IFTA amends interest rate
Late last month, the International Fuel Tax Association altered the penalty rate on underpaid taxes to fluctuate with economic changes.
The association voted 45-13 for the adjustment, effective July 2013, for interstate owner-operators and fleets that owe taxes, according to the IFTA website.
The current flat interest rate has been used for at least 20 years and far exceeds the market rate, according to the American Trucking Associations state laws newsletter. The new rate will be much lower and provides participating states and provinces sufficient time to make the change.
The current accrual rate is 1 percent per month rate of interest on delinquent tax payments, IFTA said. “While not usurious, this can certainly have a crippling effect on an already struggling trucking operation and the industry as a whole,” it wrote.
When effective, the new interest charge will be accrued at an annual rate of 2 percentage points above the underpayment rate of the U.S. Internal Revenue Code, which is set annually on Jan. 1. Interest shall accrue monthly at 1/12 this annual rate. Many states already use this underpayment rate, IFTA noted.