Pitfalls of relying on ELD for IFTA

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7 Feb 2018

One of the major sources for highway funding comes from taxes levied on fuel. Diesel fuel is taxed by the federal government at 24.4 cents per gallon. Each state adds to that tax but at differing amounts. State taxes on diesel can vary as much as 12 to 74 cents per gallon. When a Commercial Motor Vehicle (CMV) travels from one state to another the tax on the fuel it consumes changes depending on what jurisdiction it is operating in. States and the government use fuel taxes to maintain and update roads and highways. Commercial carrier companies are required to file their fuel taxes with the International Fuel Tax Association (IFTA) on a quarterly basis.

After the federal mandate at the close of 2017, Electronic Logging Devices (ELD) are being implemented by carrier companies. Many fleets have been operating with the now-mandated devices for some time.  The ELD is intended to track the driver’s Hours of Service (HOS) and replace the common practice of using paper logs. Electronic Logging Devices are designed to be more precise in recording HOS, activating when the drivers simply logs in and moves the truck. GPS data is captured to indicate that the truck is moving and the log begins recording for the logged-in driver. As the ELD records HOS it is also capturing GPS information. Some companies are hoping to utilize this GPS data to file their IFTA reports. This practice poses several concerns.

That is not what they are made for

While the data that an ELD device collects may meet the minimum requirement for federal HOS, that does not make it adequate for IFTA reporting. Hours of Service rules and requirements are regulated by the Department of Transportation (DOT) at the federal level. They pertain to the driver and are structured in a way that determines how much time an individual can spend driving a Commercial Motor Vehicle (CMV). The mandated ELD is a device added to the truck for recording HOS when a driver logs in and begins driving. The primary function of the ELD fulfills the federal requirement of recording and tracking HOS. Fuel Tax regulations; however pertain to states and are regulated under a different authority than HOS.

IFTA audits require specific data

IFTA audits focus on the power unit or truck rather than the driver. In theory, a truck may have been driven by more than one driver over a period of time. The fuel used by that vehicle is used to calculate the IFTA cost. For carrier companies that have several units the fuel tax filings can become complex. A factor that can be audited by IFTA pertains to distance traveled by vehicle, specific to jurisdiction with recorded location data and validated odometer readings. ELDs are not intended to capture this type of information and may be leaving fleets vulnerable to audits and risk.

Relying on an expert for support

A CMV that purchases fuel in Texas, crosses into Arkansas to make a delivery and returns to Texas at the end of that run may have only purchased fuel in Texas but operated on Arkansas roadways. The carrier company is responsible for the taxes on the fuel that was used in both states, and will be audited as such. Effective management of IFTA records and data can potentially save the motor carrier extra costs and risk. Companies that turn to experts in IFTA reporting are able to focus on protecting their fleets in the event of an audit. Lee Trans has been assisting carrier companies for more than 30 years by supporting data collection, filing tax returns and managing audits. Lee Trans provides the confidence that comes from having a compliance expert not just in an IFTA audit but in compliance management and risk management.