation must be retained which verifies that all applicable motor fuel taxes have been paid.
Do not report your inventory in column L of IFTA Quarterly Fuel Use Tax Schedule (IFTA-101). Report only tax-paid gallons removed for use in your qualified motor vehicles in Column L. Fuel remaining in storage may not be reported in Column L until it is used.
Over-the-Road (OTR) Purchase Receipts
OTR purchases must be supported by a sales receipt or invoice, a credit card receipt or a microfilm/microfiche copy of the receipt or invoice from the supplier. Such invoices or receipts must identify the vehicle by unit number or license plate number. The IFTA licensee reports only mileage and fuel consumption for qualified motor vehicles. Altered receipts will not be accepted for tax-paid credit.
Summarize your trip reports each month on a single fleet report. Summarize your fleet miles in each jurisdiction as well as your fuel receipts for each jurisdiction. Receipts and invoices for each qualified motor vehicle must support your summary.
Every IFTA licensee is subject to audit. If your operation is chosen for an audit you will be notified in writing. Under normal circumstances you will receive at least 30 days' notice of an audit. Every effort will be made to schedule the audit at a mutually convenient time.
If your records are not acceptable to the auditor one or more of the following actions may be taken:
- gallonage may be based on prior experience of the licensee or by comparison to similar operations;
- a standard of 4.0 miles per gallon will be used; or
- all claims for credit for tax-paid fuel without supporting documentation will be disallowed.
THE LICENSEE BEARS THE BURDEN OF PROVING THAT THE INFORMATION REPORTED IS CORRECT.
Any questions pertaining to an audit should be directed to the Excise Unit of the Connecticut Department of Revenue Services at 860-541-3222 or 860-541-3223. If a licensee fails to provide records for the purpose of audit the statute of limitations is extended until such records are provided.
Upon completion of the audit the findings will be reported in writing to the licensee and any member jurisdiction in which the licensee operated. Connecticut will collect any tax, penalty and interest owed for all member jurisdictions. If the licensee’s operational records are not located in Connecticut, then it may be necessary for the Department’s auditors to travel to where such records are maintained. The Department may require a licensee to pay reasonable per diem and travel expenses incurred by the auditor(s) in the performance of the audit.
You may appeal any action or audit findings by filing a written request for a hearing. Your request must be received within 30 days of the original action or finding date. If you do not request a hearing within 30 days, the action or finding is final.
You will be sent a notice of the time and place of your hearing. The hearing may be rescheduled for good cause. You may appear in person or send an attorney to the hearing. You may bring witnesses, documents or other material to support your appeal.
You will be sent the findings and ruling on your appeal. If the dispute involves an audit and you continue to disagree with the ruling you may request one or more other jurisdictions to audit your records. Each jurisdiction may choose to grant or deny your request. Jurisdictions that agree to audit your records will audit only the information involving your operation with them. You will be responsible for any costs related to these audits.