How to Properly Sort your IFTA Miles

All miles are not created equal when calculating fuel taxes under the International Fuel Tax Agreement (IFTA), and the categories are very specific. Understanding the differences can help you submit accurate quarterly reports and avoid raising red flags for auditors.

IFTA miles

“IFTA miles” include all miles traveled by your IFTA-registered vehicles in jurisdictions that participate in the program. This includes all miles traveled, whether the miles are taxable or nontaxable.

Once a qualified vehicle (A) is registered under IFTA and has decals on the doors, all miles must be tracked (B).

Non-IFTA miles

“Non-IFTA miles” are miles driven in jurisdictions that are not part of IFTA. These include Washington DC, Alaska, Hawaii, and three Canadian territories: Nunavut, Yukon, and Northwest Territories.

The fuel used and miles driven in these areas are taxed differently than in IFTA jurisdictions.

These miles must still be tracked and accounted for, since they are used to calculate total distance and determine average miles per gallon (mpg). Record all miles traveled, whether the miles are taxable or nontaxable, IFTA or non-IFTA.

Total miles

"Total miles” includes all miles traveled during the tax reporting period by every qualified vehicle in your IFTA fleet. This is regardless of whether the miles are considered taxable or nontaxable by a jurisdiction.

Under IFTA, all miles must be counted – interstate and intrastate; work- and non-work-related; and loaded, empty, deadhead, and bobtail miles. If a vehicle is driven for personal use or is in the shop for repairs and the maintenance crew takes it out for road tests, all those miles must be counted.

Tracking every mile is critical to:

• Calculate accurate fleet mpg, and
• Avoid mileage gaps in distance records, which could result in inadequate records assessments in an audit situation.

Taxable miles

Generally speaking, all miles driven in IFTA jurisdictions are taxable miles. In most cases, total IFTA miles and taxable miles will be the same.

Non-taxable/exempt miles

Some states offer exceptions that are considered exempt miles (usually defined by state statute). Massachusetts Turnpike miles are one example. In some jurisdictions, distance accumulated by qualified vehicles operating off-highway or on agricultural roads may be exempt from IFTA tax.

Distance traveled while operating under a fuel trip permit is included in total miles, but exempt from taxable miles on the IFTA return.

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It's important to note that even though some miles may be exempt or non-taxable, they still need to be tracked and reported in the total miles. They are used to calculate accurate mpg but are not used to calculate taxable gallons.

Also, be sure to understand and comply with the terms of any exemptions you claim. For example, to claim the Massachusetts Turnpike miles as exempt, you must:

• Retain all turnpike receipts and fuel invoices, and
• File a separate “Use Tax Return” to the state by April 15 each year the exemption is taken.

In many states, when you claim exempt distance on your IFTA return, sales or use tax becomes due on the fuel that was used for those miles.

Key to remember: Properly categorizing your mileage under IFTA can help you submit accurate quarterly reports, pay the right amount of tax, and avoid raising red flags for auditors. 

• A qualified motor vehicle means a motor vehicle used, designed, or maintained for transportation of persons or property and: 
• Having two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds (11,797 kilograms); or
• Having three or more axles regardless of weight; or
• Is used in combination when the weight of such combination exceeds 26,000 pounds (11,797 kilograms) gross vehicle or registered gross vehicle weight. 

Qualified motor vehicle does not include recreational vehicles. 

• A recommended source document under IFTA and IRP is an “Individual Vehicle Mileage Record” (IVMR) (or individual vehicle distance record [IVDR]). IVMRs can be created using a paper form or may be created using an electronic logging system/device (ELD) or global positioning system (GPS). 

If an Individual Vehicle Mileage Record ( IVMR) is captured on paper, it must include:

• The beginning and ending dates of the trip to which the records pertain;
• Trip origin and destination; 
• Route of travel; 
• Beginning and ending reading from the odometer, hubometer, engine control module (EMC), or similar device for the trip; 
• Total trip miles or kilometers; 
• Miles/kilometers by jurisdiction; and 
• Unit number or vehicle identification number.