Benjamin Franklin said only two things in life are certain: death and taxes. Since PDI is not in the estate planning or funeral home business, you can guess which one we’re discussing today. But a lot has changed since Ben Franklin made his now famous quip. In recent years, the U.S. tax code has evolved—substantially growing in length and complexity. Today’s current tax code is thousands of pages long, even if you don’t count past tax regulations, and that’s not an exaggeration.

For petroleum marketers doing business in multiple states, counties and cities, the risk and consequences of getting taxes—and more specifically, fuel taxes—wrong are much higher. When contending with the added complication of reporting fuel taxes every month, the variables are many, and mistakes can be costly. Here are a few areas you can focus on to help mitigate the risk and protect your margins.

Hire the Right People

It’s true that many petroleum marketing operations, particularly of the smaller variety, operate on thin margins and a lean team of essential employees. But tracking and reporting on your business’s fuel taxes isn’t an area where you can afford to skimp on talent. So, what level of expertise does your company need to avoid a mistake? At minimum, you need a tax accountant, and many of them have their CPA certification. According to PayScale, the average salary for a CPA in the U.S. is around $63,000, but that’s far less than the potential penalties that could result from incorrect filings.

Ensuring Regulatory Compliance

If you read that last paragraph and said, “Why is it crucial that I have a tax accountant or CPA?” here’s your answer. Fuel tax regulations and laws can vary from state to state, county to county and city to city. For instance, Florida has a discretionary tax cap, which allows them to tax your fuel by a certain percentage on an arbitrary basis, but only up to a specific amount. And that’s just one example!

When you’re pulling fuel from one state or county and delivering to another, the tax statutes and levels of enforcement often change, leaving opportunity for error and penalties. In fact, each filing mistake could incur a separate fine, and in some cases, the fines are tiered and increase in severity depending on the type of error you make. In addition to heavy fines, you still must fix the error and refile with amendments, which wastes valuable time redoing work you’ve already done. Mistakes have a domino effect that negatively impact your organization, which is why employing a tax accountant or CPA is so important. These professionals are uniquely qualified to advise you on taxes specific to the areas in which your business operates, keeping your company compliant and penalty free.

The Business of Automation

In today’s tech-saturated environment, it’s easy to become desensitized to bold claims of technology making life easier, but in the case of fuel taxes, it’s actually true. Petroleum marketers who use enterprise resource planning (ERP) systems to manage their operations are already ahead of the game. Enterprise software enables you to track every transaction your business makes, so it makes sense that this same software, which already contains the information you need, would be instrumental in minimizing the penalty-incurring processes many operators employ in filing their fuel taxes.

Software allows petroleum marketers to set up tax rules that automatically calculate and apply the appropriate tax amount based on the point of fuel pick-up and delivery. This eliminates the need for manual calculations and reduces error-prone touchpoints, ensuring you’re sending the correct invoice amounts to your customers and paying the correct amounts to your vendors.

Whether your petroleum marketing business is large or small, the goal for your company is the same: maximize margins. In addition to delivering great experiences for your customers, using the right people and products to eliminate preventable and costly fuel tax filing mistakes guarantees that you keep your hard-earned profits in your pockets.

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