Filling Truck Fuel Tank

If you’re a truck driver, there’s a good chance you have some level of familiarity with IFTA. And if you’ve worked with ProTransport in the past, you probably know about the importance of maintaining compliance with IFTA regulations. But how much do you know about IFTA and its history, or how the reporting and filing process has evolved from its beginnings to today?

While quarterly IFTA filing can still be a time-consuming and stressful endeavor, it’s actually made paying fuel taxes much easier than it had been previously. Add in the technological advancements that have been introduced in recent years, and you’ll find that IFTA has evolved significantly since its inception.

Below, we’ll give a brief history of IFTA and talk about its evolution from paper to digital reporting. Read on to learn more!

Background on IFTA

Prior to IFTA, all truck drivers were legally required to have a permit for every state they crossed during transport. Essentially, whenever a driver entered a new jurisdiction within the United States and Canada, they had to make a stop along their route to get a fuel tax permit. Additionally, each state had its own policies, guidelines, procedures and due dates that truckers had to be aware of when filling out paperwork.

Needless to say, the entire process of reporting and filing was far more time-consuming than it is today. Not only was it difficult for drivers to keep track of the fuel purchases, states crossed and fuel taxes, but the process for filing fuel taxes was inconsistent and often caused confusion in the following areas:

  • Filing timeframes
  • Tax/filing definitions
  • Record keeping systems
  • Guidelines
  • Laws

Carriers needed a more comprehensive, timely and reliable solution for managing and filing their fuel taxes, which is where the International Fuel Tax Agreement came in.

The Early Evolution of IFTA

IFTA serves as an arrangement between the continental United States (excluding Alaska, Hawaii and Washington, D.C) and Canada (excluding the Northwest Territories) that allows for simplified accounting and payment of fuel taxes and much less paperwork for carriers. 

Created in 1983 for carriers who frequently crossed state lines, there were three states that used this model at first: Arizona, Iowa and Washington. Three other states, Maine, New Hampshire and Vermont, used a similar model known as the Regional Fuel Tax Agreement (RFTA). 

Even with the model in place, however, it took time for the agreement to be enacted nationwide. In 1984, federal legislation authorized a working group to study motor carrier procedures and review the states’ methods of collecting fuel use taxes.

Between 1987 and 1990, a new model for IFTA was introduced based on that study and was adopted by additional states. By 1991, IFTA incorporated as a non-profit in Arizona to serve as the administrative body for this agreement. 

It wasn’t until 1996, however, that congress enacted legislation requiring all states to join, creating a level of consistency amongst all member states when it came to reporting, payment and auditing.

Manual IFTA Reporting 

The IFTA agreement meant that carriers could obtain a single license for their motor vehicle and only submit one tax return each quarter in their home jurisdiction.

Obviously, having this level of uniformity helped to drastically reduce the amount of time drivers spent on doing additional tasks, such as paperwork duty or obtaining a permit in the states they operate in. However, that doesn’t mean that quarterly IFTA reporting wasn’t still a time-consuming task. 

For decades, motor carriers had to do all their IFTA calculations manually. Each state has a different fuel tax rate. Essentially, drivers have to track the number of gallons of fuel they purchase in each state, check their odometers to track the number of miles they’ve driven in each state and then do their calculations based on each state’s individual tax rate. 

So, even though IFTA delivered a level of consistency in reporting and filing standards, drivers still had to spend an extended amount of time on paperwork. Motor carriers have had to spend years keeping track of all their receipts and records in order to ensure they have everything they need to remain compliant.

Having to do all of these calculations, in addition to having to keep four years’ worth of records at a time, led to many drivers making mistakes in their reporting. IFTA requires accurate logs of miles traveled in each jurisdiction, and any errors in a driver’s math or record-keeping could lead to problems or even trigger an audit.

Evolving from Paper to Digital Reporting

IFTA helped solve a number of problems associated with paying fuel tasks, but having to do it by paper still caused stress for motor carriers. It also meant that they had to spend time away form doing what they actually want – run their business and be out on the road.

As technology has continued to improve, however, the industry has seen the emergence of all-in-one trucking software – which allows fleets to automatically track their fuel data and take the time and stress out of IFTA filing.

One of the all-in-one software options available is ProTransport, which allows users to track every aspect of their business in a single, convenient location. With IFTA specifically, ProTransport offers integrations that give users the ability to load their accounting information and other data quickly

Not only does this lead to less headaches and stress, but it allows motor carriers to finish their IFTA reporting within just a few minutes.

IFTA and fuel taxes have evolved plenty over the years, but digital reporting has helped make this once tedious process much more manageable. With companies like ProTransport remaining at the forefront of the latest technological advancements, carriers everywhere will be able to focus more and more on what matters – their business.

Reach out to our team today for more information, or schedule a demo to see for yourself how ProTransport can transform your IFTA reporting process.