IFTA CalculationMarch 5, 2022 2022-03-06 11:45
Hi guys. In this video, I will talk about the International Fuel Tax Agreement, in short, IFTA describing the calculation procedure in more detail. IFTA counts quarterly and collaborates with the State Revenue Department where the company is registered. If you’re just starting a truck business, firstly you need to register in the Revenue Department. How can you do this? There are two ways. The first way is to fill out the application form in a department. Or the second way is to send the completed application form by mail and add a check out for it for $10 if you have one truck.
If you have more than one truck, then for each truck, you pay $10 extra. This is a payment for stickers that are glued on both sides of the truck and make it possible to travel to different states. In report, we calculate the number of miles and gallons spent for each state respectively. Payment is as follows. We complete the report and check them out that’s specified in the cost estimate. You send it to the department by mail.
Now we will consider an example. Let’s calculate the IFTA for a company that is registered in the state of Pennsylvania. In order to do this, we go to the site revenue.pa.gov, Pennsylvania’s Department of Revenue. On the website menu, we must select the Forms of Publication tab, then the Forms for Business. Here we choose Motor and Alternative Fuel tax forms. Then choose the motor carrier road tax, IFTA forms. For the calculation, we need the following forms. Tax report, tax schedule as well as tax rates. The tax rates form must be selected for the quarter for which you’re calculating. In our case, this is a fourth quarter of the 18th year.
First, let’s take a look at the forms for fuel tax rates. In this form, you see several columns. Jurisdiction and Fuel Type columns. Let’s say, the state of Alabama. There’s a unique rate code and also a tax rate for this state. And there’s a form of calculations. This form is for final report. Well, let’s start. First, we need to specify the type of fuel. In our case, it will be diesel and kerosene. Here we must indicate the beginning of the quarter. The fourth quarter is the first of October.
Here we must specify the period of beginning and the end of quarter. The format has days and years. This field we must indicate your company’s carrier IFTA identification number or social security number. Next, we need to point out the name of the company. Consider the following fields. Total IFTA miles, total Non-IFTA Miles, Total Miles, Total Gallons, Average Fleet mpg. We will fill these fields a bit later. Let’s take a look at the table in more detail. Here, we have to consider the jurisdiction, its rate code and also the total IFTA miles by state. Well, let’s get started.
For example, we have driven to Alabama. I want to remind you that the list of these jurisdictions should correspond to this list. No other way. That’d be Alabama, Kansas, Kentucky. We also have states that fall under the system of double taxation. In this list, these states are listed as surtax. These are Indiana surtax, Kentucky surtax and Virginia. In the table, these states are listed twice but there’d be another, New York and let it be Wyoming. Accordingly, for them, we must specify their own rate code. Alabama is 93. Arkansas is 94. Kentucky Normal is 79. Kentucky Surtax is 80, New York is 92, Wyoming is 94. The states in which we did not go do not need to be indicated.
Here we must indicate number of miles that we have arrived in the state. For example, in Alabama we’ve driven 123 miles. This column is enough to duplicate. Arkansas 1567 miles. Let Kentucky be 261. The second line does not need to be filled. In order to continue the calculation, first, we also need to fill in the number of gallons that we use during traveling. But it’d be Alabama 17, Arkansas, we have 21, Kentucky 10, New York 100 and Wyoming 89. Now, we need to calculate the average fleet miles per gallon. As we already see, our form itself has calculated the sum of miles as well as the number of gallons. Therefore, we can simply repeat these values here. But IFTA miles in our case is zero. This will be 3.273.
Also, the number of gallons is 558. The usual arithmetic division operation. We need to divide 3273 by 558. In our case, this is a factor of 5.87. So, we have to specify 0.587. Accordingly, this is our column J. Now, we can count the column K taxable gallons. For this, we need to determine taxable miles by the average value of 123/5.87. This is 21. This means that for Kentucky, we have to rewrite this value. New York is 130 and Wyoming is 96. Well, in order to calculate nontaxable gallons, it suffices the column K minus column L.
You must specify the tax rate in the table, tax rate column.
Now, the final column is Tax Credit or Tax Due, column M x N. Interest Due is a column P, we filled with zeros. And in order to fill the Q column, it’s enough to sum up the O and P column or just rewrite the zero column. It seems, that’s all.
As you can see, we have very little value, because we have driven only 3000 miles. If you for example, would drive more respectively, gallons would be more and value would be greater, but not much. Here we indicate the street. Here respectively the network, let it be Pennsylvania. Here, we specify the account number. That is the same carrier, IFTA identification number or social security number. Here we indicate the period for which we considered it. We counted for the fourth quarter of 18th year, tax period and day. Here, quarterly, we will have the last day of the quarter This is our December 31, 2018.
Here we must specify and enter the amount of your remittance i.e. how much we need to pay, 5.96. Here we have to choose a payment method. We attach the check. Here we must have already indicated that we count. We considered diesel and kerosene. That is the same value, 5.96. In the subtotal of Amount Due field, we must sum up 1234. They’re empty i.e. 5.96. Line 8, Total Balance Due, 5.96 and also Total Amount Due Overpaid. In the end, we print out the forms, indicate the initials and also put out the signature.
Here respectively, the name. Here, the signature. Also, additional information. Nothing complicated. The main point is paying attention to details and of course, you must correctly read all the miles that you have driven in one state or another. And also, you have all the refueling checks for correct sum of gallons. If the IFTA is calculated incorrectly, you should pay in addition. For example, you will receive a letter in the mail from the department where the amount you need to pay is indicated. When you send a letter and add a check for cancellation to the department. If on the contrary, you overpay, you will also receive a letter. But in the case we’re calculating IFTA, you made an overpayment, at the next quarter, the overpayment amount must be deducted from the calculation. That’s all for now. Thanks for watching.