Is your ELD provider good enough to cover your IFTA and IRP obligations?
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- Virgil Kennedy
- 5 years ago
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1 Is your ELD provider good enough to cover your IFTA and IRP obligations? The rapidly approaching deadline for the ELD (electronic logging device) mandate looming on the horizon might be signaling that NOW is the right time for you to reflect upon whether your prospective technology choice meets as many of your existing compliance needs as possible on a single technology platform. Given the requirement to procure an ELD solution, it would be wise to leverage that investment to get as much bang for your buck as possible. The recordkeeping requirements for tax reporting, e.g. IFTA (International Fuel Tax Agreement), IRP (International Registration Plan) and WMT (Weight Mile Tax), are more stringent than those applicable to an ELD. That means that not every product offering adequate to fulfill the requirements of the ELD mandate will necessarily be well suited to additionally provide solutions for other tax compliance needs. In other words, it is important to understand that a compliant ELD cannot automatically be considered adequate for tax reporting. ELD Recap: ELD means a device or technology that automatically records a driver s driving time and facilitates the accurate recording of the driver s hours of service, and that meets the requirements of subpart B of this part. In 2012, the United States Congress enacted the Moving Ahead for Progress in the 21st Century (MAP-21) bill. That legislation included a provision requiring the FMCSA to develop a rule mandating the use of ELDs. An ELD is used to electronically record a driver s Record of Duty Status (RODS) and to replace the paper logbook some drivers currently use to record their compliance with Hours of Service (HOS) requirements. PAPER ELS AOBR ELD Phase 1 Right now Awareness and Transition Carriers and drivers subject to the ELD mandate should prepare to transition and may voluntarily adopt ELDs. Phase 2 After 12/2017 Phased-in compliance Unless carriers and drivers using AOBRs, must adopt ELDs. Phase 3 After 12/2019 Full compliance All carriers and drivers must adopt ELDs. 01 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
2 By December 2017, all CDL (Commercial Driver s License) drivers required to keep a RODS must use an ELD to document their compliance with HOS rules. The new ELD rule adds certain technical and performance specifications that define exactly what the device must feature. Current users of AOBRDs (Automatic Onboard Recording Device) have until December 2019 to transition to ELDs, however it is important to note that no new AOBRs can be added to the fleet after that date. That means that if your fleet is equipped with AOBRs and you were to add an additional vehicle to your fleet after December 2017, you would need to equip it with an ELD and would then end up with mixed devices in your fleet. Commencing December 2019, ALL carriers and drivers must adopt ELDs. Buyer Beware Manufacturers are required to test and certify to FMCSA (Federal Motor Carriers Safety Administration) that their devices meet the new standards. FMCSA has created a public registry of devices that have been self-certified by their manufacturer to be compliant with the FMCSA rule. See the registry of self-certified ELDs at: An ELD is not the same as an AOBRD. Each of these has different technical specifications. Manufacturers will need to notify owners of existing AOBRDs if their devices are capable of being updated to meet ELD requirements through software updates. These updated devices must also be certified and registered by the manufacturers on the FMCSA ELD register. Buyers need to be aware of the fact that inclusion of an ELD on the FMCSA registry of self-certified product offerings does not necessarily mean the listed device is compliant with the FMCSA mandate. If FMCSA finds that an ELD listed on its register does not comply with the technical specifications, FMCSA may initiate removal of an ELD model or version from its list by providing written notice to the ELD provider stating both the reasons that FMCSA proposes to remove the model or version from the FMCSA list and any corrective action that the provider must take for the ELD model or version to remain on the list. If an ELD is removed from the list, FMCSA will alert the industry through announcements on its website and other communications. The onus is on the motor carrier to do their homework before making a purchasing decision. Your ELD provider may test on their own and claim their ELD is compliant, but the bottom line is that it will ultimately be you that runs the risk of non-compliance if the ELD solution malfunctions or is removed from the registry. As a potentially high stakes consequence, this could mean you need to take your vehicles off the road until you find another option to stay compliant. 02 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
3 ELD AND IFTA/IRP RECORD KEEPING REQUIREMENTS - KEY DIFFERENCES Basis of record keeping ELD records consist of changes in duty status for each individual driver, for each of the vehicles they drive; in contrast, IFTA and IRP and also weight mile tax record keeping requirements call for the trip information pertaining to each individual vehicle. This means that the reporting basis for the ELD is the driver, whereas for tax reporting, it is the vehicle. Qualifying vehicles CMV > 10,000lbs manufactured after model year 2000 Involved in interstate commerce CMV > 26,000lbs, OR Having three or more axels regardless of weight; OR Is used in combination, with the weight or such combination > 26,000lbs gross vehicle or registered gross vehicle weight traveling in 2+ IFTA jurisdictions CMV > 26,000lbs, OR Having three or more axels regardless of weight; OR Is used in combination, with the weight or such combination > 26,000lbs gross vehicle or registered gross vehicle weight Chartered buses traveling in 2+IRP jurisdictions (optional) trucks or truck tractors, or combinations of vehicles having a gross vehicle weight of 26,000lbs or less Not all vehicles that have to use an ELD are subject to IFTA; and, there are different recordkeeping requirements for IFTA and IR. In addition, there are reporting variations based on jurisdiction. It is important that you can differentiate between groups of vehicles and the ELD technology solution that you choose must allow you to set up vehicle groups and configure the reports accordingly. Record retention 6 months 6 months 5 years Record retention is one of the most important product features to consider. FMCSA s ELD mandate only requires that logbooks are kept for six months. For IFTA you need to keep your records a minimum of four years and for IRP it is five years. 03 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
4 Key data records requirements Original GPS or other location data for the vehicle to which the records pertain Location of each GPS or other system reading Calculated distance between each GPS or other system reading Routes of travel by unit Beginning and ending reading from the odometer, hubodometer, ECM or similar device Distance by jurisdiction / state line crossings Identification of any exempt miles claimed including distance readings Unit number Power unit and trailer Fleet number Registrants name Driver Name/ID Bill of Lading Change of duty status Engine hours Distance recaps Monthly, Quarterly, Yearly Monthly, Quarterly, Yearly As you can see from this table a minimally configured ELD product will likely not be sufficiently enabled to provide all the detailed data elements required to support tax reporting. This is a very important factor to consider when selecting your ELD product. As an example, the ELD requires conversion of the original GPS location data (latitude and longitude coordinates) to geo-locations, and once converted only the geo-location needs to be kept. However, for IFTA and IRP, motor carriers need to retain the original GPS locations. The IFTA and IRP requirements are very similar in nature; both are vehicle based and very detailed. For IFTA and IRP you also need to provide summaries on a monthly, quarterly and yearly basis. Ideally, you d want your system to tabulate those summaries for you in an ongoing incremental fashion. 04 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
5 Location data Accuracy and precision At every: Change in duty status Engine on/off Beginning and end of personal use Driver log in / out Intermediate location every 60 minutes (unless when in personal use) Continuously Records must be of quality deemed adequate by an auditor Continuously Records must be of quality deemed adequate by an auditor The minimum requirements for the ELD specify that the location must be captured at every change in duty status, engine on/off instances, at the beginning and end of personal use and yard moves, when a driver logs in or out, and - if in driving status intermediate location must be recorded every 60 minutes. If the driver operates the vehicle in Personal Use Status, the location must be less precise to protect the driver s privacy (within 10 miles compared to one mile of current location). In contrast, even if the driver is using the vehicle for personal use, the vehicle will still be subject to tax, where location and mileage information are necessary. The location must also be more precise to accurately treat and calculate the mileage to be taxable or exempt. Overall, to meet the tax recordkeeping requirements, there must be more precise data collection and more frequent location data is required to substantiate adequate distance records. Record keeping for weight mile tax has additional requirements. Without an accounting of truck operations, auditors can t verify road use tax reports and payments. In that case, they know they ll have to make an assessment of the operations and it can lead to a finding of additional taxes or fees due, plus late payment, penalty, and interest charges. That s why you should view good recordkeeping as a way to avoid audit trouble and save excess costs in the form of penalties and interest. Additional data elements / Fuel To prepare your IFTA return you need to be able to add information on fuel transactions. To meet the ELD requirements, this is not necessary. However, when you prepare your IFTA return you need to be able to marry the fueling information with the mileage information. This can be very cumbersome and even more so if you store the information in different systems - so it is desirable that your system is automatically reconciling your fuel and mileage information. In addition, internal controls are very important in this area and your system should be alerting you to any exceptions that may arise. For example, ideally you need an alert if fuel consumption is unusually high or low, or if the fuel type doesn t match. Looking at all the fuel and mileage information for your entire fleet for a whole quarter can be challenging and it s easy to make mistakes. You can be sure that auditors know where to look and will be paying attention to outliers! 05 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
6 Carrier Responsibilities Device must be maintained and recalibrated in accordance to manufacturer specs for tire size changes, drivetrain modifications, or other modifications affecting device accuracy Records produced must be of a quality deemed adequate by an auditor Records produced must be of a quality deemed adequate by an auditor Retain all data for audit purposes 6 months 4 years 5 years Maintain a second back-up copy of the electronic files Carriers submit records for audit through electronic data transfer Train drivers in device use and preparation of manual records should device fail Ensure the entire record keeping system meets requirements WHAT SHOULD YOU BE LOOKING FOR? WHAT SHOULD YOU ASK A VENDOR? Is the provider of a prospective solution for your ELD offering something that is accurate and reliable? You need to be able to trust, come audit time, that you ve captured everything required to comply with the ELD mandate, and that you ve not been left high and dry by your technology. An unreliable device or system will waste your time and put you at risk during an audit. Closely related to accuracy is uptime. In other words, how many minutes each month can you expect the service to be working or not working? Check that the operator is transparent about uptime and accuracy. An ELD provider that s open about those things is making a statement about its confidence in its product. Are you using the latest technology? The technology you install in a truck should last at least as long as the vehicle itself. The tech world moves incredibly quickly, so ask if the company you re considering uses the latest technology. Legacy systems that haven t kept up with tech trends can slow them and you down. How often are software updates released? Find out how often a company releases software updates. Companies that update regularly perhaps as often as every month show that their technology platform is built for future needs and they respond to customer pain points. And do they provide over-the-air software upgrades free as part of the service, or are they provided for an additional cost? First and foremost, is the system you re using secure? No system is 100 percent hack-proof, but you should expect bank-grade levels of security. A good tech company will ask independent security specialists often former hackers to evaluate its system (i.e., try to break in) at least once a year. There are international standards for technology security, so ask your prospective provider whether their product conforms to standards such as FIPS (Federal Information Processing Standard) and Common Criteria. 06 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
7 What are the helpdesk hours? Be sure to find out whether your tech supplier has a helpdesk and what hours it s staffed it will give you confidence if you know that someone will pick up the phone if needed. How are requirements validated? To ensure compliance it is important to understand how your technology provider works. Some, for example, are undergoing a third-party verification process to prove that they comply with the ELD mandate. Ask for it! In terms of IFTA and IRP, it s important that your provider stays ahead of the curve. Requirements need to be validated on the jurisdictional level. You are well advised to check into other aspects of vendor reliability. What steps has the vendor taken to ensure its ELD is compliant with the FMCSA rule? Does the vendor have a substantial number of active subscribers to their system? Can the vendor offer testimonials from top customers? Does the vendor have a history of success? Can the vendor document financial stability? Can the vendor assure you it will be around in the future? Will the vendor continue to provide positive service after the sale? The Mark of Quality and Innovation Quality begins at the foundation. For a technology system to become a trustworthy tool for you, to meet regulatory compliance obligations, it MUST be designed intentionally and thoughtfully to incorporate: Operational user perspectives, to ensure a systematically intuitive experience, and seamless change implementation; Built-in capability within technology that can be configurable and amendable to the changes in the regulatory requirements; like ECM connection, Bluetooth capabilities, auxiliary inputs and so on, because changes will certainly come. It s important that the regulatory rules and the logic built into the system are robust and validated with the jurisdictional regulatory agencies and enforcement stakeholders. Accuracy is extremely important as it demonstrates the granularity of the underlying data. The platform needs to be flexible, to capture other relevant data as a by-product. Speed reports, idle reports, driver behavior data including harsh braking and acceleration, harsh cornering, etc. are all worthwhile outputs of a robust ELD offering operating on a single technology platform. It is possible to add features to a solution, but it is impossible to add the foundation of accuracy and reliability as a bolt-on feature after the initial offering is built. 07 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
8 Differentiate A quality service provider will aspire to demonstrate and validate their technology innovation with subject matter experts, internal resources, external industry stakeholders, and most importantly with their customers. There are a couple of ways providers can demonstrate compliance; some undergo a third party audit or verification processes of the system against requirements for additional testing and validation. A softer approach would be commercial or regulatory pilots, opening the system for comparison and to share experiences, findings and recommendation. Most importantly the company should be transparent around the technical development, the testing framework and they should value and incorporate user feedback into their solution. Don t drag your feet but don t panic either Unlike other purchases you ve probably made in the past, this one does have an actual time limit. You ve got until December 18, 2017 to be in compliance, which means having the product selected, purchased, installed and drivers trained. So it s important not to drag your feet, but equally critical not to panic either by making an uninformed choice. And most definitely, don t overcomplicate it. Your goal should be to not only become compliant but to also find a product that can continue to offer you value as you and your drivers become more comfortable. Look at it like your first computer purchase. At first it was just to replace the typewriter. Then it became a place to store files. Next you were sending mail, downloading music, paying bills and the list goes on. So when it comes to your ELD purchase take a considered but efficient approach, don t procrastinate, panic or overcomplicate and you and your team as well as your customers will be just fine! ABOUT EROAD, INC. EROAD, Inc. is a leading transportation technology and services company, headquartered in Tualatin, Oregon. EROAD s in-vehicle technology and global electronic platform enables carriers to efficiently utilize their capital and reduce the costs associated with fleet operations and management. EROAD offers a complete suite of user-friendly compliance and telematics solutions, including automated IFTA, electronic weight-mile tax, ELD-ready electronic logbook, support for driver safety, vehicle maintenance, fuel and fleet utilization reporting. EROAD s independently proven, secure platform guarantees accurate data that you can rely on to provide insight and competitive advantage. 08 Tax Series: Red Paper 1 Is your ELD provider good enough to cover your IFTA and IRP obligations? eroad.com
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