Keeping Good Records-You Can't Afford Not To!

Transportation & Logistics

By John Popies

On February 8, 2012, the Commonwealth Court of Pennsylvania (Commonwealth) issued an unfavorable ruling on a Pennsylvania trucking company’s appeal of an audit which had assessed additional tax and interest under the Motor Carriers Road Tax Act (Act), 75 Pa. C.S. 9601-9622.The original assessment centered around inadequate record-keeping, resulting in errors that affected the accuracy of the company’s reported miles, calculated fuel usage and tax liability.

Due to inadequate record-keeping, the Department of Revenue calculated an additional tax liability, based, in part, on estimates of unreported miles and fuel purchases and was unable to provide the taxpayer with credits for taxes paid on fuel at the time of purchase. In the Company’s appeal, it cited improvement in its record-keeping in the post-audit period as evidence to support a significant reduction in the original assessment and requested that a credit for taxes paid be determined based on the same sampling methodology used to determine the tax due. Ultimately, the Commonwealth sided with the Department of Revenue, concluding that there is no statutory or regulatory authority to support application of post-audit period data to calculate tax due and that such information was irrelevant. Additionally, the Commonwealth affirmed the prior determination with regard to tax credits and stated that, once again, the law requires adequate records to determine the amount of any tax credit.

In accordance with Section 9610 of the Act, "Every motor carrier shall keep such records, in such form as the department reasonably may prescribe, as will enable the carrier to report and enable the department to determine the total number of miles traveled by its entire fleet of qualified motor vehicles, the total number of miles traveled in this Commonwealth by the entire fleet, the total number of gallons of motor fuel used by the entire fleet and the total number of gallons of motor fuel purchased in this Commonwealth for the entire fleet….”

In summary, it is imperative that companies establish procedures to capture information as described above in a timely manner in order to be able to substantiate reported miles and fuel usage.


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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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