Tax season is around the corner and while you’d like to save your landscaping company any money you can, one area you might have overlooked is the federal fuel tax credit.
The federal government and most states add a special tax to all fuel purchased at retail gas stations. This fuel tax is used to pay for the maintenance of transportation infrastructure. The federal fuel tax is 18.4 cents on each gallon of gas and 24.4 cents on each gallon of diesel.
What many business don’t know is that fuel that is used for off-highway purposes, such as running lawn mowers, handheld equipment or compact machinery, is eligible for a 100 percent refund in the form of a fuel tax credit.
“Because this benefit is so specific to certain industries, unless your CPA specializes in tax and accounting for landscaping or farming businesses, they may not know this credit even exists,” says Jon Grossman, CPA and co-founder of FuelCred. “In our research, only about 10 percent of the CPAs we interviewed knew about the credit and only about 1 percent had ever filed for the benefit on behalf of their clients.”
According to FuelCred, the average amount owed most small business landscapers is about $700 and about $1 billion dollars in federal fuel tax credits go unclaimed.
“That said, large businesses with teams of accountants benefit the most from this credit,” Grossman says. “About 66 percent of the available credit is claimed each year primarily by large businesses. The remainder is left on the table by small businesses who don’t know about the credit and who don’t have the same accounting resources.”
Landscapers can claim their federal fuel tax credit by using the IRS Form 4136 “Credit for Fuel Tax Paid on Fuels.”
“To claim the credit you don’t need to keep fuel receipts, but you must keep a record of all off-highway fuel transactions, the number of gallons purchased, the type of fuel, and the name and address of the seller of the fuel,” Grossman says.
You don’t have to submit this collected information when filing for the credit but you do need to hold on to it for at least three years in case the IRS requests it or has questions.
Landscapers can file a return themselves using online resources, with the help of an accountant or by using an app like FuelCred. FuelCred helps landscaping businesses keep track of their fuel purchases and automates the process of claiming the federal fuel tax credit.
Filing a fuel tax return using FuelCred costs $100, but TaskEasy contractors can get 60 percent off the original price.
TaskEasy is a site where property owners can find vetted services and contractors can perform billable work without having to focus on back office tasks like bidding, marketing and billing.
Launched in 2013, TaskEasy now has serviced lawns in over 12,000 cities across all 50 states.
Signing up for TaskEasy is free and contractors can accept or decline work that fits their location, scope of work and general capabilities. TaskEasy sets the price of the job and takes a small percentage from the price the customer pays and passes the rest on to the contractor.
“Our proprietary tracing software removes the bidding process altogether by digitally measuring properties, identifying locations, and considers local market rate to provide fair and consistent pricing for every job,” says Adrian Raso, Contractor Manager at TaskEasy.
In order to become a TaskEasy contractor, Raso says they try to keep the recruitment process as simple as possible.
“Once a contractor visits www.taskeasy.com/contractors and fills out our free sign-up form, we have a recruiter reach out to verify the information that was submitted and go through our legal requirements,” Raso says. “Once that is completed, the contractor will go through onboarding where they get familiar with our platform, finish setting up their account and start accepting new work in their area.”
For those wondering if they have to start taking TaskEasy jobs in order take advantage of the FuelCred discount, Raso says this isn’t the case.
“If a landscaper wants to sign-up just to get the FuelCred discount, that is totally fine with us,” Raso says. “We’re in the business of improving the lives of contractors and we know that FuelCred can provide tremendous value. So, if that means giving out a discount code that will help another small business, that’s more than okay with us.”