A recent discussion around the TruckingOffice office water cooler: Who are you going to call if you’re notified you’ve got to deal with an IFTA audit?
First guess – an attorney or an accountant. Which would you pick? How would you find someone who has had experience with an IFTA audit? I don’t know – maybe you’ll get lucky and find someone who won’t charge you a hefty fee on top of whatever the IRS decides are your penalties, taxes, and interest due.
Some people just don’t speed.
There are people in the world who look at the speed limit signs and never go any faster. “Not worth the risk of a ticket,” they say. “Insurance rates go up.” They do things the safe way because the cost of getting caught is too high.
These are the people who know that if you don’t get your IFTA done right the first time, the audit will lead to interest, penalties and fines – a total that may be catastrophic.
I don’t know anyone more concerned about safety than truckers. That kind of safety attitude needs to apply to the IFTA too.
When Does an IFTA Audit Happen?
If you’ve never had to endure an IFTA audit, good for you. But, it could happen, so let’s look at a few facts that may help you be prepared and survive with your sanity and your wallet intact.
An IFTA audit is done to ensure that the trucking company’s distance accounting process is accurate. Why? Because the mileage data is used to determine tax obligations for each jurisdiction on a driver’s route.
Typically, the IFTA conducts audits at three-month intervals to check for discrepancies in the distance accounting system. You’ll receive a 30-day notice from your base state about the upcoming audit.
Preparing for an IFTA audit is easier if you have IFTA fuel tax software integrated with your ELD. With these products, your mileage is automatically and accurately recorded. Plus, the system will generate any report required by the IFTA.audit.
At TruckingOffice, we understand how stressful it can be when an IFTA audit is coming up. That’s why our TruckingOffice PRO trucking software is so popular with thousands of truckers today. All of your data is easily accessed at any time online to help you get through an audit without any hassles. Sounds good, right? You should check it out now with this 30-day free trial to learn more.
How To Manage Before an IFTA Audit
Get ready by keeping what you need – and getting rid of what you don’t.
Make sure that the documentation you need is stored where you can get to it, but it’s out of the way until you need it. That combination often means the back of a closet – and closet space gets filled really fast. You’ll need log books for six months. You’ll need your fuel receipts. You’ll need mileage records. You don’t need food or coffee receipts. So pare down the stuff you need to save. Keep it together. If you’re an owner operator, it’s likely that a quarter’s worth of materials will fit into a large envelope or file folder. Put everything in and put a date on the outside.
Get ready by doing things right – right now.
Procrastination or worse, putting something “right there” because you’re convinced you’ll remember where you put it in 3 months, leads to trouble with or without an audit. People talk about bad habits but there are good habits too. Get into some good habits – throw the log books into a box in the office, not just lay them down somewhere. Like Grandma used to say, “There’s a place for everything and everything in its place.”
We’ve always got that time when we simply don’t have the chance to put something where it belongs, so use your inbox as a place to put things “for now” and set aside some regular time to go through it and put things away. The last day of the quarter would be a good time to do that.
Get ready by using a good system.
Having a system that keeps track of the details like mileage by using the US Government standard PC*Miler – instead of an odometer reading by a driver that you find out later was less than reliable – gives you a lot of credibility with the auditors. Use a system that can get you the numbers they ask for quickly and easily and you’ll probably be done surprisingly fast. A lot of people are still using spreadsheets for this kind of work, but if you’ve got a fleet, you could be talking about dozens of spreadsheets to manage – and mess up. Creating a regular back-up schedule is something you must do – and hope you don’t accidentally save the over an older version of a file. Of course, I’m going to suggest TruckingOffice trucking management software.
Organize Your Audit
Audits are usually handled in your office. I guess they figure you’ll have what you need on hand there, rather than asking you to bring stuff in. The other type of audit asks for you to send in your materials and then they’ll tell you how much more you have to pay them.
If you are notified of an auditor’s visit, take the time when you’re probably not sleeping (due to anxiety) and clean up your office a bit. Make sure there’s a chair for the auditor to sit in – that’s only polite. (Make your grandma proud.) If you can find out what period of time the audit is going to cover, pull that material out of the closet right away and get it organized. If you don’t use spreadsheets, don’t worry about setting one up, but you may want to put the receipts in order by date.
Be courteous. We’re all humans, dealing with a system that’s been created because of people who have cheated or scammed. That makes it feel like the auditor is our enemy and they’re waiting to find something bad to hit you with. Auditors are just doing a job that most of us would never want, and they probably get a lot of anger directed at them. Once again, Grandma would remind you that you’ll catch more flies with honey than with vinegar. You’re probably nervous and stressed by the auditor’s visit, but you could offer a cup of coffee or tea and then both of you can relax. A little.
It will be a lot easier if you’re using TruckingOffice. Why not give us a try? You’ll find out what our customers are saying is true – TruckingOffice finishes the IFTA in minutes and give you the confidence that it’s done right. You won’t have to worry about the taxes you pay if you use our trucking management software. Then if you’re one of those randomly selected audits, you won’t have to worry – just clean your office.
I am going to have an ifta audit ; I do not have mileage and receipts in hand. I did not keep my record well. What is the worst case scenario.