Have you seen the hilarious TV commercial where the mermaid is trying to convince her other mythical friends that they can actually take a picture of a check with their smartphone and automatically deposit it to their bank account?
Step by step, she painstakingly shows them how it works and yet they’re still skeptical.
For some people, even seeing isn’t believing. They insist on undeniable, irrefutable, over-the-top evidence before they accept something as fact.
I know how that mermaid feels whenever I talk to private carriers about fleet taxes.
I can’t tell you how many times I’ve heard a disbelieving business owner tell me, “But we’re not a trucking company!” as he hands me a non-compliance notice for fuel taxes, vehicle registration, sales tax, or some other ‘trucking’ fee.
I get it. I mean, what does a widget maker have in common with a for-hire carrier?
It’s trucks. Whether you produce tires for cars or horseshoes for unicorns, you have tax, licence and safety obligations just like any for-hire trucking company once you start moving your goods in a truck on a highway.
The truth is, there’s an enormous knowledge gap at private companies that run truck fleets. In many cases, the person in charge of fleet tax compliance isn’t a specialist. He or she is an accountant, a branch manager, or the owner. They certainly have the smarts to manage hours of service, vehicle inspection, licensing, fuel tax and sales tax rules. They just don’t know they have to.
Based on that fact, there are several myths in the private-fleet world that I’d like to debunk.
IFTA and IRP
If you plan to operate a commercial vehicle outside your home province on a regular basis, you’re probably required to register it under International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA).
I can hear it now: “What do you mean I have to pay to use the roads in another jurisdiction? I take my car to B.C. all the time and it’s free.” A car is not a commercial vehicle, unless you use it for work.
Sales tax on equipment, repairs and other services may need to be prorated and paid to jurisdictions where you operate your commercial vehicle.
If you live in a PST province like British Columbia, Saskatchewan, or Manitoba, the concept of prorating sales tax is easier to understand. It’s Alberta businesses that question why they can’t just buy single trip permits “like we’ve always done.”
The answer is, they can. But what many Alberta-based private carriers don’t realize is that their single trip permit doesn’t include the PST that B.C., Saskatchewan and Manitoba want to collect.
That’s right. A single trip permit does not cover the sales tax exposure on vehicles regularly traveling on single trip permits from Alberta to B.C., Saskatchewan, or Manitoba.
If you don’t believe me, it’s probably because you haven’t been caught yet.
But be warned: by not paying sales tax you risk owing big bucks and spending hours with an auditor sorting out how much distance your vehicles cover in each jurisdiction, how many days your equipment spends there and how much sales tax you paid on your equipment. It can get ugly real fast.
You’re a trucker
No one disputes that trucking regulations and taxes are a pain.
But the reality is, if you operate a commercial vehicle in places other than your home province, you probably owe those jurisdictions a portion of your fuel taxes and vehicle registration fees.
These provinces and states rely on you to provide accurate reports about fuel purchases and the distance you travel, as well as other information about your business so they can be sure they’re getting their fair share.
Late filings, missing data, or a shoddy system for gathering and maintaining records are big red flags that can lead to exhaustive audits, penalties and fines.
It doesn’t matter if you have one truck or 1,000. Or you’re too busy to learn the rules. Or your leprechaun buddy says he’s saved a pot o’ gold by not paying taxes.
There’s no shortage of people who can help you, but if you’re a private business with a commercial vehicle, it’s your responsibility to understand and manage your fleet tax obligation. You can take that to the bank,
Sandy Johnson has been managing IFTA, IRP, and other fleet taxes for more than 25 years. She is the author of the free book, 7 Things You Need to Know About Fleet Taxes, and operates FleetTaxPro.com, which provides vehicle tax and licence compliance services for trucking operations. She can be reached at 1-877-860-8025 or FleetTaxPro.com.