COVID-19 and IFTA Taxes
by Rick Larose | April 22, 2020
COVID-19 and IFTA Taxes
The outbreak of COVID-19 has created a challenging time for everyone. That is especially true for the motor carrier industry. In these unprecedented times, motor carriers are at the forefront of keeping commerce moving freely across the United States and Canada.
The International Fuel Tax Agreement (IFTA) was created for the sole purpose of making life easier for motor carriers in the licensing for, and payment of, motor fuel use taxes. Licensing and paying tax through base jurisdictions streamlines the process for the carrier, service bureau, permitting service, and tax practitioner. Overwhelmingly, IFTA is a model of success. However, the COVID-19 crisis has exposed one drawback to IFTA.
IFTA is the Exception to Delayed Taxes
As part of the response to COVID-19, the federal governments of the United States and Canada declared national emergencies. By Executive Order, the President of the United States extended the due date for the filing of income tax returns from April 15 to July 15. By extension, most, if not all states and provinces have extended filing due dates for many tax types (income, sales, etc.). The exception is IFTA. Why is that? The answer lies in an understanding of what IFTA is and what it isn’t. It also requires an understanding of what the IFTA Agreement and state (or provincial) statutes require.
IFTA is an agreement between member jurisdictions to simplify the collection of motor fuel use taxes through a base jurisdiction. The legal authority to impose fuel use tax rests with the taxing jurisdiction, not the base. The IFTA Agreement outlines the regulations by which the taxes are reported and collected. Thus, an IFTA tax return is really all motor fuel use tax returns combined on one form. In essence, IFTA, in of itself, is not a tax. A base jurisdiction, therefore, does not have the legal authority to delay the payment of fuel use tax collected for other jurisdictions.
You may have seen multiple emergency declarations issued by jurisdictions. As these declarations relate to IFTA, they are limited to credentialing (license and decals) and do not include the filing of a tax return. As an organization, IFTA has encouraged jurisdictions to be lenient on the issue of late-filed returns by not imposing late filing penalties and interest. However, there is no requirement or guarantee that your base jurisdiction will agree to waive late fees or penalties. Therefore, an IFTA tax return is indeed due and payable without delay. That means that the first quarter 2020 return is due on April 30, 2020.
about Rick Larose
Rick is a nationally recognized expert in the area of tax administration for the International Fuel Tax Agreement with a focus on audit and compliance programs for both IFTA and IRP. He was employed for 35 years by the State of Connecticut Departments of Motor Vehicles and Revenue Services where he conducted internal auditing and criminal investigations at the DMV and was a Tax Unit Assistant Manager in the DRS Audit Division specializing in excise taxes. Rick was responsible for Connecticut’s implementation of the International Fuel Tax Agreement in accordance with the federal mandate under Section 4008 of the Intermodal Surface Transportation and Efficiency Act of 1991. He was the National Chairman of the IFTA Audit and Dispute Resolution Committees and was a member of the IFTA, Inc. Board of Trustees. He has a Bachelors Degree in Accounting from Central Connecticut State University with a concentrate in taxation. He resides in South Glastonbury, CT with his wife Dorothy and son Ben.