How to Avoid an IFTA Audit

How to Avoid an IFTA Audit

An IFTA audit is done to ensure that the trucking company’s IFTA accounting process of tracking miles and fuel purchases is accurate.  Why?  Because the mileage data is used to determine tax obligations for each jurisdiction on a driver’s route.

The International Fuel Tax Agreement (IFTA), is a tax collection agreement by and among the 48 contiguous states and Canadian provinces, bordering the United States, to simplify the reporting and collection of motor fuel use IFTA fuel tax when a motor carrier operates in more than one jurisdiction.  People who operate qualified motor vehicles are subject to IFTA licensing. The taxes that are collected are used for road maintenance that is needed from the heavy equipment, i.e.: truck and trailer loads that travel through.

Be Prepared

If you have ever been through an IFTA Audit, you know it can be stressful!  You worry that they will find a mistake and even worse, fine you for those mistakes. You may already know what happens if you fail an IFTA audit. IFTA audit penalties can be quite costly.  This is why you need a system like TMS Digital IFTA Manager!

IFTA Manager imports data from your ELD. We currently interface with six different ELDs and are adding more interfaces all the time.  We combine that information with the fuel transactions we import from your fuel card company.  At this time, we interface with about 25 or 30 different fuel card companies.  In addition, if you have yard fuel in a spreadsheet or .csv file, we can even import that for you!

For the International Fuel Tax Agreement (or IFTA), an accurate and reliable accountability system is an important requirement to prevent an IFTA audit. That is where TMS Digital IFTA Manager comes in.

Stay Organized

Getting everything in place is also good advice for your IFTA records.  If you are like most folks, your day is already busy with your regular job duties.  Having an auditor in your office, having you run to fetch this document or that file can put you behind! Whether stored in physical files or stored electronically, ensure that your trip data and fuel receipt records are organized by vehicle and stored safely. Your “storage place” can mean you are keeping hard-copy files or it can mean you’re keeping your documentation electronically.

Whichever way you choose, be sure the records are organized and readily accessible should you need them in an audit. This helps ensure that things are in order when the auditor wants to visit. IFTA Manager keeps your fuel and trip history digitally AND using our Image system allows you to scan backup paperwork. In addition, IFTA Manager runs on secure servers, with 24/7 IT support. Your data is stored safely, protected from viruses, malware, and ransomware. The TMS systems are backed up, so you know your electronically stored data is safe and secure. And, available when that auditor comes a-knocking.

You will typically receive a 30 day advance notice that you are about to be audited.  Your base jurisdiction will be in communication with other jurisdictions (states/provinces) prior to the audit to obtain pertinent fuel tax information in accordance with each jurisdiction’s disclosure policy.

Check your records!

Many times, trip and fuel records are gathered, entered into a mileage and fuel tracking system, and never checked or reviewed again. Problems can arise if simple errors go unnoticed for several months or quarters at a time.

Keeping an IFTA Audit checklist of your trip and fuel data can help you ensure accurate reporting. You can check your trip reports to ensure that the ending odometer on one trip report is the start odometer on the next report. You can also check that the destination of a prior days’ trip is the starting point of the next days’ trip. Consider how far your vehicles can travel before they would need fuel — do you have fuel receipts for those lengthy trips? Here is a link for more information regarding IFTA Audit requirements  https://www.iftach.org/committee/ac/Best%20Practices%20Guide.pdf

TMS Digital IFTA Manager helps with catching issues before they snowball.  While the process of importing data from your ELD and from your Fuel card company saves you a lot of time, it is still up to you to review those transactions.  We have several built in features to assist with that.  We have color-coding options on your fuel import screen to alert you to missing information.   We also offer color-coding features on your trip screen to alert you to missing fuel or unusually high MPG amounts.  We also have an “Uncommitted Fuel Transaction” report.  Some ELDs use cellular service and if the truck is out of range, you may have missing miles.  So when you import from your ELD, the fuel that belongs to those missing miles has nowhere to attach.

IFTA Manager allows for manual entry of trips and of fuel, when the ELD fails or the fuel is wrong.  Speaking from experience, it is so much easier when IFTA Manager lets you know there is an issue versus the auditor finding it!

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