ITFA & ELDs and Audits…Oh My
With all of the chatter surrounding the electronic logging device mandate, expected in September 2015, fleets are focusing on the key benefits of how ELDs help them and their operations: reducing Hours of Service (HOS) paperwork and increasing compliance, increasing safety, and cutting operational costs. In addition to these benefits, ELDs also help fleets automate the painful process of filing for the International Fuel Tax Agreement (IFTA).
While not part of the ELD mandate, many ELD vendors include options within their software to tackle other DOT and FMCSA compliance challenges, including the International Fuel Tax Agreement. As fleets consider their options for electronic logging device compliance, it helps to broaden the scope to see where a return on investment can be made.
What is IFTA and why should I worry about it?
The International Fuel Tax Agreement is an agreement among the lower 48 states of the United States and the Canadian provinces to simplify the reporting of fuel use by motor carriers that operate in more than one jurisdiction. Thanks to IFTA, interstate motor carriers only have to file their fuel tax reports with the one state they license with, compared to all the states they operate in.
While good intentioned, administration of IFTA creates a heavy burden on motor carriers. Carriers that manually transcribe driver reports are faced with the immense challenge of ensuring they are accurately collecting miles driven in the correct jurisdiction and reconciling them with fuel purchase receipts.
Am I going to be audited?
Each IFTA jurisdiction is required to audit 3% of its IFTA accounts per year. Having a 3% chance of being audited may not seem concerning, but since not all IFTA audits are determined randomly, due to human error, you have a much higher chance of being audited if you are utilizing a manual recordkeeping system to ensure compliance with the ELD mandate.
IFTA personnel are trained to look for inconsistencies and errors in your reports. And some common mistakes can trigger audits:
- Filing Late or Amending Filings: Filing late or amending your filings can garner unwanted attention.
- Document Vehicle Odometer Issues: Odometer or GPS tracking problems should not go unaddressed, as they can dramatically skew your reporting.
- Skipping Jurisdictions: Driver trip logs must show continuity from the starting location to the destination location, noting every district in between. Routes that imply non-contiguous travel across states, for example, is a glaring error to auditors.
- Mileage Gaps: This occurs when driver trip logs don’t match from day to day. Daily logs must include personal or leased miles on the trip detail
- Incorrect Fuel Calculations: When reporting fuel, precise fuel use and mileage must be recorded, not an average of MPG and miles traveled.
- MPG Variations: If a truck’s average MPG varies drastically from one quarter to the next, there needs to be a legitimate reason indicated, such as weight, road conditions, and so forth. While not a violation per se, it can become an audit trigger.
- Questionable MPG: 5-10 MPG is generally anticipated from most vehicles impacted by IFTA. If your reported mileage falls outside of this range, an audit could be triggered.
- Missing or Illegible Fuel Receipts: Photocopies are allowed, but not always encouraged.
- Insufficient Individual Vehicle Mileage Record (IVMR) Data: An incomplete driver trip report can trigger a request for more documentation to substantiate claims. This results in more paperwork, cost, and exposes carriers to more scrutiny and potential liability.
Of course I don’t want to be audited! What do I do?
The best way to not get fined (and avoid audits altogether) is to ensure all IFTA reporting is consistent, and none of the mistakes that trigger audits are present in the reporting. This is easier said than done with paper records. However, many electronic solutions, such as the Omnitracs XRS solution, exist that remove the administrative burden away from fleets, minimize audit risks, and ensure accurate records in the unfortunate event that one does get audited.
Paper Log vs. ELD Solution
IFTA may seem like a burden, but it doesn’t have to be. By leveraging simple and affordable fleet management technology, you can automate the collection this data, digitize receipts, and minimize audit risk.
To learn more about how Electronics Logging Devices can help ensure compliance with International Fuel Tax Agreement, as well as other benefits, visit eldfacts.com, an important new information site designed to foster industry understanding of this critical legislation.
Want to learn more about International Fuel Tax Agreement? Download a FREE IFTA white paper to help you “Get Smart about IFTA.”