International fuel tax agreements, electronic logging devices and international registration plans are three main components of the transportation industry.
Knowing IFTA And Its Working:
IFTA is a tax regulation in forty-eight states of the USA and ten Canadian states. It makes the process of filing taxes easy and streamlines the complete process of fuel tax. Motor carriers who travel to more than one jurisdiction use it to report their fuel taxes. Transportation companies receive IFTA stickers and an IFTA licence for operating their motor carriers in these jurisdictions. They must submit their tax report quarterly and mention the total distance covered by their vehicles and fuel purchased during their journey. The distance covered includes the number of miles travelled in each state, district, and territory. IFTA reviews the report submitted by the freight companies and then informs them of the total fuel to be paid.
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Due to IFTA, the process of filing fuel taxes has been simplified to a great extent. Earlier, transportation businesses had to pay several taxes while crossing the territories and obtain various permits and licences. This made the tax compiling and filing a highly complex process. The companies often failed to file their taxes on time due to this. Commercial motor vehicles can qualify for the IFTA if they have three or more axles or have two axles along with a weight of 26,000 pounds. For ifta filing services freight businesses can visit IFTA’s official website to know about the tax filing process and if their vehicles qualify for an IFTA licence.
Importance Of IRP:
Only filing an IFTA is not enough as it only deals with the ifta fuel tax. The transportation companies need to file for an IRP as well which includes vehicle registration. This agreement is necessary for fleet businesses operating in forty-eight regions of the USA and 10 Canadian provinces. In the IRP fleet, companies can get revenue share by mentioning the number of miles travelled by their registered user in their report. Most transportation businesses who qualify for best IFTA report software can easily be eligible for IRP. Similarly, all freight companies having an IFTA licence also need to have an IRP. The benefit of IRP is that it has uniformed vehicle registration for both registered users and jurisdictions.
In IRP, motor vehicles need a licence plate and a cab card. After the registration process, motor carriers need a licence plate that allows the drivers to travel to the registered jurisdictions mentioned on the cab card without any hassle. Freight businesses need to ensure the information mentioned on the cab card is retained and shown at the time of injury or inspection.
What Are IFTA Audits And IFTA Penalties?
With ongoing pandemics and lockdowns, the in-person processes of IRP and IFTA have been postponed in many states. With the help of technology, they have opted for the virtual audit process. With most of the processes going on online, the transportation companies have been asked to submit digital records. Both IFTA Auditors and IRP agencies are ensuring compliance from the motor carriers and the freight companies. Companies should avoid three things if they want to avoid an audit:
- Giving incorrect information of miles per gallon, which is too high or too low.
- Explained fluctuation in the fleet records.
- Fuel purchased exceeding the tax paid.
To save themselves from legal issues and fleet auditing, many transportation companies have started adopting technology and an ifta audit checklist in their business. You can use digital recording solutions to protect the proper records and do hefty calculations.
Video Credit – The Trucker’s Accountant
Every member jurisdiction registered under IFTA is required to audit 3% of the licensed base yearly. This is to verify compliance and make sure that the correct amount of tax is paid. However, the prospect of an IFTA audit can be quite daunting for some, but they serve an important purpose. Also, if you have a good track record, the audit somehow becomes more of a process to validate the records. If your information is valid and complete, be it manual records, or the GPS data the process of audit tends to go much smoother.
However, talking about penalties- if you fail to comply or are not able to file the same on the time. Every IFTA jurisdiction has its own specific rules, but many of them tend to follow a framework. For instance, in both California and NY, you will be charged with a fine of $50 or with a penalty of 10% penalty if you fail to file your return. However, you will file after the due date, or fail to be the amount due.
“Truck driving means the stress of never knowing where you will be and what you will be doing the following day.” Connor Syrewicz
If you tend to travel to an IFTA jurisdiction without a permit, you may be able to assess a penalty, fine, or even suspension depending on the jurisdiction’s law. However, in California, you could be charged a $100 to $500 fine.
How Fleet Software Automates IFTA Reports?
The Fleet software is a safe and secure platform that allows you to save your business-related information. This provides you with access to the records only in the official or master device you want to operate in. The solution also helps you to track everything in terms of dispatch history. This provides you with detailed information about the order related details such as status, dispatch, shipment, and delivery along with the driver’s information. The advanced tracking software can also maintain the accounts and calculate the salary of each employee in the company. The fleet software lets you edit and delete the data easily. Here, you can also release the payments in advance to the driver or any other staff for a specific reason.
Why ELD Are The Right Digital Solution For Fleet Operations:
As suggested by several fleet businesses, they find it challenging to maintain paper-based records. Digital records save them trouble and can be accessed anytime and anywhere. The ELD helps companies to get precise records and compile them to apply for the IRP audit and IFTA audit manual. Often, companies have to access their documents for upto five and six years. This is possible if they have saved their records to digital forms in the cloud, so it becomes easy to access them from anywhere. Before selecting an ELD solution, transportation companies can seek their provider’s advice to know if they can maintain its records for several years with the help of ELD. Fleet managers, owners, vehicle operators and delivery personnel can log in and access these records at the time of audits and tax filing. Maintaining IFTA records manually is not possible and takes a lot of time and effort.
To participate in the IFTA audits process, it becomes mandatory to have the correct records and show them to the inspecting officers, which can be done by the best ifta tracking app. If transportation companies face any issues and problems compiling their records and calculating their taxes, they can opt for various tools, softwares and ifta tracking apps to collect their documents for them. It still saves a lot of time and energy, and they will not have to hire additional staff to maintain their records for them. In case of any doubts and access to information, transportation companies can visit the official websites of IFTA and IRS to know more about the process of filing them.