May 12, 2015
PROTECT YOURSELF FROM AN IFTA AUDIT
States audit 3-10% of all companies with IFTA licenses each year. Your chance of having an IFTA audit is much higher than the likelihood of an IRS tax audit. As an IFTA licensee, you have to do more than just file your quarterly return to be in full compliance with the agreement. The most common mistake we see companies make is failing to meet the IFTA record keeping requirements. Here is a basic rundown of what is required.
The agreement requires that you maintain mileage and fuel data records on each vehicle for each trip. You must also maintain monthly and/or quarterly mileage summaries that separately show miles for each vehicle for each jurisdiction (state or province) in which the vehicle operated. If we process your IFTA report, we maintain this part for you. If you do your IFTA on your own, it is very important that your software be able to generate such a breakdown.
You must have a record for each trip for each vehicle that contains the following:
- Date of trip (starting and ending)
- Trip origin and destination
- Intermediate trip stops
- Routes of travel
- Beginning and ending odometer or hub meter readings
- Total trip miles
- Unit number
- Company name
- Fuel purchased or drawn from bulk storage
If you are using our IFTA envelopes, filling them out completely and have all your fuel receipts or a fuel statement from a fuel card, you will capture all the information required.
In our experience from IFTA audits with our clients, each auditor is different. Some are more lenient than others and will be somewhat forgiving if you don’t have everything the Agreement requires, as long as the auditor feels reasonably confident that he/she is able to accurately account for all the miles each of your vehicles traveled in each state and the fuel you purchased. Other auditors are more “by the book” and want to see everything exactly as spelled out in the agreement. Murphy’s Law dictates that if you ever get audited you are going to get a “by the book” auditor, so it is always best to do things right. With the right system in place, it isn’t too hard to do and you won’t have any problems at the end of an IFTA audit.