Sure seems like the winter trucking season is longer than usual this year or maybe I'm just stuck in the snow belt rut. But I guess it all works out in the end, as I sit waiting for snow to be removed from another highway and another rash of accidents to be cleared so we can continue on our way.
This is a good time to re-check my record keeping for last year so I can send the facts and figures off to my Enrolled Agent tax preparer. Got the laptop booted up and the calculator singing its little numeric song, making sure all my hard work over the past year is properly categorized and it balances.
My game plan? Pay as small an amount of taxes as is legally possible without raising too many red flags for the folks in Washington.
So I’m in a booth, letting my fingers check and recheck row after row of numbers when I hear, “You must be Nicky Hammerlane. The black Stetson. The focused look of someone that knows what he's doing.”
I look up from my screen to see a man with an armful of shoe boxes and a couple of legal tablets. “Mind if I sit across from you?" he said. "I gotta get my receipts in order, categorize them and see what I have to pay in taxes."
I motion for him to sit down. As he takes his seat, he stacks the four shoe boxes on one side of the table, the legal pads on the other and pulls out a pocket calculator and a pen and lays them out in front of him.
“I hate all this," the trucker said. "Seems the government has nothing better to do than figure out how to complicate my life, then expect me to just hand over wads and wads of my money in taxes so they can do it to me again. This time of year I’m always either behind on my getting my stuff together to file a tax return, or losing loads because I'm behind on getting to my accountant in time to do my taxes."
He continued his tirade: “Look at this! Each of these boxes represents three months’ worth of receipts.”
He opened one of the boxes and it’s stuffed full of little bits and pieces of paper - some flat, some folded, some looking like the cat had just tired of playing with it. A real mess if I ever did see one.
Now he finally introduces himself. “Sorry Nicky. I'm Ralph Newsom – trucker extraordinaire, but crappy bookkeeper. I can't seem to keep it straight and make decent money out here with my one-truck operation. But from what I've heard through the grapevine I'm doing better than most. I grossed nearly $300,000 last year and almost that the year before. But when it comes tax time, the IRS hits me hard - really hard - and I can't figure out why. I mean, I work hard, all of my equipment’s paid for, get great fuel mileage, and I take care of what I have. Then, BOOM! 30 or 40 grand due in taxes and I'm right back where I started. No reserve in the bank and having to factor every load so I have the cash flow.”
He stops to take a breath.
“I see. You need…” I said, but Ralph was off and running again.
“When I saw your International with the N. Hammerlane & Son on the door, I thought, 'The Lord’s really with me this time. What are the chances I’d come across The Nicky Hammerlane? When I'd actually have time to sit and see if he can help me get a handle on all of this? Must be the answer to my prayers.' You can help me, right, Mr. Hammerlane? Right?”
I'm thinking, 'Well, if I can ever get a word in, I might.'
“Mr. Newsom, I might be able to help, but I have to admit you've got quite a mess. To be honest, after December 31 of last year is never a good time to do any tax planning for the previous year. But I can help you put together a system so you spend a lot less time dealing with your receipts and more time focused on some serious tax planning. Give me a couple of minutes to finish getting my information together for my tax return preparer, and then we’ll focus on your situation. By the way, call me Nicky or Hammerlane. Mr. Hammerlane was my father.”
“OK, Hammerlane,” Newsom responded, “How long will it take you to get this all together for your accountant?”
“Well, once I'm done,” I said with a little edge to my voice, “finalizing all the facts and figures I've tracked last year, about an hour. Maybe a bit more.”
“An hour!” he yelled. “I barely put a dent in my stuff in an hour. What's your tax bill like?”
“Let’s just say it has only five figures. But keep in mind, different situations will have different results. What one person pays doesn’t mean that's what others will. It depends on a lot of variables like equipment depreciation, repairs and maintenance, available tax credits, and maximizing the expenses you deduct, which in turn is dependent on having a qualified tax professional who understands trucking preparing your tax return every year. But it’s equally important to provide him or her with high quality, complete records from which to work. If you give him incomplete records and wait until February to categorize and calculate your expenses from the previous year, it's inevitable you’ll pay more in taxes than someone that tracks expenses and revenue week by week and month by month. Like I said, give me a few minutes while I complete my information and email it to my tax preparer.”
“So you're saying I'm paying way too much in taxes, that I need to spend time throughout the year keeping my expense and revenue records complete,” Newsom responded.
“Can't say whether all of that’s true or not, but from my experience, if they're waiting until the last minute to do their record keeping and have done little to no tax planning, most folks tend to pay more than they should,” I answered. “Give me a few minutes to get my tax summary finished and sent off and then I’ll help you get organized.”
Newsom began, “I apologize, Hammerlane. This tax stuff gives me a headache and a lot of anxiety, so I tend to become a bit hyper when I finally have to get it done. I appreciate your offer … ah … just one more question: What will you charge to help me get organized?”
“Ralph, it's like buying a diamond necklace or an Aston Martin One-77. If you have to ask the price, you probably can't afford it .That's why my fee is based on results. If you get the results you want, then make a donation to the St. Christopher Fund for Truckers. That's it,” I explained.
"That's it? But how? I mean, you deserve something for your efforts. What do you get out of all of this?”
“I'm an old-school type of trucker," I said. "So, stop beside the road some time and help another driver, like in the past days of trucking. I get the satisfaction of knowing I helped another trucker, that’s all I need as payment. Well, that and having you make a contribution to that charity helps to pass the good deed on.”
Ralph gathered up his shoe boxes and legal pads. “Tell you what, I'll go get a bite to eat and be back in half an hour, does that work for you?”
“Yup, that works. I'll be here. With the way that winter storm is raging outside, we'll all be here for several more hours. See you soon.”
Join Nicky next time for the conclusion of The Case of the Overtaxed Trucker. Can he help Ralph cut his huge tax bill down to size?
About the author: Timothy D. Brady is a speaker, business coach, and trucking industry guru. He provides training and educational presentations for small to large trucking companies, logistics organizations, and community groups. Learn more about Tim at http://www.timothybrady.com/