You probably have at least some sort of familiarity with the International Fuel Tax Agreement, more commonly known as IFTA. If you’re the one responsible for your company's IFTA quarterly report, you might hear the word “IFTA” and start feeling a sense of dread.
IFTA reporting is a necessary, often time-consuming exercise that carriers in the lower 48 states and 10 Canadian provinces have to perform four times each year and is a necessary part of the transportation industry. Rather than reporting fuel taxes in each state individually, IFTA allows carriers to report and pay fuel taxes in their base state of operations.
While IFTA reporting likely isn’t anyone’s favorite thing to do, it’s a much more streamlined method for drivers and fleet owners to pay their taxes. There are some common mistakes that people make when processing an IFTA quarterly report, though. Below, we’ll go over some of those mistakes, the consequences of missing and/or failing to file IFTA and how to make the process easier.
5 Common IFTA Reporting Mistakes
There are a handful of different reasons why IFTA reporting mistakes can happen. These errors can be corrected, but filing with errors or consistently filing amended reports may eventually result in an audit. Here are some common mistakes to watch for to help you avoid potential consequences.
Missing deadlines/failing to file
The vast majority of people who fail to file their IFTA quarterly report on time don’t have any ill intent. The reality is that IFTA deadlines sneak up, and people are busy with day-to-day tasks. Still, with a quarterly deadline, it’s imperative that those responsible for filing memorize the following dates:
- January – March (April 30)
- April – June (July 31)
- July – September (October 31)
- October – December (January 31)
Estimating in their reports
It’s easy to think that estimating your average miles per gallon or your miles traveled is harmless, especially with how time-consuming IFTA reporting can be. However, estimating your IFTA fuel calculations could lead to possible consequences and potentially cause you to miss out on refunds or tax credits.
Omitted information
Another common mistake people make is failing to include certain pieces of important information. Oftentimes, this includes things like not counting empty miles or failing to account for miles where a driver was running personal errands (such as picking up food). It can also stem from failing to report problems with your GPS or odometer, which can lead to penalties due to misreported numbers.
Disorganization
It’s important to maintain and, ideally, organize all records needed for proper IFTA reporting. Missing records, or records that are unreadable, may lead to inaccurate reporting that can either lead to an audit or force you to amend a return.
Waiting until the last minute
Procrastination increases the probability of making mistakes. While it’s tempting to postpone completing your IFTA quarterly report as long as possible, doing so might set you up for failure.
What can happen if you don't file IFTA or file incorrectly?
As we mentioned, missing an IFTA quarterly report deadline, filing incorrectly or failing to pay for any penalties can lead to consequences that range in severity.
The harshest of these is the suspension of your IFTA license, which can occur if you fail to submit your report each quarter. This type of penalty can impact your business in multiple ways, including penalties, accrued interest fees, paying to get re-instated and any potential impact on your business reputation.
The penalties aren’t as harsh if you file late but they can still be impactful. Most states have a flat rate penalty of either $50 or 10 percent of the taxes due, depending on which is greater. Within the lower 48 states, the only exception is Nevada, which offers a harsher penalty of $50 and 10 percent of the taxes due. Any late payments for these penalties are also subject to accruing interest fees that may vary by state.
IFTA audits aren’t necessarily common, and about three percent of trucking companies will receive one each year regardless of whether or not they file properly. However, things like multiple amended reports or consistently filing your returns late can potentially trigger an audit. Though it’s unlikely that your company would be shut down completely in the event of a failed audit, you will be subject to possible penalties.
How to make IFTA Reporting Easier
IFTA deadlines can sneak up on any of us, and keeping track of all the documentation needed for proper IFTA quarterly reporting can be challenging. Fortunately, options exist to help make this task much easier and stress-free.
One of those options is fully configurable trucking software such as ProTransport. ProTransport’s software allows users to load their accounting information and import important data within minutes, making IFTA deadlines far less of a headache.
On top of making IFTA reporting easier, ProTransport also gives trucking companies the ability to track each aspect of their financial health, stay compliant with all safety and maintenance regulations and maximize efficiency.
Rather than scrambling to complete your IFTA quarterly report last minute or missing deadlines altogether, make life easier by working with the team at ProTransport.