International Fuel Tax Agreement (IFTA)

The International Fuel Tax Agreement (IFTA) is a plan to simplify the reporting of all fuel (gasoline, diesel, propane, and gasohol) use taxes by commercial motor carriers.  The agreement allows a trucker/company to obtain one fuel tax license, issued by their base jurisdiction, authorizing them to travel in all IFTA member jurisdictions.  Tax reports containing detailed operations in each of the participating jurisdictions will be submitted only to the base jurisdiction. Fuel tax audits will generally be performed by only the IFTA licensing jurisdiction.  South Dakota’s Fuel Tax Section will distribute the taxes owed to all member jurisdictions.

This agreement covers only fuel use taxes. Compliance with other requirements in each jurisdiction; such as vehicle licensing, operating authority and mileage taxes, may still be required.

IFTA has the potential of significantly reducing the paperwork and compliance burdens for fuel tax reporting.

Member Jurisdictions

Obtaining an IFTA license in South Dakota licenses your vehicle in all states and Canadian provinces participating in IFTA in which you choose to travel.  The member jurisdictions include:

License & Bonding

Completion of an application is necessary for issuance of the IFTA license. One fuel tax license will be issued by South Dakota which will authorize travel in all member jurisdictions with no other fuel tax licenses or fuel permits required. Photocopies of this license must be placed in each vehicle. No fuel tax bond will be required as long as reports are filed and fuel taxes paid on time.

The license is valid for one calendar year and expires each December 31. A new license will be issued each year if all reports up to and including the third quarter are filed and taxes paid, and a renewal request is returned to the department, with the appropriate decal fees.

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Reporting Tax

A quarterly tax report must be submitted to South Dakota showing all miles traveled and fuel used in member jurisdictions.

Tax reports are due as follows -

Quarter                          Due on or Before

1^st (Jan, Feb, Mar)....................April 30

2^nd (Apr, May, June)..................July 31

3^rd (July, Aug, Sep)..............October 31

4^th (Oct, Nov, Dec)...............January 31

Trip Permits

If licensees are reporting under IFTA and have vehicles which operate using fuel trip permits, omit the mileage and fuel involved in these trips from taxable miles on the IFTA report. You must include the miles and fuel when figuring the total miles and total fuel to arrive at your AMPG.

South Dakota may assess the licensee a penalty of $50.00 or 10% of the delinquent taxes, which ever is greater, for failure to file a report, for filing a late report, or for underpayment of taxes due. South Dakota shall assess interest on all delinquent taxes due to each state at the rate of 1% per month.

Failure to comply with the reporting and payment requirements as specified in the agreement will be grounds for revocation of the IFTA license.

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The Fuel Tax Section will make refunds to South Dakota licensees when the credit exceeds $25.00. Credits from one state may be applied to taxes owed to another. For example, if $50.00 is owed to Iowa and there is a $100.00 credit for South Dakota, South Dakota will pay Iowa the $50.00 owing and refund the remaining balance to the licensee in accordance with the prevailing refund policy. You will be barred from receiving a refund if you are delinquent in filing a tax return, you are undergoing an audit, or you owe on an audit.

Fuel purchase invoices should not be submitted to obtain a refund under IFTA. Invoices must be retained by licensees for audit purposes.

Records and Audits

All records to substantiate tax reports must be retained for the current calendar year plus the three prior years. These records should include trip logs, mileage records by state, trip permits, and fuel purchase invoices. Records will be routinely audited at least once every three years. An audit will be performed by South Dakota on behalf of all IFTA member jurisdictions. Member jurisdictions do reserve the right to perform an audit on any carrier at the jurisdiction’s discretion.

Cancellation and Revocation

If a licensee ceases operation, the South Dakota Fuel Tax Section must be notified in writing so the IFTA license can be cancelled.

If a tax report has not been submitted within 30 days after the due date, or if taxes have not been paid, the IFTA license will be revoked. Revocation of an IFTA license by South Dakota will revoke fuel tax authority in other member jurisdictions as well.

The licensee can reinstate a revoked license upon full satisfaction of any tax liabilities owing to all member jurisdictions and the submission of a reinstatement application. A surety bond will be required of such an applicant.