How To Prepare For An IFTA Audit
Did you know that any IFTA license holder is subject to an IFTA audit? According the IFTA legislation, 3% of IFTA license holders are required to be audited every year. So really anyone is up for the wonderful opportunity to be audited, but it really isn’t that bad. ExpressIFTA can make all your stress of an IFTA audit disappear because you can easily keep track of all your records and access them at any time. Let’s go over all the preparations so you can handle an IFTA audit like a BOSS…
What Records Do You Need?
Under IFTA and IRS is the “Individual Vehicle Mileage Record” (IVMR). The IVMR is the original record generated in the course of actual vehicle operation and is used as a source document to verify the registrant’s application or fuel report for accuracy.
The IVMR must show:
1) Date of the trip (starting and ending)
2) Trip origin and destination
3) Route of travel and/or beginning and ending odometer or hubometer reading of the trip
4) Total trip miles or kilometers
5) Miles/kilometers by jurisdiction
6) Unit number or vehicle identification number
At the discretion of the base jurisdiction, the following information may also be required
7) Vehicle fleet number
8) Registrant’s name
9) Trailer number
10) Drivers signature and/or name
IFTA & IRS license holders must keep detailed distance records showing operations on an individual-vehicle basis. For IFTA, these operational records should also contain:
– Taxable and non-taxable fuel use
– Distance traveled for taxable and non-taxable use
– Distance recaps for each vehicle for each jurisdiction in which the vehicle operated
When recording the mileage of an apportioned vehicle, all movement (interstate and intrastate) must be included, as well as loaded, empty, dead-head and/or bobtail miles or kilometers. Distance must also be recorded when apportioned units are operated with trip permits.
IFTA licensees must maintain complete records of all motor fuel purchased, received, and used while conducting their business. Separate totals must be compiled for each motor fuel type. Also, retail fuel purchases and bulk fuel purchases must be accounted for separately.
Fuel records should include:
– The date of each receipt for fuel
– The name and address of the person from whom the fuel was purchased or received
– The number of gallons/liters received
– The type of fuel
– The vehicle or equipment into which the fuel was placed.
When an IFTA qualified vehicle is operated under a trip permit, fuel purchases do not need to be recorded and the furl purchases do not need to be reported on the quarterly tax return. A copy of the trip permit must be retained.
Tax Paid Retail Fuel Purchases
Retail purchases must be supported by a receipt or invoice, credit card receipt, automated vendor generated invoice or transaction listing, or microfilm/microfiche of the receipt or invoice. Any receipts that have been altered or have signs of erasures are not accepted for tax-paid credits unless the licensee can demonstrate the receipt is valid.
Retail fuel purchase receipts must identify the vehicle by the plate or unit number or other licensee identifier because distance traveled and fuel consumed may be reported only for vehicles identified as part of the licensee operation.
Acceptable receipts must include:
– Date of purchase
– Seller’s name and address
– Number of gallons or liters purchased
– Fuel type
– Price per gallon or liter or total amount of sale
– Unit numbers
– Purchaser’s name
A good record keeping system is well worth the time and effort to implement and maintain. The quality of your IFTA records and how you manage them will directly affect the ease or difficulty of an audit. Well managed records will impact your bottom-line by reducing penalties and assessments.
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