One crucial agreement that interstate truckers and fleet operators need to follow is the IFTA. It was issued to simplify the collection and distribution of fuel taxes between states and provinces.
But sometimes, trucking companies violate the IFTA registration and regulation process, which can lead to costly fines and legal issues. Below, we will discuss tips for avoiding IFTA violations and fines.
1. First Understand the Basics of IFTA Compliance To Avoid Violations and Fees
One basic thing that you need to know to avoid IFTA violations is to fully understand this agreement requirement. To comply with IFTA you need to file quarterly fuel tax returns if your yard truck travels with states and provinces. These returns help in determining government officials as well as trucking business owners how much fuel tax is owed based on the amount of fuel consumed and the miles driven in each jurisdiction.
Every state has to follow their specific rules about how taxes should be calculated and reported. When you are a business owner or a truck operator you need to be familiar with these rules to avoid penalties and comply correctly with proper filings.
2. Maintain Accurate Fuel Records
Invest in a good record-keeping system, whether it’s digital or paper, that ensures fuel receipts are kept and organized by jurisdiction. An electronic logging device (ELD) or fleet management system can help simplify this process and reduce human error. The IRS and other agencies will expect you to have records on hand for audits, so consistency and accuracy are key.
To track proper recording install the latest record-keeping software in the system that ensures fuel receipts are scanned, analyzed, and saved based on each jurisdiction the truck has travelled through. This will help you avoid unnecessary penalties.
3. File Your IFTA Returns On Time
The next tip you can follow to avoid penalties and fines while following IFTA registration and regulation is you need to file the returns according to the due date set by each state for quarterly filings, or at the end of the month.
Failure to submit the necessary paperwork on time will result in the raising of hefty fines, which you can avoid. If you didn’t file returns on time for long periods, it can lead to the possible suspension of your IFTA agreement.
If you forget to file the return, you can set reminders or automate your filing process to ensure you stay ahead of deadlines.
4. Double-Check Mileage Reporting
When following IFTA regulations you need to share accurate mileage in reports. It is important to follow accuracy. If somehow you remain inconsistent in following accurate mileage records you may end up paying too much in fuel taxes. If this happens, the audit team will catch such inconsistencies easily and will surely impose penalties. So to avoid fines keep detailed records of every trip and the miles driven in each state.
The best practice you can follow is to install GPS tracking software and an ELD to track your mileage. It will help you ensure the data file is accurate and up to date.
5. Stay on Top of Fuel Purchases
Fuel tax calculations depend not only on the miles driven but also on where you purchase fuel. Each state applies a different percentage for fuel tax which you need to report accurately where each fuel purchase occurs.
Make sure that you have recorded in files the fuel receipts, the location of purchase and the amount of fuel bought in each area. If a delivery truck driver needs to travel through multiple states you need to keep track of fuel bought in each jurisdiction and use this data to calculate your tax obligations.
Establish a habit of constantly collecting receipts and inputting fuel details into your records. In the event of an audit, having these receipts will provide the necessary documentation to avoid penalties.