My parents were experts at shifting the narrative. Just by changing a word or two, they could alter the perspective on whatever my brother and I were getting into at the time.
Some questions have no easy answer. They require a lot of thought, and sometimes the narrative shifts right when you think you have things nailed down.
I see this all the time in fleet tax compliance. And not unlike my mother, I often find myself telling people, “It depends.” Here are three questions you might not know that you don’t know:
1. Do I have to pay sales tax on my equipment?
Sales tax on equipment, repairs, and other services is charged at the provincial and state level. Though you may not have a choice, when you are choosing a base jurisdiction for apportionment (prorate) and IFTA, you have to consider sales tax.
Vehicles may be exempt from sales tax in their base jurisdiction, but you may owe tax to other jurisdictions they travel to. If you live in a PST province like British Columbia, Saskatchewan, or Manitoba, this is called a prorated vehicle tax. Many states call it ad valorem or third structure tax.
If you’re traveling to a PST jurisdiction on a single trip permit, will you have to pay sales tax, and if so, how much will depend.
I get this question from Alberta-based carriers once they realize that their single trip permit doesn’t include the PST that B.C., Saskatchewan, and Manitoba want to collect. They risk owing big bucks and spending a bunch of time with an auditor sorting out how much distance their vehicles covered in each jurisdiction, how many days their equipment spent there, and how much sales tax they paid on their equipment.
2. How much will my plates cost?
Any fleet with a registration year beginning on or after Jan. 1, 2015, is subject to FRP (Full Reciprocity Plan) provisions under the International Registration Plan. With FRP, your IRP cab cards list all 59 member jurisdictions along with the proper registered gross weights for each of those jurisdictions.
If you’re a new fleet, you have no actual distance to report when you get your cab card. You’ll use your base jurisdiction’s APVD (average per vehicle distance) chart to determine your fees.
If you’re an existing carrier renewing your fleet, you report actual distance accumulated during the distance-reporting period (July 1-June 30). And this is where it gets tricky.
“Report all actual distance” means all distance. Even if you have just one day of travel in the distance-report period, that is what your percentages will be based on for your renewal fees.
Carriers that start new fleets in April, May, and in particular June, are most at risk of having results that are not representative of their normal travel patterns for a year. The actual distance you travel in those three months could cost you money, or it could save you money when you renew your plates. It depends.
3. I’m Canadian. Do I have to pay U.S. heavy vehicle use tax (HVUT)?
It depends on your registered combined gross vehicle weight and how far you travel between July 1 and June 30.
All carriers with a registered combined gross vehicle weight greater than 54,999 lbs. and/or if you travel more than 5,000 miles in the U.S. between July 1 and June 30: if both are true, then yes, you have to pay HVUT regardless of whether or not you are Canadian.
There’s no shortage of complicated fleet tax questions. I’ll cover a few more next month, no doubt about it.
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 www.northstarfleet.com.
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