No one enjoys paying taxes; that’s something we can all agree on. However, as Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes”—they’re an inevitable part of life.
But using IFTA software can minimize the chances that you will be audited, as well as help to ensure that the process will be as painless as possible if the tax collector does come knocking on your door.
Some Basic Facts About IFTA
The big advantage to the Interstate Fuel Tax Agreement (IFTA) is that if you are audited, you will never have to deal with more than one auditor. Back in the day, you might have received a visit from a Michigan auditor one day and auditors from Georgia and Ohio the next. So, all in all, IFTA has done a good job of streamlining the process of paying fuel taxes.
This isn’t always the case, though. Take purchase records, for example. Some states may require you to keep them for four years, while others want you to keep them longer. So you’ll want to play it safe, by not just meeting but exceeding the stated requirements.
Keep in mind also that auditors aren’t big fans of rough estimates. Many a driver has found this out when he or she used established travel routes to calculate how many miles were covered and paid taxes based on those figures. Then when the auditor showed up, the trucker was reminded of the bridge that was out of service on the day they went through Chicago, the one that took them 50 miles out of their way.
Auditors are also quick to notice anything that looks even remotely fishy. For example, if the records seem to indicate that a driver did most of his or her trucking in states where the fuel taxes are low, then they are likely to order a full-scale examination of the records. And they could care less what the official distance is from point to point, as determined by MapQuest or other mapmakers. The miles from one spot to the next are whatever the auditor says they are. Such are the harsh realities when dealing with an IFTA representative.
What the Auditor Will Want to See
The auditor will want precise odometer readings. They will also consult trip logs, DOT records, and the reported IRP miles. They will use this to determine as precisely as possible how many miles were actually driven, and compare this with the receipts submitted by the driver. If there is a discrepancy between the two, then the auditor will assess how much tax should have been paid.
In the past some drivers have tried the “Sorry, but I lost those receipts” response. That's not a good idea. The auditor will simply do his or her own estimate of what is owed, and there's a good chance that the driver will not be happy with the figure. And of course the tax collector can always levy fines against anyone who doesn’t cooperate fully with the investigation.
If this doesn’t sound like much fun, that’s because it’s not.
Your Best Defense is Complete, Accurate Records
Most auditors aren’t out to get owner-operators or fleet owners. They just have a job to do and they’re very serious about doing it correctly. Hopefully you’ll never have to deal with an audit. But if you do, you can’t go wrong when you have trucking business software in your corner. It accurately calculates the exact number of miles driven per state, and records it in a clear, easy-to-understand format. So if the tax collectors do come knocking, you can face them with confidence, knowing you have all your ducks in a row.
Want your own IFTA survival tool? Take GetloadedOps on a free 30-day test drive and see for yourself.
Allen Campbell has more than 18 years of experience in the trucking industry as a driver, owner/operator, broker, and small fleet manager. He is the founder of TruckingOffice, an online software that makes it as easy to run the business as it is to run the trucks. It handles dispatching, invoicing, IFTA reporting, and all the other things that get in the way of trucking.