You’re probably familiar with the International Fuel Tax Agreement, more commonly known as IFTA. If you’re the one responsible for your company’s quarterly fuel tax report, you might hear the word “IFTA” and start feeling a sense of dread.
IFTA reporting is a necessary yet time-consuming exercise that carriers in the lower 48 states and 10 Canadian provinces have to perform four times each year, an essential 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 fuel taxes. Below, we’ll go over some common IFTA reporting mistakes, the consequences of missing and/or failing to file IFTA and how to streamline the process.
5 Common IFTA Reporting Mistakes
Fuel tax reporting mistakes can happen for numerous reasons. These errors can be corrected, but filing with mistakes or consistently filing amended reports may eventually result in an audit. Here are some common mistakes to avoid.
Missing deadlines or 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 while people are busy with day-to-day tasks. Still, with a quarterly deadline, those responsible for filing must memorize the following dates:
- January – March (April 30)
- April – June (July 31)
- July – September (October 31)
- October – December (January 31)
Estimating data
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 fuel tax calculations could lead to penalties and potentially cause you to miss out on refunds or tax credits.
Omitting information
Another common mistake is failing to include certain pieces of information. Oftentimes, this includes not counting empty miles or failing to report miles used for personal errands. It can also stem from failing to report problems with your GPS or odometer, which may result in penalties for misreported numbers.
Disorganization
It’s important to maintain and organize all records needed for proper IFTA reporting. Missing or unreadable records may lead to inaccurate reporting, forcing an audit or amendments to a return.
Procrastinating
Delaying filing increases the probability of mistakes. While it’s tempting to postpone completing your IFTA quarterly report as long as possible, doing so could set you up for failure.
What happens if you don’t file IFTA or file incorrectly?
As we mentioned, missing an IFTA quarterly report deadline, filing incorrectly or failing to pay penalties can lead to consequences ranging in severity.
The harshest consequence 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, reinstatement costs and hits to your professional reputation.
The penalties aren’t as harsh if you file late, but they can still make a difference. Most states have a flat-rate penalty of either $50 or 10% 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% of the taxes due. Any late payments for these penalties are also subject to accruing interest fees.
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 anyone, and keeping track of all the necessary documentation for proper IFTA quarterly reporting can be challenging. Fortunately, options exist to help make this task easier and stress-free.
One of those options is fully configurable trucking software such as ProTransport. ProTransport’s TMS allows users to load their accounting information and import key data within minutes, making IFTA deadlines far less of a headache.
On top of making IFTA reporting easier, ProTransport helps trucking companies track every 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 or missing deadlines altogether, make life easier by working with the team at ProTransport.