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The International Fuel Tax Agreement (IFTA) requires you to display two IFTA decals per qualified vehicle. In an audit, you may be required to account for the decals that have been issued to your company. The IFTA jurisdictions are concerned with fraud surrounding the IFTA decals and want to ensure that the decals are being used legally and appropriately.

If you’re not tracking your IFTA decal use, it can cost you.

Why decal count matters

In a perfect world, you will have exactly two IFTA decals for each qualified vehicle. But, in the real world that doesn’t always happen. Sometimes you may need to order an additional decal or two because the decals fell off or were stolen. Or, perhaps the vehicle was in a crash and the vehicle and decals were destroyed. Or, in some jurisdictions you can even order extras in case you want to add a vehicle at some point during the year. You can have those extra decals on hand if you need them.

In an audit, you need a way to account for the decals you’re replacing or that you’ve lost, or the decals you haven’t yet used. If you cannot account for the decals that have been issued to your company, you can face penalties and/or assessments.

Certain jurisdictions have been known to assess a flat-fee assessment per decal, or even estimate operations under the missing decals. In one instance, a state determined that a single IFTA decal was worth $15,000. The carrier was missing three decals and was facing a $45,000 assessment. Rather than try and fight the assessment and potentially rack up the legal fees, the carrier decided to pay the $45,000.

What can you do?

To help keep track of your decals, you can create a decal inventory sheet. This is a simple sheet — paper or electronic — that includes the IFTA license year, vehicle identification information, the serial numbers of the IFTA decals on the vehicle, and a comments section for you to enter notes about the vehicle and its decals. For example, if a vehicle lost one of its decals, you could document that the vehicle was issued a new decal. Or, if a vehicle was sold or in a collision, you could document these types of situations on your inventory sheet, along with information on the replacement decals you placed on your vehicle.

Recordkeeping for decals, too?

If you have extra decals, you must keep the extras with your IFTA records and hang on to them for four years — just like your IFTA mileage data and fuel receipts. Again, you can list your unassigned decals on your decal inventory sheet and update your sheet if they’re ever assigned to a vehicle.

If you’re audited, your inventory sheet would help demonstrate that you are keeping good records and going above the minimum requirements. It would also be a backup in an audit to help account for all of your decals, especially if the decals fell off or if the vehicle was sold or destroyed.

Key to remember: Carriers must retain all unused IFTA decals and may be asked to provide them during an audit.