Record keeping is crucial to running your business properly. This edition of Trucking Tips is dedicated specifically to information and tips that can help you understand and comply with proper record-keeping practices, such as maintaining trip reports, fuel information and quarterly recaps. For more information 24 hours a day on the Indiana Department of Revenue, Motor Carrier Services Web site at www.in.gov/dor/mcs/
Tips from the Audit Staff
Going through an audit can be stressful, especially if you are unsure or unaware of the proper record keeping requirements. Throughout the years, the Indiana Department of Revenue’s audit staff has seen various forms of noncompliance that could be very costly to trucking companies.
Some noncompliant actions included:
The following is a short review of documents required for an audit.
- using dispatch logs or computerized routing programs instead of driver-completed daily trip reports;
- maintaining quarterly odometer readings instead of daily trip reports; and
- using estimated miles per gallon figures instead of maintaining trip reports or fuel receipts.
The minimum mileage requirements for both IFTA and IRP are those recorded in trip reports. Trip reports need to be completed for all movement (in-state, out of state, loaded and unloaded) for each IFTA-decaled vehicle. Dispatch logs are not valid mileage documents.
These trip reports must contain the following:
- Starting and ending dates of the trip - These dates are the actual dates that the vehicle was moving, not the billing dates of the load.
- Trip origin and destination by city and state - You must list all stops for the vehicle, not just the origin and destination stops for the day. These should be reviewed to ensure that the ending destination city and state on one trip report match the origin city and state of the next trip report.
- Routes of travel and/or the beginning and ending trip odometer readings -The routes of travel or the trip‘s odometer readings must be listed on every trip report. A consistent method must be used. The routes of travel must be the route that the vehicle actually traveled. If the odometer readings are listed on the trip reports, these should be reviewed to ensure that the ending odometer reading from one trip report matches the beginning odometer reading on the next trip report. It is also recommended to have state line odometer readings.
- Total trip miles - List the total miles traveled for each trip.
- Distance by jurisdiction - List all the miles for all states and Canadian provinces for each trip report.
- Unit number - Make sure that this number is present, correct and readable. In addition, this unit number must be a unique identifying number, not “red truck,” “Ford,” etc.
- Vehicle fleet number.
- Licensee’s name - The name of the company.
To receive tax-paid credit you must keep certain records, depending on the type of fuel you purchase.
For over-the-road service station receipts, you must keep the actual receipt, the credit card receipt or a third-party-generated listing (such as a listing of fuel purchased with a fuel card provided by your supplier). Regardless of the form for these fuel documents, the fuel receipt must include:
- Date of the purchase
- Name and address of the seller
- Number of gallons or liters purchased
- Type of fuel purchased - Diesel, Gasoline, Propane, etc.
- Price per gallon or liter, or total amount of sale
- Unit number
- Purchaser’s signature - This will probably not be on the third-party-generated listings.
If you maintain bulk fuel storage tanks, it is crucial that you maintain the following purchase and withdrawal documents to obtain tax-paid credit:
- Date of withdrawal
- Number of gallons or liters withdrawn - For taxable and non-taxable units
- Fuel type - Diesel, Gasoline, Propane, etc.
- Unit number - Make sure the unit numbers are unique to determine whether a unit is taxable or non-taxable.
- Bulk fuel purchase receipts - These are the receipts for gallons that were placed into the storage tank.
Note: Receipts that contain alterations or erasures will not be accepted by the Indiana Department of Revenue.
- Inventory records - These must be physical inventory records, not book inventory records. Actual, physical inventory measurements must be taken at least quarterly.
Part of your record keeping must include quarterly recaps for each vehicle.
- Summaries must be maintained for each taxable and non-taxable use of fuel - Taxable usage is fuel used by units with IFTA decals. Fuel used by equipment or units that are plated at 26,000 lbs or below are considered non-taxable.
All mileage and fuel documents must be kept for four years from the time the return was filed or the due date of the return, whichever is later.
- A summary of miles traveled needs to be maintained by unit that lists the quarterly mileage figures for all jurisdictions (states and Canadian provinces).
If you are audited and your records are rated as inadequate, a few things may happen:
- Your reported miles per gallon could be reduced to 4.0, which will result in increased consumption and tax due (IC 6-6-4.1-9 and IFTA Article A550).
- Any reported tax-paid credit gallons without a supporting fuel receipt(s) will be disallowed as credit (IC 6-6-4.1-6 and IFTA Article R1000).
- IRP jurisdictional credits will be disallowed, or you may be billed at 100 percent of the base fee (IRP Article X-1005a of the 2008 IRP Plan).
For previous editions of the Tax Dispatch, click here.