IRS Form 2290 and IFTA

What is IFTA?

The International Fuel Tax Agreement, or IFTA, represents a tax collection agreement by and among the 48 contiguous United States and the 10 Canadian Provinces bordering the United States. IFTA is a quarterly tax on qualified highway motor vehicles that operate in at least 2 out of the 58 total jurisdictions.



Who Must Pay?

A vehicle is considered to be a qualified motor vehicle if it is used, designed, or maintained for the transportation of persons or property and has a gross vehicle or registered gross vehicle weight of more than 26,000 pounds. A Vehicle is also considered to be a qualified motor vehicle if it has three axles, regardless of its weight. Finally, a vehicle is considered to be a qualified motor vehicle if the combined weight of all of its parts is greater than 26,000 pounds.



How Does it Work?

Each Vehicle has a Base Jurisdiction, which is the state or province in which the vehicle is registered. Fuel Tax must be filed with each jurisdiction each quarter. Each state or province has a different Rate and those rates change quarterly. Each driver must keep a trip log of how many miles are traveled in each state or province, as well as how much fuel was purchased in each state or province.



What is IFTA’s Purpose?

The official purpose of IFTA is "to promote and encourage the fullest and most efficient possible use of the highway system by making uniform the administration of motor fuels use taxation laws with respect to qualified member vehicles operated in multiple member jurisdictions." When IFTA is filed with the appropriate jurisdiction, The Fuel Tax Report is then used to determine the tax amount due as well as the refund due. It is also used to redistribute taxes from collecting jurisdictions to jurisdictions that it is due. One of the reasons for the Fuel Tax is to ensure that a vehicle pays taxes to all deserving jurisdictions. For Example: if a vehicle travels through a state, but buys no gas while in that state, then there was no fuel tax paid to that state through the purchase of gasoline. Part of their tax would then be redistributed to the state that received no fuel tax.



What are they?

IRS Form 2290 is what is used by the government to collect what is referred to as the Heavy Vehicle Use Tax or HVUT Tax. It is a fee that the IRS requires all vehicles with registered gross weights equal to or exceeding 55,000 pounds to pay annually on heavy vehicles operating on public highways. The tax collected is a significant source of transportation funding in the U.S. In 2006 alone, the HVUT generated more than $1.4 billion in Federal Highway Trust Fund (HTF) revenue.



The International Fuel Tax Agreement (IFTA) is an agreement between jurisdictions to simplify the reporting of motor fuel taxes. Under this agreement, one quarterly fuel use tax report is filed representing miles traveled, fuel purchased and used, and taxes/credits due in each member jurisdiction. The base jurisdiction then distributes the funds to each affected jurisdiction according to information contained in the quarterly fuel use tax reports. An interstate motor carrier operating "qualified motor vehicles" between at least 2 member jurisdictions (The 48 contiguous states of the US and 10 Canadian provinces) must have an International Fuel Tax Agreement (IFTA) license and decals issued by their base jurisdiction. If you have the IFTA license, you must file the Quarterly IFTA Return to your base jurisdiction.



How do they Work?

Besides the fact that they are both fees imposed on heavy vehicles, these are both similar in that they are both very complicated. The complications with IRS Form 2290 come from the difficulty of actually filing one. The trouble with IFTA is that it is an incredibly detailed system.



The IRS Form 2290 includes a Schedule 1 which must be stamped by the IRS. This can either be mailed to the IRS, which can take up to several weeks to process. It can also be taken directly to the IRS office, which can take several hours of your day. This must be accompanied by the proof of EFTPS payment.



IFTA requires drivers of Heavy Vehicles to keep trip logs of miles traveled as well as how much fuel was purchased in each state or province. IFTA must be filed quarterly and the filing date is the 30th of the following month. These trip logs are difficult to keep up because they require very detailed information. As mentioned earlier, these forms are then filed with their base jurisdiction. Most states do not provide E-Filing as of yet. Therefore, most of the time these forms are mailed to the state.



A simple solution for both of these is to use an online E-File Provider. The most advanced of the available services is www.expresstrucktax.com. Express Truck Tax acts as a one stop shop for all truck tax needs. Through them, you can E-File your Form 2290 with the IRS. It also provides a way to keep online records of your mileage and fuel purchases for IFTA reporting. This can make the IFTA process much easier.