ExpressIFTA Blog

Tuesday, April 28, 2015

IFTA Audit Crash Course

You may not have won the IFTA Audit lottery, but your name is always in the drawing. Little fun fact: 3% of IFTA license holders are subject to an IFTA Audit every year. It really doesn't matter if you are the master of IFTA filing and you have never fudged your miles, anyone with an IFTA license is subject to be called for the wonderful experience of an IFTA Audit. But don't let this tiny bit of information stress you out. It's not as bad as it sounds.

What is an IFTA Audit?
An IFTA audit is the evaluation and verification of mileage and fuel figures reported on the IFTA quarterly tax return.

Who may be subject to an IFTA audit and why?
Any registrant licensing or registering qualified motor vehicles, or that is required to license or register qualified motor vehicles, is subject to an audit with IFTA. For the purpose of determining whether such registrant is maintaining acceptable records, filing correct applications, and paying correct registration fees or taxes as required.

What is the IFTA audit process?
1) Taxpayer may be contacted by phone and/or an audit contact letter may be mailed with auditor's name and phone number including year(s) to be audited.
2) Auditor arrives on location and begins the opening audit conference (or you could be asked to send in records) and confirms general data filed on return, internal control evaluation, and nature of operations.
3) Request records agreed upon previously with mileage records, fuel records, and any other requested data related to your IFTA operations.

What documents will be examined?
The auditor will be looking over your records, more specifically they will be examining...
- Individual trip records in detail
- Calculate trip mileage based on routes of travel using map miles/mileage software
- Examine the continuity of odometer or hub meter reading to determine total elapsed miles
- Reconciliation of Mileage Source Documents and Summaries to IFTA quarterly tax returns

What are the best ways to avoid an IFTA audit?
Like I said at the beginning, base jurisdictions are required to audit 3% of the IFTA accounts that are required to report per year, excluding new accounts. The best way to prepare yourself is by keeping accurate records.
- Your distance records should include taxable and non-taxable fuel use, distance traveled for each, and distance traveled in each jurisdiction.
- Fuel records should include date of receipt, name and address where fuel was purchased, number of gallons purchased, and fuel type. Separate records must be kept for each fuel type and bulk fuel purchases.
- You are required to keep your records for 4 years from the return due date or filing date (whichever is later), plus any time period included as a result of waivers or jeopardy assessments. If a licensee fails to provide the required records for audit, the 4 year retention requirement is extended until the required records are provided.

ExpressIFTA.com provides accurate fuel tax calculation and support for all 48 states that participate in IFTA. Our simple entry for odometer readings and the ability to maintain distance and fuel records online makes it easy to keep track of your mileage and fuel purchases. ExpressIFTA helps to eliminate common errors by doing all the calculations for you so you can easily e-file your IFTA Quarterly Tax Return.

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