How to Avoid 3 Common Mistakes in IFTA Fuel Tax Report

How to Avoid 3 Common Mistakes in IFTA Fuel Tax Report?

The trucking industry has its general know-how. Unlike other transportation sectors, this segment binds the truckers and trucking companies by specific regulations. The IFTA Fuel Tax process was so complex that truckers & companies look for assistance from Trucking permit services providers to avoid confusion. However, laws are simpler now. IFTA  Fuel Tax Agreement is one such law. One must note, companies that focus on trucking permit services also focus on increasing efficiency while cutting down paperwork.

International Fuel Tax Agreement

The above argument is the primary reason for the creation of IFTA. Before it, truckers need to obtain permits and pay taxes on entering every crosspoint in other states. As the process was lengthy and involved needless documents and permits, the transport authority in the 1980s felt the need to set up a joint revenue system that evolved into today’s International Fuel Tax Agreement. It eliminates the necessity for individual fuel tax permits and simplifies the accounting process.

As per the agreement’s clauses, a truck registered under IFTA needs to obtain a fuel tax permit from one only state and can easily travel nationwide in the U.S. At the end of each quarter, a fuel tax report will be submitted with all the details on taxes on the fuel purchased in different states in only one place. It simplifies taxation laws, yet filing IFTA tax reports can overwhelm many. Moreover, it is still complex and somewhat time-consuming. Trucking companies looking to expand their businesses find the process a distraction that shifts their focus from their businesses. That’s only part of it; the filing process also needs to be accurate where trucking company owners may fall short of keeping complete track records of purchases. As a result, mistakes happen in IFTA reports.

3 Common Mistakes in IFTA Fuel Tax Report

Mistake 1: Late Filing of Fuel Tax Reports

Trucking companies keeps their schedule all packed. Amid all this, there’s a high chance of forgetting the upcoming deadline for the fuel tax report.

When you submit the report late, you are liable to pay $50 or 10% of net tax liability (whichever is higher) as a late fee penalty. The fine you pay depends on the state your trucking company is based. DOT Agents can ticket your truck and you will be disabled to leave the state.

You can also receive an IFTA audit if the auditor is convinced your intent for late submission of tax reports was to commit fraud. If that happens, you will receive a $5000 fine and may be prosecuted for criminal charges.

Mistake 2: Making Guesses

Filing an IFTA Tax Report involves calculations, keeping track of mile records, and accounting after each quarter, making it a complex process.

However, IFTA wants accuracy in the tax reports. If you are making estimates, it may raise suspicion among authorities, thus leading to an IFTA audit. So always maintain proper records of fuel usage and mileage.

Mistake 3: Not Filing IFTA Fuel Tax Report

Did you forget the deadline, miss it, or assume you don’t need to file one? You can state any reasons before the IFTA auditor, but it hardly works.

Hence, accurately filing the IFTA Tax Report on time is the only option. Even when your fleet doesn’t operate for any quarter, you still need to file the report and submit the IFTA license.

Final Takeaway!

There is a high chance of operational inefficiency, clerical errors, and inconsistencies while filing an IFTA report. However, assistance from a company that focuses on trucking permits and taxes services can assist you in efficiently filing the IFTA Fuel Tax Reporting Service and minimize the risk of putting your company out of service. They efficiently calculate, keep proper records, and help you file tax reports on time. For further questions, contact a trustable IFTA service provider.