In what seems like another life ago, I worked as a salesperson at a jewelry store.
Of course, December is a big month for jewelry sales because people are buying Christmas presents. Inevitably there would be last-minute shoppers who arrived after we had closed down for the holiday. Their initial panic turned to dejection as they moved on to the next shop.
I felt worse for the ones who actually got into the store. Flustered and desperate, they’d spend too little time and too much money on a ring or earrings that, more often than not, came back as soon as the doors opened on the next shopping day.
In the tax compliance world, December is a month when many of the licenses you need to legally run your truck fleet are up for renewal. Like a stressed-out shopper, the closer you get to the deadline, the more prone you are to making an expensive mistake.
Take, for example, your International Fuel Tax Agreement (IFTA) renewal. IFTA licenses are valid between Jan. 1 and Dec. 31 of each year, with renewal applications due by Dec. 31. While easy to procure, the IFTA license can be hard to keep unless you follow the rules. First and foremost, your account must be up to date with no outstanding returns or taxes owed, or you won’t get your IFTA license renewed. Pretty simple, eh?
Well, not really. Let’s make a list – and check it twice – of what you should remember in order to put a bow on your IFTA renewal:
Because of the Christmas holiday, government agencies either run on a skeleton staff or, like Alberta, close down entirely for the last 10 to 12 days in December. Familiarize yourself with your province’s renewal deadline and procedures. Then get your application in early to allow time for processing prior to the close of the year.
Heaven forbid that you file an amended IFTA return and owe money from previous quarters. Amended IFTA returns fall outside the norms of processing and sometimes get the ‘we’ll look at it when we can’ treatment. I’ve seen mere cents owing delay the issuance of an IFTA license renewal.
You’ve heard about the two-month grace period, right? If you don’t receive your new license and decals in time for Jan. 1, 2017, you can display your valid 2016 credentials and still be covered.
But the grace period covers the display of IFTA credentials only. You can only take advantage of the extra time if you have submitted your application for renewal before Dec. 31.
Then again, if you miss the deadline, who’s gonna know? That highway patrolman in Mississippi has to take your word that you filed your IFTA renewal with Saskatchewan.
But the times, they are a’changing. There’s a movement to make this information available electronically to roadside inspectors.
In the not-too-distance future, that Mississippi highway cop is going to be able to pull out a smartphone or laptop and see whether or not you’ve filed those returns or submitted your renewal application.
Not just IFTA renewals
If you operate in a mileage tax state like New York, New Mexico, Oregon, or Kentucky, you have to file these tax returns on time and there is no grace period. UCR – Unified Carrier Registration – also has a Dec. 31 renewal deadline. And depending on where you’re based, you may face an IRP renewal deadline.
In December, there’s just no time to mess around. If you’re a small company, you actually need to drive that truck to burn that fuel and generate those IFTA miles. If you’re part of a big operation, it’s easy for that IFTA assessment to get set aside because Sue in accounting is on Christmas vacation in Mexico. She’s thinking about ordering a margarita and not whether a 50-cent fuel tax assessment could shut down the fleet.
Now is the time to sit down and file that third-quarter fuel tax return if you haven’t done so already. Pay attention when the renewal application arrives and mail it back as soon as you can.
Ask your accounting department about any outstanding amounts that could keep your trucks parked while your co-worker is cha-cha-chaing on the Mexican Riviera. And don’t leave compliance until the last minute.
You’ll be like the desperate, panicked shopper peering in the window of the closed-up jewelry store asking yourself, ‘Now what do I do?’
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.