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How To: IFTA
1. BackgroundThe IFTA -- International Fuel Tax Agreement -- is a compact between most states in the United States and most provinces in Canada that governs how motor fuel taxes are paid by truckers that haul across state or national boundaries. The main purpose of the agreement is to allow trucking companies to file only one fuel tax return to their base state, instead of filing one return for each state/province in which they operate. The single unified return reconciles all the different state motor fuel rates and allows companies to make one payment (or receive a credit) to settle their fuel tax liability.
The main concept behind the unified return is to track all the mileage a truck (or fleet) travels on a state-by-state basis. Then, by using the truck's (or fleet's) average miles (or kilometers) per gallon (or litre), the return calculates the estimated fuel consumption on a state-by-state basis. The estimated fuel consumption is compared to the fuel purchased by jurisdiction to determine the net taxable volume. If the consumption in a state/province is greater than the fuel purchased in that state/province, then tax is due to that state/province. Conversely, if the fuel consumption in a state/province is less than the fuel purchased in that state/province, then a tax credit is due. Taking all states and provinces together, a company may have either tax due or a credit depending on the relative state/province fuel tax rates. This netting of tax across states/provinces means that there is no advantage to purchasing fuel in low tax states/provinces because the actual tax liability is calculated based on actual consumption and not on direct fuel purchases.
The Logger's Edge provides the ability to track your mileage by state/province and your fuel purchases by state/province. There is a report that makes all the fuel tax calculations required by state/provincial taxing authorities.
2. Steps Involved
Set Enable IFTA Flag
In the Basic Setup Window, the flag 'Enable IFTA' needs to be set.
Setting the IFTA flag will enable an additional form as part of the block set up.
You will also need to enable several additional fields. On the Miscellaneous Expense table, you will need to enable both the state and product codes:
NOTE: if the Quantity field is not already enabled, it must be enabled as well.
On the Trucks table, the PRODUCT_CODE (= Fuel type) field must be enabled:
(Note: the list of Product Codes is set programmatically by the software. This list is not editable through the user interface.)
Enter Truck Mileage
In order to enter the mileage of your trucks, there is a special menu item that is visible when the IFTA functionality is enabled. Navigate to Data Entry | Truck Mileage from the main menu:
Clicking on this menu item calls up a grid view that shows all your mileage entries. Each entry has the driver, truck, state/province. starting odometer, ending odometer, and the distance. There is also a column for whether the mileage is tax exempt. This grid is used for you to track all your odometer readings and mileage by state/province.
If
your company is based in Canada, your odometer readings will be entered in
kilometers, not in miles, and vice versa for U.S.-based companies. It
is important that the unit of measure used for the distances always be in
the same unit of measure. That is, always enter data in miles if you
are in the U.S., and always enter in kilometers if you are in Canada.
The buttons on the grid view work the same as with the other grid views in The Logger's Edge, with the exception of the ADD button. The ADD button calls up a special form for entering your mileages.
In the form, you first select a Truck. The entry in the starting odometer column will default to the most recent ending odometer reading that you have entered. You then click the Add button to add a new row into the grid. You then enter your data for your first trip segment. The distance column is a calculated (formula) cell that will always equal the ending odometer less the starting odometer.
If
you do not care to enter the starting & ending odometer readings for each
segment, you can just enter zero (0) as the starting odometer and enter the
mileage as the ending odometer.
When you click on Add for your next entry, the next row will carryover the driver, and date from the prior entry. The starting odometer will be set to the ending odometer of the prior entry and the ending odometer will be set to zero. As an example, row 10 shows the state of the grid just after the Add button has been clicked.
When you click OK, all the data in the grid will be saved.
When you change the truck, The Logger's Edge will prompt you whether you want to save your data. Whether you choose to save the data or not, the grid will be refreshed.
Enter Fuel Purchases
Your fuel purchases are entered as miscellaneous expenses. Navigate to Data Entry | Expenses | Contractor/Vendor | Expense Entry from the Main Menu. (This form is the standard form by which you enter all miscellaneous expenses, not just entries for fuel. There is a setting in the system that allows you to use a pop-up data entry form, rather than entering information directly in the grid.)
The fields that are required for the IFTA functionality are the Units (gallons, litres, etc.), the Product (Diesel, Gasoline, Ethanol, etc.) and the State/Province. When you are entering a non-fuel miscellaneous expense you can leave the units as 0.0 and the product and state/prov as 'NONE'.
These fields, along with the Truck, determine how much fuel (by type of fuel) that you purchased in each state and/or province. The other fields, such as activity, expense code, and dollar amounts are used in other reports in The Logger's Edge, such as the truck operating cost report.
Note: you must enter all your fuel quantities for a certain type of fuel in the same units. For example, if you are based in the U.S., then when entering diesel amounts, you should always enter gallons in the units field, even if you are entering fuel purchases from Canada (which will be expressed in litres on the fuel receipt). You will need to make the conversion into gallons before entering the data in this window.
Enter/Download Rates
The state/provincial fuel tax rates can either be entered into The Logger's Edge directly or can be imported from the IFTA web site.
You
must have Internet connectivity in order for this functionality to work.
If you are a dial-up user, establish your connection first, then return to
the Logger's Edge and proceed with these steps.
In order to import the rates, navigate to Setup | Equipment / Trucks | Trucks | IFTA Rates | Import Rates from the Main Menu.
You will be prompted for the year and quarter for the applicable rates. As noted in the entry box, the format of the entry is YYYY:4; for example 2005:4 is the fourth quarter of 2005.
When you click on OK, The Logger's Edge will go to the IFTA web site, download the rates and import them into your The Logger's Edge database.
The
IFTA web site address is www.iftach.org
and has all state/provincial tax rates as well as everything you need to
know about IFTA.
Once you have imported the rates, you can review or edit them. Navigate to Setup | Equipment / Trucks | Trucks | IFTA Rates | IFTA Rates from the Main Menu:
The rate grid has all the state/provincial rates for each quarter. The effective date and end date generally span the quarter, with the exception when a state/province changes its rate in the middle of the quarter. Then, the effective date and end date are used to determine which rate was in effect for each day that mileage was recorded.
Note:
There are two rows for each rate, one for the United States and one for
Canada. The Canadian rows are indicated by the checkbox 'Is Canada'.
The Canadian rows have each state/provincial rate expressed as $$ Canadian
/ Litre and are used by filers whose base province is in Canada. The
rows for the United States are expressed in $$ US / Gallon.
The rate matrix includes rates for the following products:
- Diesel
- Gasoline
- Gasahol
- Propane
- LNG (Liquified Natural gas)
- CNG (Compressed Natural Gas)
- Ethanol
- Methanol
- E-85
- M-85
- A55
Each of these products has a tax rate for each state/province. The appropriate rate depends on the fuel type identified for each truck (see above).
The
tax rate matrix can be updated during a quarter and so you are advised to
get the latest version of the rate matrix when you file your return.
For example, the rate matrix for the 2nd Quarter of 2006 will not be
finalized until June 2, 2006 (according to the IFTA Web Site). By
re-importing the data for a quarter, you will update any rates that already
exist for that quarter.
3. Report
In order to run the IFTA report, you run the The Logger's Edge Reporter.
Navigate to Statements | IFTA Fuel Schedule:
You will then be prompted for the Quarter, your Base State/Province, and the Fuel Type:
The IFTA rules require that a separate report be generated for each type of fuel. Remember, each truck is designated with a particular type of fuel, so the report shows only mileage and fuel for trucks whose product type matches your selection above.
