Can Your Business Survive a Not at Fault Accident?
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The good news is the accident was the four wheeler’s fault. The bad news is that it may put you out of business.
In the last twenty-seven years, Benton & Parker has seen this happen hundreds of times when insureds have had accidents that were not their fault. We know that getting the tow bill paid and your truck fixed is just the tip of the iceberg. All too often owner operators go out of business because they could not collect money for their ongoing expenses (downtime) while their truck was unable to run. |
An article by Attorney Kelsea Eckert featured in Transport Topics caught our eye this month. She does a great job of defining the problem and giving you an idea of your rights should this happen to you.
Benton & Parker knows that in these circumstances many times a lawyer will be required to help you get payment for downtime. Benton & Parker does not have a relationship or receive compensation from Eckert & Associates, P.A., however we would suggest that you consult with them should the need arise.
Time is a precious commodity for an owner-operator. When an accident happens, that downtime means you’re not making money. When an accident is not your fault, you should be compensated not only for repairs, but for downtime losses as well, i.e., financial business losses you experienced because of the accident.
At least, that’s the way it should be. The reality is that the other driver’s insurance company may agree to pay for the dents, but not the downtime. Some adverse insurance companies and motor carriers offer under $100 per day. Some pay only what it would have cost to rent a truck (if you could even do so). And some won’t pay any downtime if the equipment is totaled.
Most owner operators make much more than company drivers. You are running a business. Owner-operators’ businesses have legitimate income and expenses. Your business losses should be compensated fairly by the other side when you’ve been hit.
Most states’ laws allow for reasonable downtime losses to be paid. This is often calculated from the date of the accident until you’re on the road again. It is important to note that even though you are the victim, you must mitigate, or lessen, your damages during this time, if you can. For example, you should rent another truck if possible. If you cannot rent a truck because of your specialized equipment or because of your agreement with your motor carrier, you should gather evidence to prove that you tried.
So how do you prove what your actual losses are? Through financial records, like past settlement sheets and fuel tickets, income and expense records. You may need a statement from your motor carrier or broker about continued load availability, proving that you would have had work during the time you were down. If your motor carrier has a policy excluding third-party leased equipment, you may need to provide this written policy to the adverse insurance firm to show that you could not mitigate your damages.
Adverse insurance companies may demand your tax returns. However, in this author’s opinion, tax returns are not an appropriate measure of income for a downtime claim. They don’t reflect the true operating income of a rig. Net taxable income is not a measure of lost revenue. It is every tax accountant’s mission to show a low net income for their clients. This is why even enormous corporations often show minimal net income or losses.
A more appropriate measure of income is net operating income. This is basically gross income minus fuel, tolls and other variable expenses. Only those receipts that go away when you are not driving should be included in the calculation. The other expenses remain. For example, you must pay your insurance premiums monthly whether or not you’re on the road.
Your lost income includes money that would have been used to pay fixed expenses, like:
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Equipment payments. | |
Equipment insurance and medical insurance. | |
Telephone and cell phones. |
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Licenses and fees. | |
Mortgages. | |
Accounting, bookkeeping & office expenses. |
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401(k) contributions. |
These are expenses you have to pay whether you are working or not. Just as that adverse insurance adjuster relies on a regular weekly paycheck to pay his or her household expenses, you rely on a portion of your gross operating income to pay both your business expenses and your personal, daily living expenses — whether deductible for tax purposes or not.
If your truck is totaled, most state laws say you should also be paid for each business day you are down. The other driver’s insurance company may claim that your days down are from the date of the accident until the date you receive payment for the totaled truck. This calculation is not appropriate because it takes time to find a suitable truck with the proper equipment. The more specialized asset your tractor or trailer is, the longer it takes to find a replacement for that asset and cannot be located and replaced overnight. Once equipment is located, it must be made suitable for operations. Often this includes the time and money involved in obtaining U.S. Department of Transportation licenses, approval from the motor carrier to which you are under contract, employers and brokers, safety inspections, replacement of tags, placards, licenses, etc.
Many courts across the country have held that the proper calculation of days includes a reasonable amount of time after payment has been made to the insured for a total loss. Many of those courts are allowing downtime to continue until the loss ceases to exist, as long as the victim has made reasonable attempts to mitigate their damages.
As an owner-operator, you have rights. These will vary from state to state. You have the right to speak with an attorney about your downtime claim.
Eckert & Associates, P.A. is a transportation law firm helping owner operators across the country who have been in accidents and have claims. Some of the claims they pursue in include: downtime/loss of use, deductibles, rental, reimbursement, loss of contracts, out of pocket expenses, property damage, and total loss issues. There is no fee for the consultation and no attorney fees are required to begin since the firm works on a contingency fee basis.
If you have a claim, feel free to contact them at (904)278-7688.
Attorney Kelsea Eckert lives in Florida and has been practicing law since 1988. She represents owner operators, transportation companies, and insurance companies. You can learn more about her practice at www.downtimeclaims.com. She welcomes your calls and questions.
USDOT – Changing the Rules of the Road
The USDOT has been very busy within the past few months on rule changes covering several different issues. Specifically, the “hours-of-service” regulations have been revised, bans have been implemented on texting and hand-held cell phones while driving a commercial vehicle, new procedures are now in place for a driver to obtain a CDL from state driver licensing agencies, as well as proposed changes in drug testing procedures and new controlled substances that may be added to the current test list.
The following information was obtained from www.fmcsa.dot.gov.
Hours-of-Service.
Effective February 27, 2012 “On Duty time” (defined in 395.2) does NOT include any time resting in a parked commercial motor vehicle. In a moving property-carrying commercial motor vehicle “On Duty time” does NOT include up to 2 hours in the passenger seat immediately before or after 8 consecutive hours in the sleeper-berth.
Application: This removes the commonly perceived necessity for a driver to always log sleeper berth (line 2) to record the needed “Off Duty time” required by 395.1(g). For team operations the driver not driving may now log 2 hours in the passenger seat as “Off Duty” (line 1) before or after 8 consecutive hours in the sleeper-berth to get the required 10 consecutive hours off duty.
Penalties: Driving (or allowing a driver to drive) 3 or more hours beyond the driving-time limit may be considered an egregious violation and subject to the maximum civil penalties ($11,000 per offense for companies and $2750 for each offense for drivers).
Hand Held Cell Phones.
Commercial drivers are now prohibited from using a hand-held mobile telephone while operating a commercial truck or bus.
Penalties for violating this rule include a maximum fine of $2750 to the driver and $11,000 to companies that allow their drivers to use hand-held phones while driving. Using a hand-held cell phone will be considered a “serious” violation (383.51) by the by the USDOT, meaning that any two convictions (speeding of 15 + over the speed limit, tail gating, erratic lane changes, using a hand-held cell phone, et al) within a 3 year period will result in a driver’s CDL privileges being suspended for 60 days.
Medical Certification Requirements to Obtain a CDL.
Effective January 30, 2012 drivers operating in certain types of commerce are required to submit a current medical examiner’s certificate to their state driving license agencies to obtain a “certified” medical status as a part of their driving record. CDL holders required to have a “certified” medical status who fail to provide and keep up-to-date their medical certificate with their state driver licensing agency will become “non-certified” and may lose their CDL.
Drug Testing.
On January 27, 2012 the Federal Department of Health and Human Services (HHS), Substance Abuse and Mental Health Services Administration (SAMSHA) approved the Drug Testing Advisory Board’s recommendations to: (1) Include oral fluid as an alternated specimen in the Mandatory Guidelines for Federal Workplace Drug Testing Programs, and
(2) The inclusion of additional Schedule II prescription medications (e.g. oxycodone, oxymorphone, hydrocodone, and hydromorphone) in the Mandatory Guidelines for Federal Workplace Drug Testing Programs.
DOT is required by law to follow HHS procedures for the drugs for which they test and the specimens they test.
Licensing and Insurance Data Update.
The Federal Motor Carrier Safety Administration (FMCSA) is taking action to address issues associated with technical upgrades to its licensing and insurance information system. The FMCSA encourages carriers that may have licensing and insurance data concerns to contact them at 866-637-0635.
Green Semi Trucks?
Increase Semi Truck fuel efficiency by 30 to 50% and cut emissions by 30 to 95%?…..Yes please.
Hydrogen Hybrid has developed the technology to fuel Class 8 Semi Trucks with their 8x Mega Fuel System. The First Hydrogen Class 8 Semi Truck was unveiled today by Hydrogen Hybrid and The Queen Mary of Long Beach.
The 8x Mega Fuel System works with diesel and gas engines to produce over 2,500 liters of hydrogen an hour. The Semi Truck was tested on a route from Ohio to California and back on a 14 liter engine running at 65 miles per hour. Wow.
Companies that convert their Semi Trucks with the 8x Mega Fuel System can increase profits by 50% a year, lower maintenance costs by 70%, and be considered a green company because of the extensive decrease in pollution.
So, make money and have the social status of a green company?….Amazing.
Not only does Hydrogen Hybrid produce fuel systems for semi trucks, they also produce fuel systems for basically any kind of car out there, if its diesel or gas. Maybe GM should use some of that bailout money on this…they may actually be able to pay it back…
So what do you think, is this the future of Semi Trucks? Will we finally begin to lose dependency on foreign oil?
Energy Saver:Turn Your Key, Be Idle Free
What activity wastes gasoline, costs money, produces pollutants, and yet doesn’t get you anywhere? Idling! And yet, every year, Americans waste 3 billion gallons of fuel by idling their vehicles.
Idling is running a vehicle any time that it’s not moving. In this condition, the car’s fuel economy is exactly zero miles per gallon. Although many people think that restarting the engine too often will wear out the starter, that idea is just an “old husband’s tale.” In fact, idling places unnecessary wear-and-tear on the engine, and many manufacturers discourage it.
Although drivers can’t avoid some amount of idling, such as being stuck in traffic, you can limit it in many situations. Drivers of passenger cars (light-duty vehicles) should turn off their engines if they are stopped for more than 30 seconds. Choosing to walk into restaurants and banks rather than using the drive-through will certainly help improve fuel economy, reduce emissions, and enhance your well-being. In addition, purchasing a hybrid electric vehicle that turns off its engine when stopped can help make not idling second nature. Locally based campaigns, working with Clean Cities coalitions, have reduced idling nationwide, including San Antonio’s Green Patrol and Idle Free Utah.
Heavy-duty vehicles, such as buses and trucks, cause even more pollution when they idle than light-duty ones. Most heavy-duty vehicles run on diesel fuel and produce many more pollutants than gasoline vehicles. Although newer diesel vehicles are cleaner than ever before, older vehicles emit large amounts of carbon monoxide (CO), oxides of nitrogen (NOx), particulate matter (PM), volatile organic compounds (VOCs), hydrocarbons (HC), and oxides of sulfur (SOx).
These pollutants worsen cardiovascular and respiratory problems, such as heart disease, asthma, and bronchitis. It is particularly important to reduce diesel pollution near schools, in urban regions, and in economically disadvantaged areas. Children, whose bodies are still developing, are far more susceptible than adults to the damage pollution causes. Urban and low-income areas often have more trucks and buses on their streets than suburban regions, exposing residents to more overall pollution.
Reducing idling in heavy-duty vehicles can be a bit more complicated than for light-duty, but is still possible. School buses and long-haul trucks are two of the most common heavy-duty vehicles that regularly idle.
School buses often idle outside of schools while the driver waits for students to finish class. However, drivers should turn off the engine as soon as they finish loading and unloading passengers and limit their warm-up times to 5 minutes or less. In cold weather, buses can use heaters that do not run off the engine. These heaters use only 1 cup of fuel per hour in contrast to the ½ gallon per hour used for idling. Even a little bit can make a big difference!
With the help of their local Clean Cities coordinator, 435 Utah bus drivers pledged to reduce idling by 5 minutes a day, saving over 3,000 gallons of fuel a year (PDF 309 KB) Download Adobe Reader.
If you’re interested in reducing idling at your neighborhood school, the U.S. Environmental Protection Agency has a Fuel Savings Calculator and an Idle-Reduction Campaign Kit available through their Clean School Bus USA program.
Long-haul trucks pose even more complex issues, as truckers often idle vehicles to keep themselves comfortable while they sleep or during federally mandated rest periods. However, truckers can install auxiliary power units, which mount on the truck and provide heating and cooling without running the engine. In addition, some truck stops have electrification units that allow truckers to plug in their vehicles and run the systems they need.
Thankfully, reducing idling is much simpler for most of us. Just remember: turn your key, be idle free!
New Motor Truck Cargo Filing Rule
Effective March 21, 2011 the Federal Motor Carrier Safety Administration (“FMCSA”) has eliminated the requirement for most for-hire (common) carriers of property, and freight forwarders, to maintain a minimum amount of cargo insurance and file evidence of this insurance (“federal filings”) with the FMCSA.
This rule however, does not apply to household goods motor carriers and household goods freight forwarders who will still be required to maintain a cargo filing. If you have received a notice in the mail that your cargo filing will be cancelled effective March 21, 2011 and you fall into one of these two categories please contact your insurance agent immediately, to prevent your cargo filing from being cancelled.
What to expect: “If” the carrier plans on cancelling the filing you may receive a letter in the mail from the insurance company notifying you that your cargo filing is being cancelled effective March 21, 2011. If the filing is cancelled after 3-21-11, the cargo filing requirement will already be removed and no letter will be sent.
Example:
The Underwriters for your Motor Truck Cargo policy are therefore hereby giving you notice that effective March 21, 2011 any cargo federal filings that underwriters have in effect on your behalf will be cancelled.
Trucker Tax Service, Inc., Q & A of the Month!
Q: Is depreciating the value of my truck on my taxes a good idea?
A: There are two different means of owning a truck. You can purchase a truck by paying cash or taking out a loan, or you can lease a truck through a company or individual.
If you own a truck you should always depreciate it properly or write the total cost off in the year you purchased the truck. The IRS allows the owner of a truck the opportunity to write the total cost off in one year, or depreciate the total value of the truck over 3 ½ years, depending on your taxable income situation.
When you claim depreciation, the amount of depreciation used in any given tax year is normally a sizeable deduction, which directly reduces your gross taxable income. Normally, you take the purchase price of the truck and calculate it over the same period of time as the length of the loan on the truck. At the end of the depreciation period, (which should parallel the period of the loan), you should have properly depreciated your truck down to a zero depreciation value.
This doesn’t mean that the truck is not still worth re-sale value, it simply means that no more depreciation is available to use as a deduction on your taxes.
If you purchase a truck for $50,000.00, the formula would be depreciating 33% the first year or $16,500, 44% the second year or $22,000, 15% the third year or $7,500.00 and then an additional $4,000 in the final year.
If you don’t depreciate or write off the cost, you will end up paying thousands of dollars in additional taxes to the IRS.
You should consult a tax expert within the trucking industry to guarantee that you’re receiving the proper amount of depreciation.
Trucker Tax Service, Inc., Tax Tips of the Month!
We have listed 5 tax credits that every tax payer needs to be aware of and makes sure, (if eligible), that they have received these credits on their completed tax return. These five credits can be especially valuable to low-income taxpayers. These credits are based on your net taxable income, which is where a solid percentage of truck drivers end up if their tax deductions are calculated properly by an expert in the trucking industry.
- Earned Income Credit (EIC)
The Earned Income Credit (EIC) for low-income taxpayers keeps growing. For tax year 2010, the maximum credit for a household with three or more children is $5,666. That can be money in your pocket! The IRS has reported that several million households are leaving billions unclaimed. So don’t forget to claim this credit if you are eligible.
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Child Tax Credit
This is a partially refundable credit worth up to $1,000 for each child up to age 16. You must earn at least $3,000 in taxable income to be eligible.
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Child and Dependent Care Tax Credit
This credit is offered by both the state and federal governments. It is worth only a portion of your total child care costs, and there are caps. But the state credit is “refundable,” meaning that you can claim it (up to $500) even if you pay little or no tax.
- Educational Tax Credits (the American Opportunity Tax Credit)
This includes paid tuition for your CDL. This educational credit can be worth as much as $2,500 for students who are in their first four years of college. The credit is for your tuition, educational materials, and some computer or internet expenses. You must meet certain income requirements. However, you may be eligible for a partial refund of up to $1,000 even if you do not owe taxes. Immigrants who are residents may also claim this credit.
- Making Work Pay Tax Credit
Many workers got this credit in small amounts in their regular paychecks during 2010.
WIN $200! GET YOUR TAXES DONE THE RIGHT WAY WIN $200!
Trucker Tax Service, Inc. is proud to announce an exclusive contest for Benton and Parker e-magazine subscribers. If you have your taxes done by Trucker Tax Service, the experts in trucker’s taxes, you will become eligible for a drawing of 5 individual prizes worth $200 each! This is a double dip opportunity! Not only will you receive the best trucker tax representation available, you will also become eligible to put an additional $200 in your pocket!
The rules are simple. Have your taxes completed by Trucker Tax Service and you automatically receive an entry to win one of 5 – $200 cash awards! Please call or e-mail Trucker Tax Service and we’ll be happy to forward you one of our Trucker Tax Organizers to get you started. We look forward to first saving you hundreds, (possibly thousands), of dollars and then awarding 5 lucky recipients with Two Hundred Dollars in CASH!
Please contact us via our financial services e-mail address: tfs@truckertaxservice.com
Or please feel free to give us a call at anytime. We look forward to hearing from you soon.
Trucker Tax Service, Inc.
(888)-799-1099 / office (888)-750-7557 / fax
Tax Tip of the Month
When you began driving a truck for yourself you didn’t realize that going into business for yourself meant having your own business. The choices you make may be dependent on the financial advice you get. A huge concern for a lot of long haul truckers is taxes. In the next three issues we will explore the many ways truckers can help reduce their tax burdens, sometimes substantially, with reliable financial advice from the pros. Do you want your money to pay the Obama administration or do you want to keep it in your own pocket?
Tax season is upon us again so we wanted to start a monthly column that discusses certain areas that are specific for the trucking industry. This month we’re focusing on Per Diem. Per Diem is by far the most misunderstood deduction available. Don’t be discouraged if you don’t understand Per Diem, as a very large percentage of tax preparation firms don’t know how to calculate Per Diem properly.
A truck driver is entitled to a per diem deduction any time he/she is away from home long enough to be required to take a rest break. The deduction is taken on Form 2106 for Company Drivers or on a Schedule C for Owner/Operators. For every day the driver is on the road, he/she can deduct for tax purposes $59 a day for meals and incidental expenses. For the days leaving and arriving home the deduction is ¾ of the daily rate. After the total amount allowed is calculated, it is adjusted by 80% for the tax deduction because you are in the transportation industry, (otherwise it is adjusted by 50%). So on the tax return, the deduction for meals is $47.20 for every day he/she is away from home. Do not forget to take this deduction along with other truck driver allowed deductions. The reason a company pays a driver Per Diem is too avoid paying him taxes on his full daily wage. It’s a nice break in the amount of taxes a company typically has to pay out per driver. Normally it works on a per mile basis, i.e. $.08 per mile. If an employee drives an average of 500 miles per day, the company pays him $40 Per Diem. This is still a wage; it simply does not have any taxes removed up front. The driver pays the tax at the time he files his taxes. The company can still claim this Per Diem expense, as it is a percentage of the drivers total labor wage. The driver receives a Per Diem deduction of $59 per day, (net $47.20), from the IRS. If the driver receives $40, ($.08 x 500), per day in Per Diem from his company, you take the $47.20 less the $40 to calculate his net deduction. So in turn, both the company and the driver are receiving deductions for the same paid out per diem.
WIN $200! GET YOUR TAXES DONE THE RIGHT WAY WIN $200!
Trucker Tax Service, Inc. is proud to announce an exclusive contest for Benton and Parker e-magazine subscribers. If you have your taxes done by Trucker Tax Service, the experts in trucker’s taxes, you will become eligible for a drawing of 5 individual prizes worth $200 each! This is a double dip opportunity! Not only will you receive the best trucker tax representation available, you will also become eligible to put an additional $200 in your pocket!
The rules are simple. Have your taxes completed by Trucker Tax Service and you automatically receive an entry to win one of 5 – $200 cash awards! Please call or e-mail Trucker Tax Service and we’ll be happy to forward you one of our Trucker Tax Organizers to get you started. We look forward to first saving you hundreds, (possibly thousands), of dollars and then awarding 5 lucky recipients with Two Hundred Dollars in CASH!
Please contact us via our financial services e-mail address: tfs@truckertaxservice.com
Or please feel free to give us a call at anytime. We look forward to hearing from you soon.
Trucker Tax Service, Inc. (888)-799-1099 / office (888)-750-7557 / fax
Trucker Tax Service was created to service the truck driving community with a fast and secure method for filing taxes while on the road. Trucker Tax Service provides a streamlined approach to tax preparation, including electronic filing and direct deposit of all refunds. Our goal is to provide the most convenient method of filing taxes for everyone affiliated within the trucking industry.
Jim O’Donnell, President of Trucker Tax Service, spotted this unique opportunity while working for a tax service company. “With my previous experience dealing with the truck stop industry”, says Jim O’Donnell, “and my meetings and conversations with truckers, trucking company owners and truck stop operators, I confirmed the need for a virtual tax service for the drivers. Most people don’t realize how much time a typical driver spends on the road at terminals and at truck stops. They also don’t grasp how difficult it is for a driver to simply prepare their receipts prior to sitting down with a qualified tax preparer.”
Jim has over 28 years of experience in several industries, including the truck stop industry, Wi-Fi operations, franchise ownership and management, as well as owning his own technology company.
Jim realized the importance of providing a comprehensive tax preparation business to the trucking industry. He understands the needs of the driver and set out to design a company to meet those needs by offering a streamlined, convenient service.
Trucker Tax Service is very fortunate to have the highest level of experience managing their tax preparation and financial services departments. Jim Yergens is our Vice President of Operations. Jim is a CPA and has been in the accounting and tax field for over 20 years. He has extensive experience in preparing individual, corporate and partnership tax returns. Jim is also a QuickBooks ProAdvisor and can help in setting up QuickBooks for easy tracking of income and expenses for truck drivers.
Please feel free to contact us at anytime with any tax questions or concerns. We will be happy to help you through this tax season and make it a much easier and more gratifying experience.
TRUCKER TAX SERVICE, INC. – How We Can Help You
State and Federal Tax Preparation – Trucker Tax Service (TTS) will file all of your applicable state and federal taxes. If you’re married, TTS will file a joint return for you and your spouse.
Other Industries – Although TTS specializes in the trucking industry, our state of the art software, plus the years of experience of our tax professionals provides the ability to service any tax preparation need. Trucker Tax Service is a full service tax preparation company.
Quarterly Estimated Returns – Owner-operators are required to report their quarterly estimated taxes. TTS can file these quarterly returns on your behalf.
Profit and Loss Statements (P & L) – TTS provides monthly profit and loss statements for you to track your overall profitability.
Bookkeeping Services - TTS provides monthly bookkeeping services to maximize your time on the road and give you one less thing to worry about.
What else do you need? Talk to us! TTS would be happy to customize any part of the accounting process to help make your life easier.
