This story appears in the September 12 print edition of iTECH, a supplement to Transport Topics.
Fleets and technology providers alike are optimistic about coming changes to International Fuel Tax Agreement record-keeping and audit procedures, saying the revisions will streamline carrier record-keeping requirements, accommodate advances in onboard technology and clarify specifications for states’ acceptance of data captured by electronic devices.
The rule changes don’t take effect until Jan. 1, but states can choose to implement them earlier. Fleets using onboard recording devices and the firms supplying the technology say they’ll be ready for the changes.
Marlin Kling, president of Midwest Motor Express, a regional and longhaul carrier based in Bismarck, North Dakota, is looking forward to efficiencies he hopes to see from the standardization of data acceptance requirements.
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“There’s so much data we have to pull together for all the states,” he said. “It will be a great improvement in our productivity when all states accept the mileage information generated by electronic logging systems.”
Nearly all interstate motor carriers fulfill their fuel-use tax obligations through IFTA, which was established in 1983 and which has been in effect across the 48 continental states for 20 years. But the fuel-use tax can only be enforced through audit, and for IFTA audits to take place, carriers must keep accurate records.
Lacking clear guidance on criteria to declare a carrier’s records sufficient, states have not always maintained uniform audit programs, and some have imposed penalties on carriers for records deemed noncompliant.
The new rules specifically provide for acceptance by states of carrier records produced by GPS or other electronic means — providing those records contain sufficient information to be audited.
When Midwest Motor Express made its transition to electronic driver logs several years ago, in part to use the data generated for the carrier’s IFTA filings, the company “had some problems, because states weren’t clear about what they would and wouldn’t accept,” Kling said.
“I think it’s only reasonable to expect that if we’re required to make these reports, we should be able to use the same technology we pay for to help us move forward with productivity in other areas,” he added. “The new rules are a perfect application of this moving forward, because they will remove compliance ambiguity.”
Kloeckner Metals Inc., a private carrier based in Roswell, Georgia, already accumulates nearly 100% of its IFTA data electronically, and the rule changes will move a step further toward creating paperless cabs, said Don Troy, corporate director of fleet and logistics.
“Our inspection forms are electronic, so no more daily inspection reports are needed unless there’s a safety violation notice,” Troy said. “Electronic logs are replacing paper logs, and moving to electronic fuel-tax reporting will remove the driver’s daily trip report. I’ll have completely paperless cabs in my trucks, resulting in savings for my drivers, for me and for my company.”
Onboard technology also provides a more accurate mileage number because driver paper reports are subject to human error, he said.
Gary Markham, director of regulatory compliance at ProMiles, a developer of mileage and fuel-tax reporting software, said the information required for auditing includes beginning and ending odometer readings, GPS location data with date and time stamps, and “frequent enough position points that the auditor and any mapping system you’re using can build a reasonable route.”
Changes to the rules also make the mileage accounting requirements for IFTA the same as those in effect for the International Registration Plan. This means that carriers no longer are required to keep two sets of mileage records.
Gary Bennion, a tax manager for global logistics provider and less-than-truckload carrier XPO Logistics, thinks the change will save carriers time.
It could also help carriers become more comfortable with onboard technology, he said.
“I don’t think the new rules are going to change much about the way carriers were planning to use their onboard recorders,” Bennion said. “I think the [electronic logging device] mandate is what’s driving the use of them. But I think they’ll feel more comfortable now, knowing that the way they do report will be in conformity with IFTA guidelines, and knowing that IFTA now has guidelines carriers can rely on.”
Bennion said carriers should expedite their own efficiencies by using “all the data they can” from their onboard recording devices.
XPO, based in Greenwich, Connecticut, ranks No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. The company also ranks No. 2 on Transport Topics’ Top 50 list of the largest logistics providers in North America.
Under IFTA, each state is required to audit an average of 3% of its carrier accounts each year, “but 3% is not much,” said Robert Pitcher, vice president of state laws at American Trucking Associations.
“Most states know who they want to audit when they have questions about a carrier or look at its mileage reports,” he said.
An audit examines three past years of a carrier’s mileage records in addition to the current year’s records. “And those that are audited may get audited every three years,” Pitcher said.
There also are rules about the size of carriers states are to audit. A quarter of each state’s audits are to be of its top 25% of carriers by mileage, and a like percentage of audits are to be of the state’s lowest 25%.
“But so many carriers are small, and the large ones aren’t spread equally around the country,” Pitcher observed. “It’s possible that a very large carrier, depending on the states it travels through, may never be audited.”
Just because a truck has onboard telematics doesn’t mean it produces a fuel-tax report that is auditable, however. Provisions in the new IFTA language define whether a carrier’s records are “adequate” for auditing.
“If a carrier presents trip records for audit that contain specified elements, including dates, distance traveled and routes taken, those records are to be accepted as adequate and not subject to penalty,” Pitcher said. “If the records cannot be audited or are altogether lacking, however, no audit is conducted and a penalty is imposed on the carrier.”