Avoid Penalties Associated With Fuel Tax Records: 4 Tips
If you are ever subject to an International Fuel Tax Agreement audit, your records are the only proof confirming what you’ve reported. If certain records are missing or incomplete, auditors are able to estimate operations, recalculate fuel taxes, and assess penalties and interest.
Here are four common recordkeeping errors to avoid:
- Failing to keep all records for four years. IFTA requires licensees to keep records on which the fuel tax returns are based for four years from the tax return due date or filing date, whichever is later. If you’re combining hours of service logs with trip reports, be aware that the logs only need to be kept for six months, while the trip reports must be kept for four years.
- Failing to keep track of in-jurisdiction miles. Carriers often think that the miles within their base jurisdiction are not counted as taxable miles. The reality is that these miles are not exempt from tax and must be tracked and reported.
- Skipping out on the monthly summaries. IFTA requires licensees to keep recaps or summaries of each vehicle’s operations throughout the month. If your summaries accurately match the vehicle operations, the auditor may be more inclined to accept your records and may not see the need to dig deeper.
- Throwing out unused decals from previous tax years. Due to fraud, jurisdictions are now keeping an eye on unused decals. The expectation is that you must store unused decals in a secure location and keep them for the four-year record retention period. If they’re missing, some jurisdictions will estimate operations under those decals or hit you with a price-per-decal assessment.
For more information, please see Failure to Keep Proper Fuel Tax Records Can Be Costly by the BC Trucking Association (June 5, 2014).
Tia Chisholm, HUB International TRANSPORTATION
HUB International TRANSPORTATION specialists are based in Vancouver. Our longstanding relationships with the best providers in the business allow us to deliver the solution that serve you best. With HUB, you can run your business knowing that you are headed in the right direction.