The International Fuel Tax Agreement (IFTA) simplifies fuel tax reporting for truckers and transportation businesses operating in multiple jurisdictions across the United States and Canada. Essentially, IFTA allows commercial carriers to file a single quarterly fuel tax return with their home jurisdiction, covering all jurisdictions where they operated.

Before IFTA, truckers had to obtain fuel permits from each state they drove through, creating tedious paperwork and inefficiencies. Today, if your vehicle qualifies for IFTA—usually meaning vehicles with three or more axles, or vehicles with two axles exceeding 26,000 pounds—you must file regular IFTA reports detailing fuel purchases and miles traveled within each jurisdiction.

Why is IFTA Important?

The core purpose of IFTA is straightforward: to ensure that jurisdictions fairly collect fuel taxes based on actual road usage by commercial vehicles. Each jurisdiction has different fuel tax rates, and IFTA helps accurately distribute these taxes based on precise mileage reporting.

Filing your IFTA returns accurately and on time is crucial for your business. Errors or non-compliance can lead to penalties, audits, or costly disruptions. Therefore, understanding basic IFTA principles and common reporting pitfalls can significantly benefit your transportation business.

Common IFTA Reporting Mistakes to Avoid

IFTA reporting might sound straightforward, but the reality is often more complicated. Many carriers inadvertently make mistakes when preparing reports. Here are some of the most common errors to avoid:

1. Late Filing or Not Filing at All

Procrastination is a common reason for late IFTA submissions. Unfortunately, a missed deadline isn't just inconvenient; it’s costly. Late submissions or failing to submit your IFTA report altogether results in penalties of either $50 or 10% of the net tax liability due—whichever is greater. More importantly, habitual late filing attracts attention and increases your risk of audits.

To avoid this mistake:

• Clearly mark your calendar with quarterly deadlines.
• Set reminders on your smartphone or computer.
• Prioritize the completion of IFTA documentation in advance.

2. Estimating Fuel and Mileage Data

It’s tempting to estimate mileage and fuel usage, especially if meticulous record-keeping feels tedious or if you’re short on time. However, estimated or rounded numbers can quickly lead to discrepancies that trigger audits. Accurate fuel receipts, documented mileage logs, and precise calculations ensure correct reports and eligibility for refunds or tax credits.

Best practices:

• Keep thorough records of fuel receipts and mileage.
• Cross-check the odometer readings and GPS data regularly.
• Take time to verify calculations before submitting your reports.

3. Not Documenting Odometer or GPS Problems

Technical problems with odometers or GPS devices can significantly affect mileage accuracy. Failing to report these issues promptly can make your records appear incomplete or falsified during an audit. Auditors often scrutinize mileage discrepancies closely, and undocumented problems could result in further investigation.

Recommended actions:

• Immediately document any equipment failures.
• Include detailed notes explaining any irregularities in your quarterly report.
• Regularly inspect and maintain tracking equipment to reduce the chance of malfunctions.

4. Omitting Personal or Unloading Miles

Every single mile your truck travels, whether for commercial, personal, or unloading purposes—must be documented in your IFTA report. It might seem harmless or irrelevant to leave out personal errands, meal runs, or short drives during loading and unloading, but auditors view mileage gaps as red flags. Even minor omissions could trigger an audit.

How to avoid this issue:

• Educate your drivers about logging every mile.
• Create a standardized practice for logging all miles daily.
• Conduct routine checks to ensure consistency and completeness.

5. Using Non-compliant or Outdated Software

Modern technology can greatly simplify IFTA reporting—but only if your software meets current compliance standards. Many software providers advertise as "IFTA-compliant," but outdated or improperly calibrated tools may provide incorrect calculations or outdated tax tables. This reliance on faulty data can create serious problems.

Important software guidelines:

• Verify that your software regularly updates tax tables and rates.
• Ensure your Electronic Logging Device (ELD) is FMCSA-compliant.
• Invest in reputable software specifically designed for transportation companies.

6. Ignoring Mileage and Fuel Use Trends

Your fleet’s reported miles per gallon (MPG) should remain relatively consistent across reporting periods, typically falling within the 5 to 10 MPG range. Significant fluctuations or abnormalities in your reported MPG may draw unwanted attention from auditors. Consistency and accuracy across reporting periods help avoid unnecessary scrutiny.

Preventative tips:

• Regularly analyze your fleet’s fuel and mileage trends.
• Provide explanations within your report for any significant variations in MPG.
• Address unusual patterns immediately rather than waiting for auditors to question them.

The Cost of Mistakes and How to Avoid Them

Mistakes in your IFTA reporting aren't simply paperwork errors; they directly impact your business. Penalties, audits, and lost time can become major operational disruptions. Implementing careful record-keeping and standard operating procedures can mitigate these risks.

Consider these practical strategies:

• Regular training and refreshers for your administrative and driving teams.
• Utilizing compliant and reliable software to streamline reporting.
• Scheduling regular audits within your business to catch issues proactively.

Keep Your Fleet Running Smoothly and Efficiently

Navigating IFTA regulations doesn't have to be stressful. With clear understanding and diligent practices, you can simplify the process and avoid costly errors. Accuracy, timeliness, detailed record-keeping, and compliant technology are your best defenses against mistakes.

Keeping track of fleet maintenance doesn’t have to be complicated. With Simply Fleet’s Fleet management software, streamline your operations effortlessly. Easily track service schedules, manage maintenance tasks, and prevent costly downtime with intuitive tools designed specifically for fleet managers. Sign up today for a free trial and discover how Simply Fleet can simplify your fleet management, enhance productivity, and drive profitability.