It was 105 years ago last month that the RMS Titanic struck an iceberg and sank in the North Atlantic, sending more than 1,500 people to their doom.
To me, the most amazing thing about the Titanic disaster wasn’t the hull’s fatal design flaw. It’s the fact that there were only enough lifeboats for 1,178 people, about one-third of Titanic’s total capacity.
Simple math, common sense, and more lifeboats could have helped avert catastrophe.
For truck fleets, there are regulatory icebergs everywhere you go. When you can’t avoid them, your survival depends on math, common sense, and a lifeboat.
Let’s look at fuel taxes and IFTA reporting.
Do you ever sit down and think about how much fuel tax you actually pay in a month or a year? Let me tell you, it’s a boatload.
Let me give you a couple of examples.
Company A is in oilfield services. Last year on 59 pieces of equipment it paid $166,248.16 in fuel taxes – $2,817.77 per unit per year and $234.81 per unit per month.
To give you some context, that works out to about 24 cents per mile traveled or 14 cents per kilometer traveled. This carrier would burn a lot of fuel off-road, but with IFTA it doesn’t matter. Alberta did away with its off-road rebate program in 2011, so all fuel in IFTA-qualified vehicles is taxable.
Company B is a cattle hauler that travels the three western provinces plus Washington, Idaho, and Montana. On four trucks last year it paid $30,269.46. So for every kilometer it hauled those little doggies, the carrier paid 7 cents per kilometer in fuel tax.
No audit situation is ever the same because no two carriers are ever the same. But think about Company A and its $166,248.16 in fuel tax. For arguments sake, let’s say it was missing some fuel receipts or had underreported distance and the error factor ended up at 10%. That equates to $16,624.82 for a single year. Multiply that by three years and the total is just under $50,000 – a financial disaster of Titanic proportions for any company.
If the same thing happened to the cattle hauler, it would have to pay just over $9,000 in additional tax. Worse yet, it would be like paying tax twice, and who wants to do that?
It isn’t enough to just look at your IFTA return and think that because you got a credit you paid less fuel tax. If you have a credit, you bought fuel in high-tax jurisdictions and consumed it in lower-tax jurisdictions.
The same is true if you owe money at the end of the quarter. All that means is that you bought fuel in low-tax jurisdictions and consumed it in high-tax jurisdictions. Whether you pay it at the pump or you pay it when you file your IFTA return, the amount you owe is the same.
You are the captain of your own ship and with fuel tax you have to make sure the math adds up and you call for help when it doesn’t. Otherwise you can end up like Leonardo, shivering in the water.
Worse yet, I’ve never met an auditor who looked anything like Kate Winslet.
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 North Star Fleet Solutions, which provides vehicle tax and license compliance services for trucking operations. She can be reached at 1-877-860-8025 or northstarfleet.com.
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