Fuel Tax - Who Is Responsible?

So I've been with my husband OTR with the mom and pop company that offered him a job after the Werner firing thing. It's not going great. He actually doesn't have issues with his skills but he doesn't seem to have the best temperament for truck driving, plus the company is a bit lax about safety and regulations - which brings us to the latest drama...

Yesterday, after a difficult pickup in inner-city Detroit (involving backing across four lanes of traffic into the alley) he missed the turnoff at Pilot where he was planning to weigh and immediately hit a weigh station. He did get an overweight ticket, but the really bad thing - the fuel tax (IMTA or something) had not been paid and had been revoked before he even started at the company. They are charging him for it and the charge is a MISDEMEANOR. Another driver at the company got charged with the exact same thing, just in a different state. Paying taxes should be the company's responsibility, right? I can see the argument that he should've been more viligant about checking into that, but ultimately he's the company driver and not owner operator. A misdemeanor for this is a really big deal. I'm not even that worried about his trucking future at this point, because it's been nothing but drama, but plenty of non-trucking jobs ask about misdemeanors. Oh and hubby got a form from the inspector saying IMTA or whatever had been revoked right before he started. The company owner tried to tell him "revoked" means "renewed."

Is he a company driver - or a LEASE? Salaried Employee or 1099 Contractor?

IFTA is "International Fuel Tax Agreement". Basically - the FUEL TAXES collected on diesel fuel (actually all fuels) by the state are supposed to be used for "infrastructure". Basically, trucks create wear & tear on the roads, and the fuel taxes are supposed to pay for this. Companies (or O/O's, Lease Ops) file IFTA Returns with their "Domicile State" (the state the company is registered as doing business from), documenting gallons purchased in each state, and MILES RUN in each state. Their state IFTA then shuffles the taxed $$'s according to miles run. So if (for example) you purchased all your fuel in florida - but ran a bunch of miles in GA/AL - Florida's IFTA office would give GA/AL's IFTA some $$ according to their agreement. The IFTA Sticker (along with your CAB CARD) is what authorizes you to run in states OTHER THAN YOUR OWN.

That's what IFTA is...

What happens is, if your carrier/company fails to PAY, PAY ON TIME, or doesn't pay PENALTIES for errors in filing or late returns - the IFTA agreement with the company is REVOKED OR SUSPENDED. If the carriers IFTA is suspended or revoked, and you don't have a "Trip/Temporary Permit" to run in a state other than your own - it is ILLEGAL TO OPERATE IN THAT STATE.

For starters - if the company he's working for is so messed up, that their IFTA got revoked - RUN LIKE HELL. Chances are, if they aren't paying their FUEL TAXES - then they likely aren't paying their IRS TAXES EITHER. I'd think their INSURANCE might be suspect too. Some unscrupulous companies will run "pirate" until they are caught up with (and shut down), then simply register another Carrier/MC# with FMCSA , get their IFTA & insurance started - then let it all lapse and run until they are caught and shut down again.

If he signed on as a LEASE OPERATOR - then he "technically" owns the truck and is responsible for the IFTA and other stuff (KYU, etc.). Mega Carriers take care of all this for their lease operators, as they are still operating under that carriers MC#, Trucking Liability, IFTA Contract, etc. - but the LEASE OP DOES PAY THOSE FUEL TAXES - it's just that the company files the returns for them.

So being that your husband was the driver - he's going to be on the hook for both the overweight ticket AND disposing of the IFTA Charges (the misdemeanor one). Might be time to LAWYER UP on this one. PAY the overweight ticket - since the driver is ultimately responsible for the weight of his vehicle. Fight the IFTA one. If he is a COMPANY (salaried) driver and NOT LEASING THE TRUCK - then the company is responsible for this one. If he is LEASING - then he might in fact end up on the hook for this also.

Such is the DOWNSIDES of doing a Mom & Pop. One would HOPE they run on the UP & UP, but there are no guarantees, and it probably wouldn't help to try and get a "second chance job" by making them show you that all their compliance paperwork is up to date.

We TAKE IT FOR GRANTED with Mega Carriers - that they aren't going to let their IFTA get suspended/revoked, their insurance certificates are good, and their permits/cab cards are all up to snuff.

Rick

Rick's advice:

For starters - if the company he's working for is so messed up, that their IFTA got revoked - RUN LIKE HELL. Chances are, if they aren't paying their FUEL TAXES - then they likely aren't paying their IRS TAXES EITHER. I'd think their INSURANCE might be suspect too.

Don't forget, most importantly, if the company isn't paying their taxes or truck maintenance, payroll may have to be "deferred", too. (This is a fancy way to say you may not get paid.)

Add in this comment from Amanda:

I'm not even that worried about his trucking future at this point, because it's been nothing but drama.

Drama like this should not be part of any trucking career. Run, Amanda, run!

He's a company driver.

And Rick, everything you said was basically what I figured. I just wanted confirmation since my total experience in trucking has been my one month on the road with him and reading this board. Wish he would read this board too.

I already found a lawyer specializing in trucking issues and will call him ASAP.

Also, looking at all the paperwork today, the company is registered under both {Company Name} Express and {Company Name} Transport. Two different addresses, one a carrier and one a contractor. Is that sketchy?

He's a company driver.

And Rick, everything you said was basically what I figured. I just wanted confirmation since my total experience in trucking has been my one month on the road with him and reading this board. Wish he would read this board too.

I already found a lawyer specializing in trucking issues and will call him ASAP.

Also, looking at all the paperwork today, the company is registered under both {Company Name} Express and {Company Name} Transport. Two different addresses, one a carrier and one a contractor. Is that sketchy?

Many carriers have multiple entities registered. Usually Carrier and Broker and maybe even "contractor". For example: lease ops may run under the contractor MC# and be brokered loads by the brokerage - all operating under the umbrella of the main carrier.

That's not necessarily "shady" - if it's done correctly as part of a business plan. All the mega's have multiple corporations, and at least some of them are going to have more than one registered with FMCSA. For example - Prime has a number of active MC#'s.

As a company driver - he is NOT GOING TO BE RESPONSIBLE for maintaining the IFTA - but - it might be argued that he "should have known" it was suspended/revoked. I would hope the company would step up and defend this charge for him - but if they are so "snowed under" with their compliance - I wouldn't think defending your husbands charges are going to be right up their in their priorities.

You're on shaky ground here..

Rick

I just figured out they also classify as employees as 1099. Sounds like they might be doing this to inaccurately classify him as an independent contractor? They pay for his fuel, tolls and he gets paid weekly.

I just figured out they also classify as employees as 1099. Sounds like they might be doing this to inaccurately classify him as an independent contractor? They pay for his fuel, tolls and he gets paid weekly.

Did they inform your husband he would be paid as a contractor NOT an EMPLOYEE?

Some companies do this to bypass paying the required taxes - it is typically ILLEGAL for them to do this. Unless your husband signed a contract that says he is a contractor.

This is a RUN LIKE HELL situation. You are on the hook for ALL YOUR TAXES also.

Rick

The company is saying they paid the tax and there was just a clerical error. The sketchy part - the exact same thing happened to a different driver in a different state. So the company is clear but both MI and KY DOTs messed up? Riiiiight that's real believeable. 🙄😒

The company is saying they paid the tax and there was just a clerical error. The sketchy part - the exact same thing happened to a different driver in a different state. So the company is clear but both MI and KY DOTs messed up? Riiiiight that's real believeable. 🙄😒

Where this has to be straightened out is with the IFTA office in their HOME STATE. It's not DOT that's "messed up" - it's the COMPANY. Remember - IFTA tax payments are handled by THE HOME STATE. The company wouldn't owe MI/KY any IFTA payments - that would be paid under the agreement between the states.

Kentucky also has a KYU Highway Tax that is TOTALLY SEPERATE from IFTA. You'll see this on the side of trucks as a KYU#. It's a totally separate tax and return in addition to IFTA. If it's not filed, not paid, delinquent, etc. - your permit to drive through the state will be INVALID. I'd suspect if their IFTA had issues - their KYU does ALSO.

The greater concern (to me) would be the whole 1099 thing. You bear the burden of your ENTIRE TAX LIABILITY, likely have NO HEALTH INSURANCE, nor WORKMANS COMP COVERAGE.

Everything you're saying about this company - throws up RED FLAGS.

Rick

I just figured out they also classify as employees as 1099. Sounds like they might be doing this to inaccurately classify him as an independent contractor? They pay for his fuel, tolls and he gets paid weekly.

Look at a paycheck stub. If you see deductions for taxes, Social Security, etc. (These may have strange initials, like SSNC or something.) That's a sign of employee.

If you don't see several deductions from the gross amount, chances are high that your company is going the 1099 route. That also means you will have to pony up about 30% of your total earnings for the year at tax time.