Every three months, fleet managers for companies with fleets that operate in multiple states or between the US and Canada have to go through mountains of reports, receipts, and files to organize their IFTA tax forms. This can be a time-consuming headache whether you’re managing one vehicle or one hundred vehicles.
The international fuel tax agreement, or IFTA, was meant to simplify fuel tax issues, allowing one state/province to collect taxes on fuel sold in that state or province, and redistribute that money between all of the states/provinces that the fuel was actually used in.
However, not all states & provinces charge the same tax rates. When the taxes on the fuel are less in the state where it was purchased than the state(s) where the fuel was used, there is a deficit, one which the vehicle owner/operator is expected to cover. On the reverse side, when the fuel taxes in the state where the fuel was bought are higher than the state(s) where it is consumed, there’s a surplus, and that generates a refund for the vehicle’s owner/operator.
Why Report Accuracy Matters
Not only do these reports have to be filed every quarter, they have to be painstakingly accurate. There are two major reasons for this:
- To Avoid Overpaying on Fuel Taxes. Inaccuracies in your IFTA report can have you under-reporting your fuel consumption in low-tax states. You can’t get a refund on fuel use you don’t report, leading to lost capital.
- To Avoid IFTA Audits. No business likes getting audited for a financial report. The presence of an investigator impedes normal business operations, and they frequently find some kind of fineable error.
How frequently are companies with a vehicle fleet audited and fined? To be honest, not many audits are carried out each quarter, mainly because individual states or provinces only have to audit about 3% of their licensee base per year. However, they do tend to target these audits on licensees that they’re certain are doing something incorrectly.
For example, according to statistics cited by Trucknews.com, in one year, “Alberta had 2,817 licensees and conducted 70 IFTA audits. Of those 70 audits, 51 were assessed a penalty for something. That’s 75%! In Saskatchewan, the figure was 83%. In Manitoba, it was 59%; British Columbia, 49%; Ontario, 95%; Quebec, 94%.”
That’s a scary high batting average for audited companies to get fined.
How GPS Fleet Tracking Software Can Increase IFTA Report Accuracy
In a typical IFTA report, a driver provides an odometer reading of their vehicle at the start and end of each business trip as well as for every fueling stop. Unfortunately, they may often forget to log “personal use” miles for when their vehicles aren’t being employed for official business, such as a post-delivery trip to a hotel or rest stop, or the trip home. Or, a meter reading might get recorded incorrectly.
Such accidental omissions and errors can serve as a basis for an audit because they create gaps in your odometer mileage reports.
GPS fleet tracking software can help you make your IFTA report more accurate by:
- Providing Turn-by-Turn Tracking of Each Fleet Asset. With GPS, you can get turn by turn tracking of every asset you have in the field. Activity can be divided up into reports by specific trips for Driver Trip Reports, or sorted into monthly reports. This way, you never miss a mile.
- Creating Records of GPS Data. Your GPS fleet tracking software can do more than just create easy-to-read reports of GPS data; it can allow you to store that data for future use in case an auditor requests it. This archival data can even be used to help track the average MPG of your vehicle fleet to help you spot anomalous fuel consumption rates.
- Providing 24/7 Tracking of Each Vehicle. With GPS, you can continuously gather mileage/use data on your fleet vehicles, even when drivers forget to log their activities. This helps prevent gaps in odometer data on your report.
By increasing the accuracy of your IFTA report, you can help avoid an audit, saving yourself considerable time and hassle.