Is fsc taxed?

[AutonomyRex]

Hi FKATZ or anybody else whom can answer this question, which I cannot locate in all my searches.

Is FSC Taxed.???

Been a Company Driver all my driving years.....

I have been made an offer to run a fleet owners' truck for a 65/35 split. Paying for fuel, yet only being offered 65% of the FSC.

I always read that drivers paying for fuel should get/do get 100% of FSC as they are paying for fuel.

Yet this owner, whom many respect and have been with for some time, and are doing very well financially.....says that he, The fleet owner, must pay taxes on FSC, so he pays 65/35 of what carrier pays to him.

This is in expedite, and I spoke with the driver who is buying a tractor to go out on his own, and has been a driver for this owner for about 18 months, and in expedite for 6 years. He seemed to be ok with it....he wasn't promoting it, only excepting of it as he gets 65%.

But Still........is FSC taxed? Do O/O's or Fleet owners pay taxes on your FSC? Or is This a red flag?

Any help would be appreciated.

THX
A-Rex

 

[greg334]

Yep it is part of the compensation in the 1099.

 

[AutonomyRex]

Yep it is part of the compensation in the 1099.

Thx Sir,

So in your experience, is the 65/35 split the norm on FSC...everything I read says 100% goes to whomever buys the fuel. Or am I missing something??

Thx
A-REX

 

[greg334]

If you pay for fuel, you should get 100% of the FSC - no exceptions.

On the other hand, if you get the 68/32 split and pay for fuel, the 8% offsets the costs.

 

[Fkatz]

On the owners 1099 the company that he is leased on to does include all the Fuel Surcharges that he receives, and inturn, you should receive 100% of the fuel surcharges. because it is also included in your 1099, so you are paying tax on it. but the owner should not take any percentage, cause it is passed on to you on your 1099, so it as though he is penalizing you the percentage

Franklin Katz, ATP ,PA, PB
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC 28086-3151
(704) 739-4039
Fax: (704) 739-3934
e-mail: [email protected]

Providing Professional Accounting Services and Income Tax Preparation

Circular 230 Disclaimer – Any tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax related penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or tax-related matters addressed herein.

 

[AutonomyRex]

THX Gentleman,

That is the information I was seeking to be able to understand and decide if this would be a good contract to enter into.

I really could not grasp why he keeps 35%, and did not want to get into a p!ssing match with the owner until I had some good info to back up my position.

 

[pjjjjj]

IMHO you have to weigh the whole picture, and not get stuck on one piece of it.

I'm not sure how workers' insurance works over there, or if your fleet owner will be paying that on your behalf. Over here, a fleet owner pays WSIB based on gross revenue as opposed to net revenue. Some people call WSIB a tax.

The norm seems to be a 60/40 split with the 60 going to the one paying fuel. If you'll be getting 65% and paying fuel, you'll be getting 5% more of the rest of the revenue and 35% less of the much smaller FSC part of the revenue.

Using a round figure of $200,000 revenue with say 18% FSC, you'd be short by $2600. Consider what other considerations there are to weigh against that $2600, ie a fair fleet owner is worth something, does he pay tolls or any of your other charges/expenses, etc.

This owner's pay structure may simply be a straightforward way of calculating the whole picture so that both parties can be profitable, instead of using all kinds of complicated figures for different things which can be an accounting nightmare and impossible for the driver to figure out.

FSC is a pie in the sky anyway. Some carriers tell their contractors they are getting 100% when they really mean they're getting 100% of their 70% cut. In reality some loads don't pay FSC to the carrier at all. Don't get hung up on language, think about the whole picture and your bottom line and talk to more of the other drivers before making your decision.

 

[AutonomyRex]

Thx Pj.....

Good info to consider. And I have had a long sit down with owner. I do understand a bit better now as well his "system".

In 3 months it moves to a 70/30 split and a year later a 75/25. The carrier lumps load rev/fsc all into one...and I have been given full AUTONOMY ;-)...and the power unit will be mine in 2.5years. So I am building equity as well...not just a driver.

All you fellas posts are helping me to make a solid decision. Still a few things to look into though....but the contract is a solid one, and you are correct pj...a good solid owner is worth something. He is also going to teach me the ropes of "actually" being an O/O...vs being a company driver.

Thx Greg for the info about 68/32 split as well...he went to 70/30...though he wants 3 months of Road time in expedite to be sure we both are a fit, and it works for me. I realize there is a huge difference between Company and O/O. I think I can live with that.

And Thx FKatz for clearing up the FSC question as well........

Have a great weekend all
Stay Safe
A-Rex