Table Of ContentUMASS/AMHERST
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Commonwealth of Massachusetts Department of Revenue
International
Tax Agreement
Fuel
IFTA
COUJECnOH
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Processing Division, Excises Unit, P.O. Box 7012, Boston, MA 02204
InternationalFuelTaxAgreement
Introduction
The purpose ofthis manual is to outlinethe steps involved in licensing underthe International Fuel TaxAgree-
ment (IFTA). The International Fuel TaxAgreement is an agreementamong states and Canadian Provincesto
simplifythe reporting offuel taxes by interjurisdictional and interstate motorcarriers. Upon application, the car-
rier's base jurisdiction will issue credentials (license and decals) which will allowthe IFA licenseeto travel in all
IFTA memberjurisdictions.
Massachusetts may beyour base jurisdiction for IFTA licensing and reporting if:
1. You maintain the operational control and recordsforqualified motorvehicles in Massachusetts orcan
make those records available in Massachusetts;
2. You have qualified motorvehicles which actuallytravel on Massachusetts highways; and
3. You operate in at least one other IFTA memberjurisdiction.
The IFTA license offers several benefitstothe interstate motorcarrier. These benefits includethe following: one
application, one set of credentials, one quarterlytax reportwhich reflectsthe nettax or refund due, and in most
circumstances one audit conducted byyour base jurisdiction. These advantages all lead to cost and time sav-
ings forthe interstate carrier.
IFTA carriers operating in non-IFTAjurisdictions must continuetofollowthe procedures and filethe returns re-
quired bythe lawsand regulations ofthose non-IFAjurisdictions.
Technical assistance and information pertainingtothe International Fuel TaxAgreement can be obtained by con-
tacting the Processing Division, Excises Unitatthe following address:
InternationalFuelTaxAgreement 1
Contents
I. KeyTerms: "Base Jurisdiction" and "Qualified MotorVehicle" 2
II. Registration 3
A. Application Requirements 3
B. IFTAFees 3
C. IFTA Credentials 3
1. License 3
2. Decals 3
3. Grace Period 3
4. Temporary IFTA Permit 3
5. Single Trip Permits 4
D. Reporting Requirements 4
E. Penalty and Interest 5
F. Bonding/Certified Check 5
G. Compressed Natural Gas (CNG) 5
H. Refunds and Credits 5
I. Tax-Exempt Miles 5
J. Exempt Fuel Use 5
III. Lease Agreements and Tax Responsibilities 6
IV. License Cancellation, Suspension, Revocation and Reinstatement 7
A. License Cancellation 7
B. License Suspension and Revocation 7
C. License Reinstatement 7
V. Record-Keeping Requirements 8
A. Mileage Records 8
B. Fuel Receipts 8
C. Bulk Fuel Storage 9
D. Record Retention Period 9
VI. Audit 10
VII. Appeals 10
VIII.Power ofAttorney 10
Definitions 11
InternationalFuelTaxAgreement 2
Key Terms
I.
"Base Jurisdiction" and "Qualified Motor Vehicle"
Two basic terms shape the workings of IFTA. The firstterm, "base jurisdiction," establishesthe jurisdiction to
which a carrierwill make fuel tax payments. Your base jurisdiction will then distribute the appropriate amounts
,
oftax owed to each IFTA memberjurisdiction foryou. Massachusetts may beyour base jurisdiction if:
>
yourvehicle(s) is registered in Massachusetts;
yourvehicle's records are maintained orcan be made available in Massachusetts; and
at least one ofyourvehicles logs miles within Massachusetts.
The second term defines the kinds of vehiclesthat qualifyforan IFTA license. These "qualified motorvehicles"
are defined as motorvehicles used, designed or maintained totransport people or property and that:
*
have two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds, or
II,797 kilograms; or
»
have three or more axles, regardless ofweight; or
*
are used in combination when such combination exceeds a gross vehicle weight or registered gross vehicle
weight of 26,000 pounds or 11,797 kilograms.
Recreational vehicles are not considered qualified vehicles.
Ifyou have morethan one fleet operating out of more than one jurisdiction, morethan one jurisdiction could
qualifyas your base jurisdiction. In this instance, the jurisdictions involved may agree to designate one jurisdic-
tion as your base jurisdiction. This designation must be approved in writing by each affected jurisdiction.
InternationalFuel TaxAgreement 3
Registration
II.
A. Application Requirements
Any motor carrier based in Massachusetts and operating one (1) or more qualified motorvehicles in at least
one (1) other IFTA member jurisdiction mustfile an IFTA Credential Application in Massachusetts. Ifa carrier
qualifies as an IFTA licensee but does not wish to participate in the IFTA program, trip permits must be obtained
to travel through member jurisdictions in accordance with the regulations of each memberjurisdiction. Applica-
tions must be filled out completely and typed or printed in ink. Submitthe completed application to the Mass-
achusetts Department of Revenue, Processing Division, Excises Unit, P.O. Box 7012, Boston, MA 02204.
A carrierwill not be issued IFTA credentials if its IFTA account is delinquent, or ifthe carrier was previously li-
censed in another IRA memberjurisdiction and the carrier's license has been suspended or revoked and is still
in that status in that memberjurisdiction. The Department of Revenue will not issue a license ifthe license ap-
plication submitted contains misrepresentations, misstatements or omissions of required information.
B. IFTA Fees
IFTA licenses are renewed and decals are issued annually. The decals are expected to cost $8.00 per set.
C. IFTA Credentials
1. License
An IFTA license will be issued for each qualified motorvehicle operating in IFTA memberjurisdictions. The license
ora photocopy ofthe IFTA license must be maintained in the cab ofeach qualified motorvehicle. The IFTA license
is valid forthe calendaryearJanuary 1 through December31. Ifa carrier is found operating a qualified motor
vehicle without an IFTA license, the vehicle operator may be subjecttothe purchase of atrip permitand afine.
2. Decals
Two decals will be issued foreach qualified motorvehicle operated bythe IFTA licensee. IFTA requiresthat one
decal be placed on the exterior ofthe passenger's side ofthe power unit. The second decal should be placed on
the exterior portion ofthe driver's side ofthe power unit. A licensee may request extra decals forfleet additions.
Decals that are assigned to new owner-operators whose qualified vehicles are undera long-term lease must be
recalled oncethe lease isterminated. Failureto displaythe IFA decals properly may subjectthe vehicle operator
to the purchase ofatrip permitand afine.
Licensees may request additional decals throughoutthe license year by completing an application form.
3. Grace Period
Massachusetts will be an IFTA memberjurisdiction beginning January 1, 1996. Massachusetts-based carriers
will have atwo-month grace period to display 1996 IFTA credentials. To operate in IFTAjurisdictions during this
grace period, the carrier must display one ofthe following:
a. a valid 1995 motorfuel use tax credentials from the IFTAjurisdiction in which it is operating; or
b. a singletrip permitfrom the IFTA jurisdiction in which it is operating.
4. Temporary IFTA Permit
This is a permit issued bythe base jurisdiction to be carried in a qualified motorvehicle in lieu ofthe permanent
annual decals. Atemporary permit is vehicle-specific and is valid fora period ofthirty (30) days to allowthe
carrieradequate time to affixthe permanent decals. The temporary IFTA permitwill be issued onlyto cur-
rently registered IFTAcarriers.
InternationalFuelTaxAgreement 4
5. Single Trip Permits
In lieu of registration in a motorfuel use tax program, an interstate motorcarrierwho operates commercial ve-
hicles in Massachusetts must purchase a 72-hourtrip permit at an anticipated cost of$20.00. Note: underthe
same circumstancesyou will most likely be required to purchase trip permits in other IFTA memberjuris-
dictions, where prices and time periods will vary.
D. Reporting Requirements
All licensees must file an IFTA quarterlytax reportwith the Excises Unit. The tax due or refund amount is calcu-
lated for each memberjurisdiction on this report. Ifthere is a nettax due, the licensee will submita checktothe
Commonwealth of Massachusetts; ifthere is a refund due, the licensee will receive a refund checkfrom the
Commonwealth of Massachusetts. Tax rates provided with the IFTA quarterlytax report will be currentforall
memberjurisdictions.
The following information is required on the IFTA quarterlytax report:
1. Total miles, taxable and nontaxable, traveled bythe licensee's qualified motorvehicles in all jurisdictions,
IFTA and non-IFTA, including trip permit miles;
2. Total gallons offuel consumed, taxable and nontaxable, by licensee's qualified motorvehicles in all jurisdic-
tions, IFTAand non-IFTA;
3. Total miles and taxable milestraveled in each memberjurisdiction;
4. Taxable gallons consumed in each memberjurisdiction;
5. Tax-paid gallons purchased in each memberjurisdiction; and
6. Currenttax rates foreach memberjurisdiction.
The IFTAquarterlytax reportwill be sentto all IFTA licensees at leastthirty (30) days priortothe due date. Fail-
ureto receivethe quarterlytax report does not releasethe licensee from reporting obligations. A quarterlytax
report must be filed even ifthe licensee does notoperate or purchase taxable fuel in any IFTA memberju-
risdiction in a particular quarter.
The due date forthe quarterlytax report isthe last day ofthe month immediatelyfollowing the close ofthe
quarterforwhich the report is being filed.
These dates arre asfollows:
"1
Reporting Quarter Due Date
—
January March April 30
—
April— June July31
July September October31
—
J
October December January 31
The quarterly tax report must be postmarked bythe due date. Ifthe due date is a Saturday, Sunday or legal holi-
day, the next business day is considered the due date. The licensee will be subjectto the IFTA penaltyand inter-
est provisions ifthe report is notfiled in atimely manner.
InternationalFuel TaxAgreement 5
E. Penalty and Interest
Ifa licensee fails to file a report, files a late tax report, or fails to remit anytax due, the licensee is subject to
penalty and interest. The penaltyforfailure to file a tax report when due is the greater of fifty dollars ($50.00) or
ten percent (10%) of the net tax due to all memberjurisdictions. Interest is computed on all delinquent taxes
due each jurisdiction at a rate of one percent (1%) per month, from the date the tax was due for each month, or
fraction thereof, until paid.
F. Bonding/Certified Check
A bond may be required forjustcause (e.g., when a licenseefailstofiletimely reports, when tax has not been re-
mitted, orwhen an audit indicates problems that warrant bonding). A licensee required to post a bond must pro-
vide a surety bond, bank certificates ofdeposit, orany other obligation that the Massachusetts Department of
Revenue deems appropriate. Payment by certified check is required from any licensee required to post bond
G. Compressed Natural Gas (CNG)
CNG and otherfuels that cannot be measured in gallons must be converted to gallons by using the conversion
factor used bythe jurisdiction in which the fuel was consumed.
H. Refunds and Credits
A refund may be claimed on the IFTAtax reportforany overpayment oftax in a reporting period. Please check
the box on the IFTAtax report ifa refund is requested. A refund will be issued afterthe Department has deter-
mined that all tax liabilities, including any outstanding audit assessments, have been satisfied to all member
jurisdictions. A refund may be denied ifthe licensee is delinquent in filing any quarterlytax report(s).
Ifa refund is not requested, the creditwill be carried forward to the next period. Earned credits will expire if
not used after eight (8) quarters.
Tax-Exempt Miles
I.
IFTA recognizesthat some jurisdictions have unique economic and geographic characteristics which have given
rise to various definitions oftax-exempt miles. If questions arise, contactthe individual memberjurisdictions.
All jurisdictions require supporting documentation.
These miles should be reported. Total miles should be reduced only on the jurisdiction calculation, not the
miles per gallon calculation.
J. Exempt Fuel Use
IFTAjurisdictions may define specifictax-exemptfuel use in their own jurisdiction. This exemption is not calcu-
lated on the IFTAtax report.
An exemption must be obtained from the jurisdiction in which the taxwas paid. The licensee must maintain ad-
equate records to supportthe exemption claimed and submit a separate refund claim fortax paid on tax-exempt
fuel directly to the appropriate taxing jurisdiction.
InternationalFuelTaxAgreement 6
Lease Agreements
III.
and Tax
Responsibility
The carrier operating avehicle is always responsible forthe payment offuel tax, unless a lease agreement
specifically states otherwise. For example, ifa carrier leasing avehicle is stopped by a law enforcement officer
and the lease agreement does not showthatthe lessor is responsibleforthe payment offuel tax, the carrierwill
be held responsible. Similarly, a carrierwho is audited bythe Department must have documentation proving
thatthe payment offuel tax isthe responsibility of another party orthe carrier must paythe tax.
The following five items, taken directlyfrom the IFTAArticles ofAgreement, addressthe tax responsibility of
lessors, lessees, independent contractors and household goods agents.
1. A lessorwho is regularly engaged in the business of leasing or renting motorvehicles without drivers for
compensation to licensees orother lessees may be deemed to be the licensee, and such lessor may be is-
sued a license ifan application has been properlyfiled and approved bythe base jurisdiction.
2. Inthe case ofa carrier using independent contractors under long-term leases (more than 30 days), the
lessorand lessee will be given the option of designating which party will report and payfuel use tax. Ifthe
lessee (carrier) assumes responsibilityfor reporting and paying motorfuel taxes, the base jurisdiction for
purposes ofthis agreement shall bethe base jurisdiction ofthe lessee, regardless ofthe jurisdiction in which
the qualified motorvehicle is registered, forvehicle registration purposes bythe lessor.
3. In the case ofa short-term motorvehicle rental, by a lessor regularly engaged in the business of leasing, or
renting motorvehicles without drivers, forcompensation to licensee or other lessees of29 days or less, the
lessorwill report and paythefuel use tax unlessthefollowing two conditions are met:
a. The lessor has awritten rental contract which designatesthe lessee asthe party responsonsible for re-
porting and paying the fuel use tax; and
b. The lessor has a copy ofthe lessee's IFTAfuel tax license which is valid fortheterm ofthe rental.
4. In the case ofa carrier using independent contractors undershort-term/trip leases of 29 days or less, the
trip lessorwill report and payall fuel taxes.
In case ofa household goods carrier using independent contractors, agents, or service representatives,
under intermittent leases, the party liable forfuel tax shall be:
a. The lessee (carrier) when the qualified motorvehicle is being operated underthe lessee's jurisdictional
operating authority. The base jurisdiction for purposes ofthis agreement shall be the base jurisdiction of
the lessee (carrier), regardless ofthe jurisdiction in which the qualified motorvehicle is registered forve-
hicle registration purposes bythe lessoror lessee.
b. The lessor (independent contractor, agent, orservice representative) when the qualified motorvehicle is
being operated underthe lessor'sjurisdictional operating authority. The base jurisdiction for purposes of
this agreement shall be the base jurisdiction ofthe lessor, regardless ofthe jurisdiction in which the quali-
fied motorvehicle is registered forvehicle registration purposes.
5. No memberjurisdiction shall require the filing of such leases, butyou must make the leases available upon
request ofany memberjurisdiction.
InternationalFuel TaxAgreement 1
License Cancellation,
IV.
Suspension, Revocation
and Reinstatement
A. License Cancellation
The IFTA license may be canceled atthe request ofany licensee provided all reporting requirements and tax liabil-
itiesto all memberjurisdictions have been satisfied. Thefinal box on the IFTA quarterlytax report may be
checked to indicate the end of operations under IFTA. The license may also be canceled by submitting a written
request forcancellation. Upon cancellation, the licensee must destroythe IFTA license and all unused IFTA decals.
B. License Suspension and Revocation
An IFTA license may be suspended and/or revoked forany ofthe following reasons:
1. Failure to file an IFTA quarterlytax report;
2. Failure to remit all taxes due all memberjurisdictions;
3. Failure to pay and/or protest an audit assessment within the established time period; or
4. Failure to maintain adequate records or make records available when requested.
The Department will notifyall memberjurisdictions when a suspension or revocation has occurred or has been
released. Do not operate vehicles when a license has been revoked or suspended.
C. License Reinstatement
The Department may reinstate an IFTA license once the licensee files all required reports and satisfies all out-
standing liabilities due to all memberjurisdictions.
InternationalFuelTaxAgreement 8
Record-Keeping
V.
Requirements
A. Mileage Records
It isthe licensee's responsibilityto maintain records ofall interstate operations ofqualified motorvehicles. The li-
censee's records mustsupportthe information reported on the quarterlytax report. The Individual Vehicle
Mileage Record (IVMR), as required forthe International Registration Plan, isan acceptable source documentfor
recording vehicle mileage information. Anotheracceptable source document is atrip reportwhich must include:
1. Date oftrip (starting and ending);
2. Trip origin and destination (including cityand state);
3. Routes oftravel;
4. Beginning and ending odometer readings;
5. Total trip miles;
6. Mileage by jurisdiction;
7. Vehicle unit number; and
8. Licensee's name.
B. Fuel Receipts
The licensee must maintain complete records ofall fuel purchases. Separate totals must be compiled foreach
fuel type. Fuel types include Diesel, Gasoline, Gasohol, Propane and Natural Gas. Thefuel records mustcontain:
1. Date of purchase;
2. Name and address ofseller;
3. Numberofgallons purchased;
4. Type offuel purchased;
5. Price pergallon;
6. Unit numberor license plate number ofthe vehicle into which the fuel was placed; and
7. Purchaser's signature.
Acceptable fuel receipts include an invoice ora credit card receipt. Receipts which contain alterations orera-
sures will not be accepted.
