OVERVIEW OF TAX FILING
For simplifying the fuel taxing process in parts of Canada and USA IFTA (International Fuel Tax Agreement) was set up. It is applicable in 48 contiguous states in the USA and 10 Providences of Canada. IFTA software simplifies the process of reporting for the taxation by reporting for a single state rather than different states.While IFTA trucking software makes the taxing process a lot easier, reporting becomes a little difficult because of very specific requirements for it. Being late or not filing at all gets the trucker in a fine of 50$ or 10 percent of the next tax payable and possibly an audit. This leads to more scrutiny and paperwork. This is important to understand that reporting is very important in every quarter. If in any quarter the fleet doesn’t work, with seasonal work, still the reporting has to be done. The form may vary in different states but the data breakup needed of the fuel records remains the same. That makes reporting easier for people in different states.
IMPORTANCE AND APPLICABILITY
Before IFTA was instituted, there was a different taxation system in different states. The business which is operating in any certain state had to apply for the tax permit in the specific state/s. Therefore the business has to fill up the records for the different states it is operating in. Not to mention the inter-state and port entry issues. To help clear these problems and to simplify and centralise the taxation process IFTA was created. The processing of IFTA is very important because if you forget or neglect the payment of the miles per state
taxes or filing of the documents even by one day the consequences can be catastrophically bad. If any discrepancy is found out, there will be an audit which will put a brake on the whole working of the business.
IFTA is applicable for transportation companies which runs their business inter-state for tracking their fuel consumption and mileage covered. There is a specific requirement for the business which needs to come under IFTA and file the fuel reports. The requirements are for any vehicle which is used for trucking management of people or property and meets the underlying requirements.
Any vehicle with two shafts and exceeding 26,000 pounds.
Any vehicle having three or more shafts, regardless of weight.
If the combined weight of both of the vehicle and transports gets exceeded from 26,000 pounds.
To summarise it, if a business operates commercial vehicles which travel between the states, it will need an IFTA license. Once the license is obtained the fuel and mileage records are reported quarterly.
The main question which comes to so many minds while thinking about IFTA is, what will happen if they will not report for IFTA trucking accounting software or forget to report it. The answer is that the consequences are catastrophically bad. Because then there will be an audit, during which the business will be stopped and the license plate and insurance, the business has paid for, will be going to waste, the customers will go to the competitors and the loss will be huge in long term. So the reports need to be filed every quarterly before or on the due date. In the reports, there are two things which need to be measured, and these are mileage covered and the fuel intake. There can be a bit different in the file format but the breakdown of the data needed will be the same.
The reports are filed out quarterly. The owner can do it by himself or can hire a person to keep track. But the spreadsheet needs to be updated daily so that there is no skip in-between the data. Mileage numbers per state and fuel receipts are needed to be organised. A tracking software can be used. Profiles, axon software and trucking office are examples of the software which can be used. Before IFTA, the driver had to give reports on every state mileage and the fuel consumption there. With IFTA there will only be the data needed for the fuel consumption in the state regardless of where it was bought. So while paying for fuel either the owner is paying at petrol pump or at the time of quarterly IFTA payments.
The filing of ifta reporting and paying for taxes is a tricky process. The information needs to be updated timely and there should be a clear communication with the driver. The states IFTA covered the taxes for those states is to be filed collectively and the fuel reports and mileage covered are to be concrete. To conclude it all the commencement of IFTA has saved the business a lot of money and hassle. The rules are more strict and reporting is more strict. But in the end, it is very beneficial for the business. While it is very beneficial, avoiding or in case of forgetting to report, there can be a huge problem. It leads to audit which ultimately results in the loss in the business.