The rules and regulations of the International Fuel Tax Agreement (IFTA) are complicated, but one thing is fairly straightforward – you will be fined or penalized for late filing, underpayment, or unpaid taxes. To make it worse, you’ll have to pay interest on the unpaid amount until it’s paid in full. You want to avoid this financial setback if possible. But, in case it happens to you, here’s what to expect.
What Are the IFTA Interest Rates?
The IFTA interest rate for underpayment is set at 2% above the underpayment rate determined by the IRS. For example, if the IRS underpayment rate is 3%, the IFTA annual interest is 5%. This rate accrues monthly at 1/12th of the annual rate.
Of course, you must pay the interest besides the other penalty which is $50 or 10% of the liability due.
Did you miss the due date for your IFTA report? It happens. Busy truckers like yourself miss the deadlines for a variety of reasons. But, IFTA doesn’t acknowledge excuses. You’ll pay fines for any of the following:
- Late filing.
- Failing to file even if the vehicle was not operational.
- Not including payment with your IFTA report.
- Amended returns.
- Underpayment due to inaccurate mileage records.
Regardless of why you missed the deadline, you are in jeopardy of having your motor carrier permit revoked until the taxes are current. And, as mentioned above, in addition to the fines, interest accrues monthly until your taxes are current. Once your taxes are paid, you’ll need to reapply for your motor carrier permits.
How Can You Avoid Late IFTA Reports?
You can avoid late IFTA reporting. First, be familiar with the quarterly due dates and commit those dates to memory. If the due date is the 31st of the month, don’t wait until that day to file. Things can go wrong that will delay processing your report. So, no matter which method you use to file, you should never wait until the last minute. Remember, those interest rates can add up quickly.
The IFTA quarterly tax schedule for 2022 is as follows:
- 1st Quarter: January – March (due May 2, 2022)
- 2nd Quarter: April – June (due August 1, 2022)
- 3rd Quarter: July – September (due October 31, 2022)
- 4th Quarter: October – December (due January 31, 2023)
If you file online, your return is marked received on the date you submitted it. When you file by mail, your return is considered received on the postmarked date. If you hand-deliver the return to the IFTA office, it is marked received on that day. It sounds simple, but why take a chance? Allow a few days leeway, just in case.