Ever heard of Red Adair? He’s the guy you’d call when you had an oil well fire that no one else could handle. Adair traveled the world fighting fires and famously said, “If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”

What do oil well fires have to with fleet tax compliance? Every week I get a call from a fleet with a compliance problem that seemingly flared up out of nowhere. They were just trucking along and boom – suddenly they’re feeling the heat of an audit for reasons they don’t really understand. A fleet’s tax compliance situation may look fine on the surface but every missed deadline or piece of sloppy reporting creates weakness and pressure down below. Eventually, the compliance system blows out.

I know a seasoned trucker who got his USDOT number but didn’t know he needed an interstate operating authority (MC number) to haul legally in the United States. He flew under the radar for three years until the DOT caught up with him and shut him down. It was a month before he could get his MC number and operate legally.

The truckling landscape is littered with compliance blowouts. When push comes to shove, a trucker’s priority is to move freight. The IFTA return can always wait. You can put off the paperwork until tomorrow.

But think of it this way. If you can’t take a load because you failed to renew your IFTA license, that’s a blowout, and the smoke in the air tells tax authorities, customers, and competitors that you don’t pay attention to the details of running your business.

How do you reduce the risk of compliance blowouts? Considering that Red Adair’s words about the cost of hiring an amateur are just as true when it comes to tax compliance, here are some alternatives:

Do it yourself

Government Web sites have information about IFTA and IRP. Just read the manuals and get’er done! How hard can it be?

Well, governments are great at telling you the rules but it’s your job to interpret them and apply them to your specific situation. The only time they’re going to challenge your line of thinking is during an audit, and you don’t want to get to that stage. And governments aren’t great at responding to important, practical stuff like where the heck can I get a BOC-3, and, by the way, why I need one?

Online services

There are online services where you enter your tax and licensing information and they prepare returns for you. But that’s all they do. There’s no analysis to help you manage fleet tax compliance or determine whether your information was collected and calculated properly in the first place. In fact, some services make their money by selling your contact information. Once you hit the “submit” button, prepare to be inundated with phone calls and e-mails from companies with something to sell.

Hire someone

The pool of experienced candidates for fleet tax compliance jobs is small. Believe me, I know.

There are no college courses for this type of work and it takes at least a full year before any new hire understands the basics, let alone becomes a true professional. My introduction to fleet tax compliance was in the Alberta Prorate Office where I typed up cab cards and sent them out. It was three months before it clicked that I was giving out credentials for licensing!

Consider this: If you had to write a job description for an IFTA/IRP manager, what would it say? What are the qualifications? What would the job title be? Who would train this person? Problems are magnified when the manager doesn’t know what he’s talking about. I had a controller at a company once tell me, “We just estimate IFTA as it doesn’t change year to year.” I’d like to hear an auditor respond to that one.

Whether you hire someone in-house or outsource the work, there are costs associated with managing fleet tax compliance and staying on top of changing regulations. Savings come from doing something over and over and over again to perfect the process and build the relationships you need when you run across something unusual or quirky.

Don’t let the pressure of non-compliance build up. Hiring someone to cap a well and minimize the damage is far more expensive than setting up a fleet tax compliance program that, with proper maintenance, won’t blow out in the first place.

We would love to help you set up a fleet tax compliance program for your fleet or business.  It starts with a phone call.  Give us a call today and let’s talk.

Call us Toll Free: 1-877-860-8025

Email: sjohnson@fleettaxpro.com

About the Author:
Sandy Johnson is the founder and managing partner at North Star Fleet Solutions in Calgary. The company provides vehicle tax and license compliance services for trucking operations ranging from single vehicles to large fleets. She can be reached at 877-860-8025 or northstarfleet.com.