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The International Fuel Tax Agreement (or IFTA) is an agreement between the lower 48 states of the United States and the Canadian provinces, to simplify the reporting of fuel use by motor carriers that operate in more than one jurisdiction. Alaska, Hawaii, and the Canadian territories do not participate. An operating carrier with IFTA receives an IFTA license and two decals for each qualifying vehicle it operates. The carrier files a quarterly fuel tax report. This report is used to determine the net tax or refund due and to redistribute taxes from collecting states to states that it is due.
This tax is required for motor vehicles used, designed, or maintained for transportation of persons or property and:
Exceptions exist for Recreational Vehicles (such as motor homes, pickup trucks with attached campers, and buses when used exclusively for personal pleasure by an individual). Some states have their own exemptions  that often apply to farm vehicles or government vehicles.
There are many theories on how to "reduce your IFTA" bill at the end of the quarter. But these theories are based on a misunderstanding of how IFTA works.
Prior to IFTA each state had its own fuel tax system, and a truck needed tax permits for each state in which it operated. Most states established Ports of Entry to issue permits and enforce tax collection, which was burdensome to the trucking industry and the states. Pre-IFTA trucks in inter-state commerce carried a special plate ("Bingo Plates") upon which each state's permit sticker was affixed. This was inefficient and proving to be costly for each state to manage.
Simply stated, IFTA works as a "pay now or pay later" system. As commercial motor vehicles (CMVs) buy fuel, any fuel taxes paid to the states is credited to that licensee's account. At the end of the fiscal quarter, the licensee completes their fuel tax report, listing all miles traveled in all participating jurisdictions and lists all gallons purchased in the same. Then the average fuel mileage is applied to the miles traveled to determine the tax liability to each jurisdiction. Three states—Kentucky, New Mexico, and New York—have "weight-mile" taxes in addition to the standard fuel tax. Oregon has just a weight-mile tax. Any amount of fuel taxes due (or refund due) is then paid to (or 'by' in the case of a refund) the base jurisdiction who issued the license. The member jurisdictions then take care of transferring the funds accordingly. Audits are conducted only by the base state and fuel bonds are rarely required.