IFTA Audits: A Guide for Truckers

The international Fuel Tax Agreement or IFTA is a program designed for simplifying fuel tax reporting for truckers who drive across the US and some provinces of Canada. With IFTA, instead of filling separate reports for every state truckers cross through, carriers file one quarterly return through their base jurisdiction, which then distributes the taxes.

To stay compliant, you need to keep accurate records for every trip, including fuel purchase and mileage or kilometrage you drive. These records show where you traveled and make sure each state or province receives the right share of fuel taxes, so they need to be as accurate as they can. It is not only required by law but also protects you from paying unnecessary taxes or facing penalties. If there even is a slight inaccuracy, it can trigger an IFTA audit, with officials reviewing your filings to confirm everything matches your records.

What Is an IFTA Audit?

An IFTA audit is a review that your base jurisdiction performs to check if your fuel tax filings are correct. Auditors compare your trip and mileage records, receipts and quarterly reports to your actual operations. Their goal is to confirm that every mile or kilometer traveled and every gallon or liter of fuel bought matches with the report submitted data.

Who gets audited and why

Auditors don’t pick carriers to audit by random. All IFTA licensed carriers are subject to audit. Every jurisdiction is required to audit a certain percentage of its carriers yearly. According to the IFTA Audit Manual, every jurisdiction must audit an average of 3% of its licensed carriers per year. They follow rules and look for warning signs, but some audits can come randomly via selection. Carriers in the high or low-distance categories sometimes get targeted more often, because spendings in travel show almost anytime possible reporting issues.

As we said, audits may be triggered by random selection (so no one is “safe” just because they've been clean in past years) or because of “red flags” they see. It can include things like:

• Big differences in miles or fuel numbers between quarters
• Missing or late submissions
• Fuel purchases not matching with reported usage numbers
• Miles reported without supporting logs, etc.

IFTA can also just audit to see if the records are in proper format, if their rules are being followed or carriers are keeping all the documentation required.

Purposes of IFTA audits

IFTA makes it clear that audits protect fairness and accuracy in jurisdictions. They serve different purposes:

1. Verify returns: the auditor checks if you reported distance and fuel correctly.
2. Make sure there’s an equal treatment: as every jurisdiction relies on fuel tax revenue, the audit helps to distribute taxes fairly, avoiding over or under-payment.
3. Review recordkeeping: auditors look at how you store and track data: trip sheets, odometer readings, GPS logs and fuel checks. Incomplete data may result in penalties.
4. The IFTA Audit Manual requires all audits to follow the same rules, so carriers don’t face conflicting requirements in different jurisdictions.

How audits work

The Audit process follows a specific sequence:

1. Audit notification, when you gett a written letter at least 30 days before the audit, explaining the period you will be reviewed and the records you need to provide.
2. Opening conference, when the auditor tells you how the audit is going to run and what they’ll review.
3. Evaluation of internal controls, when the auditor studies how you handle recordkeeping and looks for weaknesses in your system.
4. Sampling and verification, when the auditor selects a couple of months or vehicles to test whether your system captures all miles and fuel.
5. Closing conference, when the auditor reviews findings with you, including any penalties, interest, or adjustments
6. Audit reports, when the base jurisdiction prepares an official report for you and notifies all affected states and provinces.

How to Prepare for an IFTA Audit

Getting ready for an IFTA audit should start long before the notice. You should always be prepared.The best approach is to keep the records organized and accurate through the years so when you receive an audit letter, you already have everything in place and have nothing to worry about.

Use an IFTA Audit Checklist

One of the ways to be prepared is to follow the IFTA audit checklist. Auditors typically request the following records:

• Trip reports and IVDRs (Individual Vehicle Distance Records) including the origin, destination, route, beginning and ending odometer or hubodometer readings (if your vehicle has one), total distance and jurisdictional breakdown.
• Fuel receipts: again, keep the original or digital copies that show the date, seller name, location, fuel type, price and the amount purchased.
• Quarterly IFTA returns
• Vehicle records: VIN number, plate numbers, fleet lists and lease agreements.
• GPS or ELD data (if used): many auditors want to see electronic logs to back up paper reports.

Having these documents ready before the audit reduces stress and builds confidence when it comes.

Keep Records Complete

The IFTA Audit Manual requires auditors to verify your records against reported miles and fuel. That means you need to:

• Record all miles (or kilometers) driven and do not leave gaps for detours or off-route driving.
• Make sure the fuel receipts you keep match the amounts you claim. If receipts are missing, tax-paid credits can be denied.
• Avoid relying on estimates. If your records are not correct, auditors may default to 4 MPG (1.7 KPL) under A550, which can create a much higher tax bill.

Stay Organized Year-Round

The easiest way to pass an audit is to treat every quarter as if you will be audited. Here are some tips to keep in mind:

• Reconciling mileage and fuel purchases every month.
• Scanning or photographing receipts immediately to avoid loss.
• Using software or an ELD to track distance by jurisdiction.
• Training drivers and office staff to follow the same system.

Be Ready for Auditor Requests

Auditors often ask for information in advance, sometimes 30 days before the audit (A610 Audit Notification). Respond quickly and provide clean and legible copies. If your records are electronic, make sure you can export them in a usable format.

What Happens If You Fail an IFTA Audit

Failing an IFTA audit can bring serious financial penalties. The seriousness depends on how inaccurate the filings are and if you can support them with records.

Potential consequences

Some of the potential consequences you can face are:

• You may pay additional fuel taxes if your reported miles or gallons don’t match with the actual records.
• Jurisdictions can issue fines for incomplete or incorrect reporting.
• Your outstanding balance will continue to grow until paid.
• Missing or incomplete receipts will result in losing your license and stopping you from “tourings.”

Common reasons for failing

Being an experienced carrier does not mean that you are guaranteed from mistakes. Even pros can run into trouble if the paperwork is not complete. Auditors, given their experience, usually know the common issues and flag them (and find them quickly), and knowing them ahead can help you avoid the unnecessary headache. Below you will find some of them:

• Trip reports are missing information like odometer readings or jurisdiction breakdowns.
• Fuel receipts are lost, faded or illegible.
• Records don’t match with the numbers filed on quarterly returns.
• Mileage or MPG look unrealistic compared to industry averages.
• Using estimates instead of actual trip and fuel data.

The good news is that these issues can be easily prevented by keeping detailed trip logs, saving every fuel receipt and double-checking your quarterly filings.

Best Practices to Stay Compliant

The easiest way to avoid the stress of an audit is to build good habits into your daily and quarterly operations. By keeping your records clean, you reduce the chance of mistakes and make any future audits much easier. 

Keep every fuel receipt, both in paper and digital form, rely on tools such as ELDs, GPS tracking or IFTA software to get the mileage automatically and reduce errors, compare your records with quarterly IFTA returns each month to catch mistakes early and make sure drivers and staff understand the importance of accurate reporting. Finally, stay updated with any changes in IFTA rules, since jurisdictions may adjust requirements over time.

Closing Note

Staying on track with IFTA isn’t about passing audits, it’s about protecting your business. 

When your records are accurate and easy to verify, you save time, avoid bills and keep your trucks moving and business running without interruptions.