Tag Archives: International Fuel Tax Agreement

How Well Do You Know IFTA, BOC-3 and Heavy Fuel Tax Filings?

Have you started your own trucking company? Are you striking out on your own as an independent operator? If you answer yes to either of these two questions, you may be wondering where to start. Don’t worry, we’re here to help.

Whether it be navigating your annual IFTA filings or maintaining driver files, we’ve got the information you need. Let’s start by taking a look at the types of filings you will be required to understand and file on a regular basis.

International Fuel Tax Agreement Filings

The International Fuel Tax Agreement (IFTA) is an agreement that was made between the U.S. and Canada to simplify the reporting of fuel usage by fleets who are operating in more than one jurisdiction.

A fleet operating with IFTA receives a license and decals for the qualifying vehicles that it operates. The carrier must also ensure a quarterly fuel tax report is filed. The report is then used to figure out if anyone gets a refund and how taxes should be redistributed throughout collecting states and provinces.

IFTA specifically covers vehicles that fall under the following descriptions:

  • Having two axles and a gross vehicle weight of 26,000 pounds
  • Having three or more axles, regardless of the vehicle weight
  • Is used in combination, when the combined weight exceeds 26,000 pounds

The tax is mandatory if a vehicle is used for the transportations of people and property. The requirement is also covered by weight restrictions. Exceptions are made for recreational and some farm or government vehicles, but those exceptions are state specific.

How it Works

The IFTA system uses a pay now or later principle. As you buy fuel, any taxes paid to the state is credited to your account.

At the end of the fiscal quarter, you must file a fuel tax report. On this report you will list all the miles traveled and all the gallons of gas purchased. At that point, the average fuel mileage is applied to the miles traveled and a tax liability is determined.

Just as happens when you file federal taxes, you will either receive a refund or owe money. Member states and provinces then handle transferring the funds accordingly. For more information on exactly how to calculate the final number, the state of Florida provides this handy worksheet.

Heavy Fuel Tax Filings

The Heavy Vehicle Use Tax (HVUT) is a federal tax that is imposed on the use of any public highways by certain heavy motor vehicles. This list generally includes trucks, truck tractors, buses, and other types of motor coaches. The tax is applied to vehicles with a gross weight of 55,000 pounds or more.

For a list of state fuel taxes for heavy motor vehicles, check out this website. The HVUT is an offshoot of the standard federal gas excise tax. Generally, these taxes go into various cleanup fees and programs run by the state and federal governments.

To file an HVUT, use IRS form 2290. Keep in mind that these forms must be filed through mail and cannot be uploaded or filed digitally.


BOC-3 Filings

The BOC-3 filing is required by the federal government and pertains to individuals or companies operating in the transportation or logistics industries.  BOC stands for “blanket of coverage” and exists to assign a person in a business who can receive and send legal documents.

Companies operating as process servers are capable of granting BOC-3 filings.  They must also employ or lease the service of individuals within each state and of course must be registered with the Federal Motor Carrier Safety Administration (FMCSA)

BOC-3 filings are pretty uniform across the board, though different agencies may process things slightly differently. You might find one service only handling the BOC-3, while other may also offer services in safety, compliance, materials and other areas.

Your BOC-3 filing form can be found here.

How Can Someone Start a Trucking Business?

Almost everything you buy has been moved by a truck at some point, whether it’s food, gasoline, clothing or other items. The trucking industry can be very lucrative, but it is also a highly competitive industry. It’s smart to research the industry thoroughly before starting your own company to be sure you understand everything involved with starting a trucking business.

Decide If You’ll Subcontract

One of the first decisions you need to make when starting your trucking company is deciding whether you will hire employees or use subcontractors to drive your trucks. They are positives and negatives to each method and trucking companies have succeeded both ways. There are generally less start-up costs involved when you have sub-contractors instead of employees, but you also have less control over the schedule of the drivers and you may have to pay a higher percentage of the money you make to subcontractors than you would pay to company drivers.

Trucking companies who hire drivers to work for them as employees have more control over the drivers and can set the rates that they will pay the drivers. The downside is that the company has to pay for insurance and equipment costs that would normally be paid by subcontractors.

Starting The Business

In some ways trucking companies are started the same way that other businesses are started. The company owner must register the business with all applicable state, federal and local agencies. You must get a business license and all necessary permits before your company can legally operate. It is essential that you get a Federal Department of Transportation Number. This number must be displayed on all of your trucks. You also need to apply for and receive Federal Motor Carrier hauling authority.

Tax Forms and Registrations

There are several tax forms that must be completed periodically for your trucking business to be operating legally. One of these is a heavy use tax form. You also need to obtain International Registration Plan tags as well as International Fuel Tax Agreement decals from your state department of transportation. A BOC-3 filing is required to operate a trucking company legally in the United States. It’s best to visit a local licensing office or your state department of transportation’s website for specific information you need to legally operate a trucking company in your state. It’s best to talk to an accountant who has experience with the trucking industry when you are forming your trucking company. They will be able to offer business advice and help you manage the company’s finances correctly right from the start.

Trucking Insurance

There are very strict insurance requirements that anyone who owns a trucking business must meet. You must have insurance on your vehicles as well as the company itself. Some of the companies you haul freight for may have even stricter requirements than the federal regulations, so make sure your insurance policy meets their requirements before hauling loads for those companies.


If you decide to hire truck drivers and operate your own fleet of commercial vehicles, you need to purchase the vehicles. Most experts in the trucking industry recommend starting with just one or two vehicles and adding to your fleet as time goes on. This gives you the ability to learn the trucking industry without being overwhelmed by the number of drivers and vehicles in your fleet. Think about the type of freight you will be hauling before purchasing trucks and trailers so that you buy the appropriate vehicles. Refrigerated trailers are likely to be more expensive than dry van trailers, but they are necessary if you will be hauling food or other perishables.