Treasure is defined as a concentration of riches, often ancient in origin, considered lost and/or forgotten until rediscovered.
For a fleet tax manager, no treasure is as highly prized as a fuel receipt. It’s our Spanish doubloon or piece of eight, and when one goes missing it can set off a frantic search that would put Indiana Jones to shame.
Let me explain.
Under the International Fuel Tax Agreement (IFTA), you need a valid receipt or invoice order to substantiate that tax was paid on the fuel you put into your commercial vehicles.
Without a receipt, you’re left with two choices. You can pay fuel tax twice (once at the pump and again on the IFTA return because you’ll have to declare the purchase as non-tax paid fuel), or you can bury your head in the sand and pay the tax plus penalties and interest once an auditor uncovers your mistake. Either way, you’re going to walk the plank unless you have a valid fuel receipt.
Why you need a receipt
The whole idea behind IFTA is to distribute tax to jurisdictions based on where your vehicle consumes its fuel.
When you buy more fuel than you use in any one jurisdiction, you get a fuel tax credit since you paid more than you actually owe. Buying less fuel than you consumed in a jurisdiction means the jurisdiction is due more tax.
Receipts are like a dotted line on a treasure map, detailing how much fuel you purchased and where you bought it.
In the olden days, they were hand-scrawled on paper. Today, receipts are printed on little slips at the pump or register, or sent electronically from a fuel distributor. Heck, you can use your phone to snap a picture of a fuel receipt or invoice and use the digital image to support your claim.
Technology has changed a lot of things, but regardless of what a fuel receipt looks like, it must include specific information in order to be valid evidence of tax paid.
This includes the date of purchase, price, the quantity of fuel purchased, the seller’s name and address and information to verify that the vehicle consuming the fuel is IFTA-credentialed and belongs to your fleet. The receipt must show that fuel tax was paid at the pump or directly to the taxing jurisdiction. There are similar requirements for fuel stored onsite in bulk tanks.
So how much of your company’s treasure would you have to hoard away to cover missing fuel receipts?
Let’s say you misplace a fuel receipt for 500 liters in British Columbia, where you paid 0.2267 cents per liter in tax for a total of $113.
Losing the receipt would in essence double what you owe since you can’t claim the tax you paid at the pump. If you had the bad luck to lose one receipt a month that showed $113 in fuel tax paid, you’d owe an extra $1,356 a year in tax. That’s a whole truck payment!
Now you know why a missing receipt is like buried treasure.
Given how much information a receipt has to contain and the sheer number of fuel receipts a truck can generate, it’s easy to make mistakes.
A lost receipt is the most common, but I also see receipts with wrong information. For instance, guys will have a fuel card assigned to them but drive multiple trucks. They get mixed up and write the wrong unit number on the receipt. In an audit, the receipt may be disallowed – and send up a red flag that you’re not careful in your reporting.
You’ll wish you had taken the time to make sure you had a valid receipt for each fuel purchase.
Three quick tips
Fuel receipts are hard to manage because there are so many of them.
Here are three things to make the job easier:
1. Summarize your fuel tax data monthly. Don’t wait until the end of the quarter when your fuel tax return is due and you have to scramble for information. Good luck tracking down that owner-operator for a missing receipt after he’s moved on to another carrier.
2. Continually audit your own records. Make sure each receipt you take credit for is valid and contains all the information IFTA requires. Self-audits show that you’re in control of your data – even data that’s missing or needs further examination.
3. Pay for non-receipted fuel on your quarterly IFTA return. It might cost more at the time, but it will show an auditor that you’re making an effort to comply.
*** Sandy Johnson has been managing IFTA, IRP and other fleet taxes for more than 25 years. She operates FleetTaxPro.com, which provides vehicle tax and licence compliance services for trucking operations from single vehicles to large fleets. She can be reached at 1-877-860-8025 or www.FleetTaxPro.com.