IFTA Penalties & Audits

So another IFTA deadline has come and gone, and you’ve forgotten to file your report and pay your dues. You had every intention to file your report, but you’re busy – we understand.

But that raises the question, what will happen? What should you do? Will you be audited? Let’s talk about it!

Penalties

In most states, you’ll find that the late filing penalty is a flat rate of $50, or 10% of the taxes due — depending on which one is greater. After your first month of late filing penalty, you will be charged .4167% of the tax due every month until the tax amount is paid.

Note: Nevada’s penalty for late filing is a $50 flat fee PLUS 10% of the taxes due. Nevada also charges the .4167% of the tax due every month, as well as an administrative late fee of $100 the first time, $500 the second time, $1000 the third time, $1500 the fourth time, $2000 the fifth time, and $2500 for every time after that.

Audits

Whether you’ve already filed your IFTA or you’re running late, the unfortunate news is that you are also at risk for an audit. Now, that doesn’t mean you’re going to get audited but consider it.

• Non-continuous Jurisdictions: Your trip logs need to show continuity from your starting destination, with every district in between. It’s impossible for a vehicle to begin in North Carolina and suddenly be in Colorado. Auditors will see this as a flashing red sign!
• Mileage Gaps: If one day ends and your next day doesn’t begin where you left off, this could trigger an audit. This can happen when drivers don’t realize that their personal or leased miles must also be included on the trip logs. 
• Over-simplified Fuel Calculations: It may be tempting, but it is not okay to split your miles traveled by a set miles per gallon estimate as your MPG will fluctuate over time.
• Skewed MPG: When your average MPG varies drastically from one quarter to the next, there should be a valid explanation, such as varying road conditions or weights of the loads carried. 
• Mileage Extremes: The average MPG for a heavy truck is between 5-10 MPG. If your mileage is way off the ranch, you probably have some calculation errors. Some states won’t even let you file your IFTA return until your MPG is within that range.

How to Survive an Audit

If you’re hit with an audit, it’s not the end of the world – it’s just a frustration you want to avoid. We’ve told you who is at risk before, and how you can avoid an audit.

But now you’re getting audited. So what do you do? You want to focus on proactivity, organization, and documentation.

Basically, make sure you have fully detailed, original copies of distance and fuel records at hand that you can access. You should have the following information at hand:

Basic driver and vehicle information:

• Driver’s name and signature
• Registrant’s name
• Vehicle Fleet number
• Vehicle Identification Number 
• Trailer number

Trip Information:

• Start and End dates of the trip
• Trip Origin and Destination
• Routes of Travel
• Odometer/Hubometer readings from start & finish
• Total Trip Miles/Kilometers
• Miles/Kilometers by Jurisdiction

Fuel Records must contain the following:

• Original receipts for each purchase (Copies or scans are not acceptable. Keep them in good condition and do not write on or alter them in any way)
• Date of purchase
• Seller’s name and address
• Number of gallons/liters purchased
• Fuel type
• Price per gallon or total of sale
• Unit numbers 
• Make, model, and gross weight of the licensed vehicle

Now that we’ve moved on from the 3rd Quarter, it’s time to start focusing on the 4th Quarter. Let’s get through the holidays first, though!

If you have any questions about your IFTA records, reach out to us at 704.234.6005.