Kenny Rogers got it right with his old country hit, “The Gambler.” You got to know when to hold ’em, know when to fold ’em.
You, my friend, are leaving money on the table when it comes to managing your fleet taxes. I see it all the time.
Let’s start with IRP.
Every gambler knows that the secret to survivin’ is knowin’ what to throw away and knowin’ what to keep. And every trucker should know that it’s almost always better to transfer your plate instead of canceling it when you register a new truck.
It comes down to how jurisdictions handle the unused portion of your plate.
Canadian jurisdictions will refund most of the amount remaining, although Alberta Prorate does hold on to some U.S. credits when you cancel units with U.S. travel.
You may be able to apply these credits to a new registration. U.S. states (with the exception of California) will transfer any remaining credit to a new truck. They do not issue refunds on cancelations.
If you qualify for a refund, the process for getting your money can take a long time. And if you are an owner-operator, the refund will go to the carrier because it’s their name on the plate, not yours.
A vehicle registration refund can add up to thousands of dollars when the dealing’s done. If you’re gonna play the game, boy, you gotta learn to play it right.
Sales tax refunds
Sales tax refunds are another story. The rules for getting a portion of your sales tax back when you cancel or even transfer a unit are confusing.
Let’s say you’re an owner-operator who changes carriers three times a year. You’re paying sales tax three times that year on your truck.
Depending on your circumstances it may not be worth it to chase down a refund on a single truck, especially if it’s an older vehicle and the taxes don’t amount to much. But what if it’s a brand spanking new ride? What do you do? Fold?
The bottom line is that buying a new truck or changing carriers in the middle of a registration year is usually a bad bet. It may be easier said than done, but only buy or transfer newer equipment at renewal time so you can avoid paying unnecessary fees and taxes on your vehicles.
If you can’t wait until it’s more convenient, then transfer the plate. You’ll lose out on the sales tax, but if the move happens in, say, the last three months of the renewal cycle, then at least you aren’t out a huge amount of either licence fees or sales tax.
IFTA and mileage tax returns
You’ve heard me say this time and time again, but really, people, get your IFTA return filed on time every quarter. It isn’t just the penalty and interest that you trigger when a return is not filed on time, it’s the immeasurable cost of time and effort.
Here’s a way to simplify things.
First, get a GPS in your truck to calculate your distance by jurisdiction. Then get 12 envelopes, one for each month of the year, and every time you fill up, put that fuel receipt in the corresponding month’s envelope. At the end of each month, tally up your distance and fuel or, better yet, get that information to a reliable service bureau so they can get your IFTA return filed on time.
Getting into trucking can be a gamble but you can come out the winner if you play your cards right. There’ll be time enough for countin’ when the dealing’s done.
Sandy Johnson has been managing IFTA, IRP, and other fleet taxes for more than 25 years. She is the author of the book, 7 Things You Need to Know About Fleet Taxes, and operates northstarfleet.com, which provides vehicle tax and license compliance services for trucking operations. She can be reached at 1-877-860-8025 or firstname.lastname@example.org.