International Fuel Tax Agreement
The most general definition is that IFTA is an agreement between the U.S. states and Canadian provinces to charge a tax on fuel based on the miles driven in their jurisdiction by commercial vehicles. The fuel efficiency (“miles per gallon” or “kilometers per liter”) play a large part in the calculation of what you owe as well. The better MPG that your truck gets – the less you pay in fuel tax.
You pay the IFTA bill to the state or province in which you have your company registered. They, in turn, will pay the other states in which you drove for you (from your filed return and payment that you sent.)