Mike Holmes wouldn’t build a house on anything less than a solid foundation, and neither should you.
The same is true for your fleet tax compliance house.
In the fleet tax world, the distance you collect and report on your IFTA fuel tax returns is the foundation on which you build your entire compliance structure.
For instance, the distance you collect and report to IFTA is used for mileage tax returns filed in Oregon, New Mexico, New York, and Kentucky. When you renew your IRP (prorate) plates, you use IFTA distance to calculate the percentages that determine your license fees for your renewal.
Sales tax for multi-jurisdictional vehicles is determined by the distance you travel in each province and state.
Even insurance agents use IFTA distance and request the reports by name for the last four quarters before they will issue your insurance renewal and determine how much you will pay.
Without rock-solid distance data, the rest of your compliance house will start to crumble.
Brick by brick
You might think it’s good enough to simply collect your fuel and distance data, add it all up, and file your quarterly IFTA returns. But because this information is so essential to other aspects of compliance, it’s important to understand how IFTA works and to keep up with changes in rules and interpretations.
IFTA simplifies the collection and distribution of fuel taxes among jurisdictions based on the number of miles or kilometers you log in each. States and provinces want their fair share of the tax you owe, so getting the distance right is critical. If your calculations are off and one jurisdiction gets more (or less) than it should, you have a problem that not only affects your fuel taxes but how all those other fees are apportioned.
Learn as you go
Periodic changes in the rules and how they are enforced make it tricky to keep those compliance bricks in line. What’s more, no one offers a college degree or apprenticeship for IFTA and other tax programs. You have to learn as you go.
When I was starting out, I attended workshops offered by the IFTA and IRP organizations. I never failed to pick up new information or feel relieved that I was doing things right.
The real gem in attending, however, was the networking. Through the workshops, I was able to find experts and colleagues with the answers I needed.
A helpful network
The two workshops I recommend most are the IFTA/IRP audit workshop and the IFTA/IRP law enforcement and managers workshop. If you oversee fleet tax compliance for your company, I highly suggest attending these workshops and creating a network of people, in both government and industry, you can reach out to when you have questions.
My 30-plus years in the business have taught me that most people in the trucking industry treat fleet tax compliance as something less important than it really is. It’s not sexy, but try moving that shiny new Peterbilt without a cab card or an IFTA decal. You won’t get far.
I also learned that people in the fleet-tax world are happy to pitch in when you need it. Like ol’ Mike Holmes, they’ll help you set things straight.
That’s what I’ve tried to do with this column, which is my last for Truck West. I’ve enjoyed sharing what I’ve learned and hope I’ve helped you put your fleet’s tax compliance on a more solid footing.
Thanks for reading. May all your audits be zero change!