Hopefully you have not experienced any audits before, but if you have, then you already know how time-consuming, stressful, and expensive it can be.
For IFTA, audits are carried out to determine if licensees are in compliance with the terms of the International Fuel Tax Agreement (IFTA) and with state or provincial law.
You may know that IFTA is a fuel tax agreement for the 48 neighboring states and 10 provinces to simplify the reporting of fuel taxes for interstate or interprovincial motor carriers.
The description below has been quoted directly from IFTA auditing material to shine light on the subject of why your base state or province audits motor carriers for IFTA:
“IFTA establishes a single uniform system for administering and collecting fuel consumption taxes from interjurisdictional carriers. Under IFTA, motor carriers register with their base jurisdiction, and receive credentials, which allow them to travel through other IFTA member jurisdictions. Carriers then file a single quarterly return with a single payment to their base jurisdiction that covers all of their travel in other IFTA member jurisdictions. The base jurisdiction processes the IFTA tax return and forwards funds to each jurisdiction or requests funds for net fuel taxes.”
Due to this collaboration between IFTA jurisdictions, your base jurisdiction is required to audit 3% of their IFTA licensees on an annual basis. Your base jurisdiction is not only acting on their own interest, but in the interest of all IFTA jurisdictions, managing the revenue raised by fuel taxes collected through IFTA.
You might think 3% is a small number and that you are never going to get picked for an audit. However, if you give your state or province any reason to look into you, then it substantially increases the odds of being picked sooner rather than later.
Here are the reasons why you might be picked for an IFTA audit, aside from random selection:
- Submitting reports with inconsistent MPGs or with errors or missing information
- Filing IFTA quarterly reports late
- Newer IFTA licensees who are in their second or third year of IFTA registration
- The 3 months or the quarter in question
- The previous 3 quarters to the quarter in question
- The 4 or 5 years prior to the quarter in question, if considered to be necessary
Audits are not going away, because for they are essentail to the success of the International Fuel Tax Agreement. An audit program was included to act as the necessary compliance measure for ensuring the correct revenues are being collected by each jurisdiction.
If you want peace of mind, then stop fighting with your spreadsheets or devices that provide you with incomplete or non-IFTA compliant mileage and use a fuel tax program that generates correct IFTA reports.
eTruxFuel has been built to follow IFTA compliance and generate correct IFTA reports – so easy that you can do it yourself. It also allows you to self-audit your fuel and mileage data, since you can run unlimited reports. This gives you the chance to edit any errors or include any missing information before filing, avoiding the dreaded IFTA amendment form.
– – –
We want to make IFTA easy for you. Why not take advantage of our 31-day free trial?