The United States is a melting pot of 50 states, each with unique culture and laws. When you visit different states, experiencing this diversity is as exciting as it is educational and as interesting as it is impactful. No one knows this better than those involved in the freight industry.
Carriers have a unique opportunity to travel the lower 48 states in the U.S. and enjoy beautiful scenery while they deliver loads. However, navigating across state lines isn’t as simple as it seems. Owner-operators must adhere to the carrier laws in each place they travel to.
One important regulation for carriers to consider is the International Fuel Tax Agreement (IFTA). The International Registration Plan (IRP) is another regulation that carriers need to be familiar with. Understanding all facets of the IFTA and IRP will help carriers stay in compliance with legal regulations.
Read on to learn about the IFTA and IRP and what owner-operators need to know to follow their rules. The melting pot of our nation is yours to enjoy, but there are some business hoops to jump through first.
Each state or jurisdiction used to have different carrier laws, where carriers operating in those jurisdictions had to apply for a license, then file and send their fuel taxes according to each state’s laws. It was a challenging and tedious process that made cross-country carrying unnecessarily difficult and time-consuming.
Which is why certain states in the U.S. formed the IFTA cooperative agreement in 1983. Over time, more U.S. states, and certain Canadian provinces joined IFTA. In the wake of its adoption, carriers were no longer required to follow a multitude of fuel tax regulations. Carriers with an IFTA license could travel in all IFTA jurisdictions without purchasing different fuel tax permits. Now, thanks to IFTA, you can file just one set of tax forms quarterly through a base jurisdiction rather than filing in each traveled jurisdiction. Today, the lower 48 states in the U.S. and 10 Canadian provinces are member jurisdictions.
The IFTA created a more systematic and efficient fuel tax system for carriers to use and saved trucking companies millions of dollars in administrative expenditures. It was a revolutionary solution to an age-old freight industry problem and is still used by carriers decades later.
If you don’t currently have an IFTA license, you might be wondering how to get one. To determine if you’re eligible for an IFTA license, consider the following criteria.
To be eligible for an IFTA license, you must:
Be based in a member state and operate across at least two member jurisdictions. The following jurisdictions are not IFTA members:
United States: Alaska, Hawaii, and the District of Columbia
Canada: Yukon Territory, Northwest Territory, and Nunavut
Use a truck that also meets one or both of the following criteria:
Has two axles and a weight of over 26,000 pounds (11,797 kilograms)
Has three or more axles (weight is a non-factor here)
If you’ve met all the benchmarks to qualify for an IFTA license, you’re ready to learn more about specific IFTA requirements.
Once you determine you’re eligible, you must complete the base-state-specific IFTA license application form. Most states require the same basic information: registered business name, mailing address, federal business number, and Department of Transportation (DOT) Number, which shouldn’t be confused with your Motor Carrier (MC) Number.
A DOT Number is required (in 38 states) for most commercial vehicles hauling cargo and will be assigned to you when you register with the FMCSA. It acts as a personalized identifier for use in compliance audits, crash reviews, and company inspections. You will also need it to complete the IRP registration process.
An MC Number is an individualized identifier assigned by the FMCSA. It’s different from a DOT Number as it’s typically assigned to for-hire moving companies that are transporting passengers or regulated commodities (such as agricultural goods).
To get your IFTA license, you will need to contact your base jurisdiction to review additional required forms and filing procedures.
Affix a current IFTA sticker to your truck each time you renew your license. The yearly IFTA stickers expire on January 1 of the subsequent year, though the DMV lets carriers renew through the end of February. After this time, carriers will be fined for an expired sticker and license.
Execute an IFTA report every 90 days (quarterly) for operational trucks, regardless if the truck isn’t used for a quarter (or more). This report documents the number of miles a carrier drove and gallons of gas a carrier purchased. It will also ascertain the taxes still owed or the refund due. The base state’s IFTA home office will communicate this information with you. The deadlines for the IFTA reports are April 30, July 31, October 31, and January 31.
Pay all outstanding taxes due by the aforementioned deadlines.
Archive fuel tax records in your base state’s home office for a minimum of 4 years.
You should complete the above requirements so you can stay in compliance with IFTA regulations. If you don’t follow regulations it can lead to legal ramifications due to non-compliance.
There’s a definite learning curve for IFTA compliance as an owner-operator. Mistakes happen in every line of work; however, compliance mistakes can be costly and hurt your business.
The required IFTA quarterly reports can take time to organize and complete, and you don’t want to let anything slip through the cracks. The best practice is to submit ahead of the deadline, especially if your mileage and gas records are complete for the quarter.
Every time carriers cross a state line, they must record their odometer readings. At the end of a quarter, carriers are required to add these odometer entries together to form a comprehensive record of miles traveled.
Carriers must track the total gallons of fuel purchased per jurisdiction per quarter. This tracking should include gas purchase date, gas station’s name and location, type of gas purchased, the price per gallon, the number of gallons purchased, truck plate number, and the carrier’s name.
Once your mileage and gas records are up to snuff, use your IFTA login to submit your reports on your base state’s Department of Revenue’s Fuel Tax System website. Failure to track this information properly or to submit the record on time can result in steep fines, penalties, and even a Department of Transportation audit, which could result in fines so high that you’re forced to shut down your business.
You can protect yourself and your business from hefty fines by staying organized, keeping accurate mileage and gas records, and filing IFTA mandated reports on time. Luckily, there are carrier software tools out there that’ll help you record the required information efficiently and accurately.
Thanks to electronic logging device (ELD) software systems, the days of manual entry on a reporting worksheet are long gone. ELDs with IFTA reporting capabilities help streamline monitoring and calculating your miles traveled and the fuel used. It saves carriers time and money.
Take the Xpress Technologies ELD, for example. Its exclusive load access coupled with eLog capabilities helps carriers navigate the roads and regulations of the freight industry with ease.
The International Registration Plan (IRP) is the second regulatory agency you should be familiar with. It regulates what license plate you need on your truck(s). Created in the late 1960s, the IRP was formed to build a reciprocity agreement that distributed (among member jurisdictions) money from vehicle registration fees equitably. Reciprocity allows carriers to drive their trucks in jurisdictions other than the base state in which they’re registered and ensures all the involved jurisdictions receive fair revenue.
The ultimate goal of the IRP is to boost interstate business by increasing the use of our country’s highway systems. Carriers register with their base state’s jurisdiction and pay a fee based on how much they’ve traveled in other IRP member jurisdictions. Collected fees are allotted to IRP member jurisdictions (based on the number of miles driven), and voila, we have a fair reciprocity agreement in which all parties benefit.
So, what qualifies you to register for IRP? It has to do with the type of vehicle you drive. Apportionable vehicles operating in multiple states or provinces must have an IRP. Not sure whether your vehicle is an apportionable vehicle? Check out the criteria below.
Apportionable vehicle criteria:
Hired vehicles used to transport property or goods in two or more member jurisdictions within the United States or Canada.
Have at least two axles and a gross vehicle weight of more than 26,000 pounds.
Have three or more axles (weight is not a factor here).
Please note that recreational vehicles (RVs), government-owned vehicles, city pickup and delivery vehicles, or vehicles displaying restricted plates, typically chartered buses, are not considered apportionable vehicles and are not eligible for IRP.
If you operate your apportionable vehicle in more than one IRP jurisdiction, how do you register your vehicle and obtain IRP plates?
You’ll need a brick-and-mortar place of business in your base state jurisdiction. To register, you’ll have to provide four documents that prove residency (i.e., utility bill, tax return, mortgage statements, bank statements, or other government documents).
2. Complete IRP Application:
The IRP application, which varies from state to state, typically requires carriers to provide basic company information like name, phone number, address, and company owner. It will also ask for your DOT number and vehicle information, including the VIN, unit number, purchase date, and price.
Depending on your base state jurisdiction, you may be required to submit an emissions certificate, state safety inspection, and heavy vehicle use tax (HVUT- Form 2290). Each jurisdiction has its own application periods, which vary from one another. Make sure to confirm when your application deadline falls.
3. Pay Registration Fees:
Registration fees are different for each IRP jurisdiction. Contact your base jurisdiction office to determine your IRP fees and payment method.
As a rule-of-thumb, IRP often uses mileage to calculate fees, which means you’ll be required to track the miles you drive in each jurisdiction. The Xpress Technologies ELD can assist you with tracking your mileage for IRP registration fee calculations.
4. Affix Plates and Store Cab Card:
Once you complete the IRP application and pay the registration fees, you will receive your apportioned license plate. In addition to the IRP license plate, you’ll receive an apportioned cab card. This cab card details which jurisdictions your truck can travel, and specifies your truck’s weight limits. You should keep the cab card in your truck and keep a copy for your personal records. If you happen to misplace your card, a digital photograph is permissible.
5. Renew IRP Plates:
IRP requires carriers to renew their plates annually. You must contact your base state jurisdiction office to complete the renewal process, as each jurisdiction has different renewal procedures and accompanying fees. Your personalized IRP cab card will provide renewal deadlines.
If you drive an apportionable vehicle and travel in more than two jurisdictions, you must register with IRP, display the IRP license plate, and have your cab card on hand at all times. Carriers who fail to meet any of the above IRP requirements are at risk for citations, hefty fines, or even truck impoundment.
It’s vital to adhere to IRP regulations so that your business can continue to run smoothly. Following all mandated regulations and compliance guidelines are necessary to establish yourself as a reliable carrier and build strong long-term relationships within the industry.
Xpress Technologies: Consistent Compliance Support
The world of IFTA and IRP regulations can be a complex one to travel. At Xpress Technologies we believe in giving carriers the tools they need to succeed so you can grow your business. That’s why we’ve compiled what carriers need to know about compliance. Whether you’re navigating the ins and outs of Hazardous Materials Regulations or how Hours of Service (HOS) regulations differ between California and Texas, we’ve got you covered. We’re here to consistently help carriers like yourself, succeed on the road, one journey at a time. Contact us today.
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