Diesel Is Spiking Again: A Reminder for Motorcoach Operators

30-Second Takeaway

  • Middle East tensions are beginning to influence global oil markets
    • Diesel prices can move quickly when geopolitical risks increase
    • Some markets are already approaching $7 diesel, and $10 fuel is not impossible in a severe supply disruption
    • Operators already facing rising insurance costs could see margins squeezed further
    • Fuel surcharges are widely used across transportation industries
    • Motorcoach operators should consider implementing or updating surcharge policies before fuel spikes affect profitability

Operator Perspective

Before I was part of a CPA Firm serving the motorcoach industry, I spent 30 years as a motorcoach operator. Like many of you, I watched fuel prices swing wildly over the years—sometimes slowly, and sometimes overnight.

When fuel moves quickly, margins can disappear just as fast. The cycle has returned.

The Industry Has Rebuilt

Over the past few years, the motorcoach industry has done something remarkable. It rebuilt itself. When COVID shut down group travel, coaches across the country were parked. Charter work disappeared overnight. Companies that had spent decades building their businesses suddenly found themselves fighting simply to survive. But this industry has always been resilient.

Operators tightened expenses, protected their fleets, kept key employees, and waited for travel to return. And return it did. Today operators are experiencing one of the strongest demand environments the industry has seen in years. Schools are traveling again. Domestic tour groups are back. Sports teams and corporate groups have returned to the road. The international tourism market has collapsed, but that is another story. For many companies, the industry has entered a welcome period of renewed prosperity. But experienced operators also know something else about this business.

Good times can stop quickly by forces outside the industry’s control – a sudden surge in fuel prices.

Why the Iran Conflict Matters

The recent escalation of tensions in the Middle East—particularly involving Iran—has introduced uncertainty into global oil markets. Oil is traded globally. Even though the United States produces a substantial portion of its own energy, prices still respond quickly to geopolitical risk. When instability appears in major oil-producing regions, markets react almost immediately. Even the possibility of disruptions to production or shipping routes can push prices higher.

For diesel-dependent industries like motorcoach transportation, those reactions show up quickly at the pump. Unlike labor costs, insurance premiums, or maintenance expenses, fuel prices can change dramatically in a brief period. And when they do, the impact on operating margins is immediate.

Fuel Surcharges Are Nothing New

Fortunately, the transportation industry has dealt with this before. Fuel surcharges have been used across trucking, airlines, and passenger transportation for more than two decades. Whenever fuel prices spike—as they did in the mid-2000s, during the 2008 oil surge, and again during the diesel increases in 2022—transportation providers rely on surcharges to manage rapidly rising fuel costs.

The reason is simple. Trips and contracts are often priced months in advance. Fuel prices can move dramatically in a matter of weeks and even days. Fuel surcharges help bridge that gap. They allow operators to maintain their base pricing while adjusting for extraordinary fuel increases in a transparent and predictable way. Most customers already understand the concept because they see it regularly on airline tickets and freight shipments.

Operators Are Already Feeling Cost Pressure

Fuel volatility is arriving at a time when motorcoach operators are already facing rising costs. Insurance premiums across the industry have been climbing steadily. Liability coverage has become more expensive, and many operators have experienced significant increases in annual premiums. Insurance increases are difficult, but they usually happen gradually. Fuel costs behave very differently. They can rise quickly—and when they do, they move far faster than insurance costs.

A typical coach traveling about 100,000 miles per year may consume more than 10,000 gallons of diesel annually. A $1.00 increase in diesel prices adds an approximate $10,000 in annual fuel cost for that single coach. A $2.00 increase adds $20,000 annual increase per coach – a fleet of twenty coaches will sustain a drain of $400,000 to the bottom line.

While insurance increases are already squeezing margins, fuel increases can outpace those pressures overnight.

How High Could Diesel Go?

Another question operators should consider is how high diesel prices could climb. In parts of the country, diesel prices are already reaching levels that would have seemed extreme only a few years ago. In California, diesel is already approaching $7.00 per gallon in certain markets. If global oil markets tighten further, prices could climb much higher. In a severe supply disruption, $10 diesel at the pump is not a dream. For companies running multiple coaches every day, that kind of increase cannot simply be absorbed.

Example Fuel Surcharge Structure Operators Can Use

Many operators ask what a simple surcharge structure might look like. Below is a straightforward example commonly used in transportation:

Baseline Diesel Price:
$4.00 per gallon

Adjustment:
For every $0.25 increase above the baseline, apply a surcharge.

Average Diesel Price            Fuel Surcharge

$4.00 or less                            No surcharge

$4.25                                           2%

$4.50                                           4%

$4.75                                           6%

$5.00                                           8%

$5.25                                           +10%

Again, this is a simple example. Many companies reference the U.S. Energy Information Administration (EIA) weekly diesel price index when applying fuel surcharges. Using a public index helps keep the process transparent and easy to explain to customers.

Final Thoughts

Motorcoach operators have always been problem solvers. This industry has navigated recessions, fuel cycles, regulatory changes, and even a global shutdown. The recovery we are seeing today is proof of that resilience. But protecting that recovery requires staying ahead of potential risks. If diesel prices continue rising quickly, operators who implement fuel surcharges early will be in a far stronger position than those who wait.

At BUSBooks.cpa, we work exclusively with motorcoach companies and understand the financial realities unique to this industry. Helping operators identify financial risks early and respond proactively is an important part of what we do. The motorcoach industry has already overcome enormous challenges. With thoughtful planning, it can navigate this one as well.

From Peter Shelbo of BUSBooks, LLC

Penalties for Not Filing Form 1099: What Businesses Need to Know

Businesses and individuals who make certain payments in the course of their trade or business are required to file Form 1099 with the IRS and provide a copy to the payee. (See our article on forms 1099). Failure to comply with these requirements can result in significant penalties. This article provides a comprehensive overview of the penalty structure for not filing Form 1099, as well as important exceptions, reductions, and best practices for compliance.

Understanding the Penalty Structure

The IRS imposes penalties under Internal Revenue Code sections 6721 and 6722 for failing to file correct information returns (such as Form 1099) and for failing to furnish correct payee statements. These penalties apply separately for each Form 1099 not filed with the IRS and for each payee statement not provided to the recipient.

For tax year 2025 (returns due in 2026), the penalty amounts are as follows:

  • Filed correctly within 30 days after the due date: $60 per return/statement (maximum $683,000 for large businesses; $239,000 for small businesses)
  • Filed after 30 days but by August 1: $130 per return/statement (maximum $2,049,000 for large businesses; $683,000 for small businesses)
  • Filed after August 1 or not filed at all: $340 per return/statement (maximum $4,098,500 for large businesses; $1,366,000 for small businesses)
  • Intentional disregard of filing requirements: $680 per return/statement, with no maximum limit
  • A small business is defined as one with average annual gross receipts of $5 million or less for the previous three years

Separate Penalties for Filing and Furnishing

It is important to note that the penalty applies separately for failure to file the information return with the IRS and for failure to furnish the payee statement to the recipient. If both are missed for a single payee, two penalties may apply.

Exceptions and Reductions

There are several circumstances under which penalties may be reduced or eliminated:

  • Reasonable Cause: No penalty will be imposed if the filer can demonstrate that the failure was due to reasonable cause and not willful neglect. This generally requires showing that the filer acted responsibly and that the failure was due to events beyond their control or significant mitigating factors.
  • De Minimis Rule: If a filer submits returns on time but makes errors and corrects them by August 1, the penalty may not apply to the greater of 10 returns or 0.5% of the total number of returns required.
  • Safe Harbor for De Minimis Dollar Amount Errors: If the error on the return or statement is $100 or less ($25 or less for tax withheld), no correction is required unless the recipient requests it.
  • Electronic Filing Requirement

If a filer is required to submit 10 or more information returns (aggregated across all types), they must file electronically. Failure to do so without an approved waiver may also result in penalties.

Correction Procedures

If an error is discovered after filing, a corrected return should be filed as soon as possible. The IRS has specific procedures for correcting different types of errors, including incorrect taxpayer identification numbers, names, or amounts.

IRS Assessment and Notification

The IRS will send a notice if a penalty is assessed. Interest will accrue on the penalty until it is paid in full. Filers may dispute the penalty or request abatement if they believe they have reasonable cause.

Best Practices to Avoid Penalties

  • File all required Forms 1099 and furnish payee statements by the due date.
  • Ensure all information is accurate and complete.
  • File electronically if required or obtain a waiver if unable to do so.
  • Apply for an extension if more time is needed to file or furnish statements.

Conclusion

The penalties for not filing Form 1099 can be substantial, especially for larger businesses or in cases of intentional disregard. However, the IRS provides relief in certain circumstances, such as reasonable cause or minor errors. To avoid penalties, businesses should implement robust procedures for tracking payments, collecting payee information, and meeting all filing deadlines. If you have questions about your specific situation or need assistance with compliance, consult a qualified tax professional.

Written by Tracy Fickett, BUSBooks, LLC

Forms 1099 and W-2 for Tax Year 2025

The 2026 New Year brings your business fresh opportunities. It also demands annual compliance and information reporting. January requires your accounting department to prepare a handful of reports that affect your employees, vendors, and your friends at the IRS.

Here is a recap of the 2025 calendar year information reporting that you may be responsible for issuing soon.

Forms W-2 to Employees

Employers need to issue Forms W-2 to all employees receiving wages during the tax year. In addition, the fourth quarter and annual payroll tax returns are due. These are prepared by the person or company who processes your payroll during the year. The recipients must receive their W-2’s by January 31,2026. The IRS requires filing by January 31, 2026 as well.

Forms 1099 to Vendors and Independent Contractors

Generally, any person or entity engaged in a trade or business (including nonprofit organizations, trusts, estates, and government agencies) must file Forms 1099-MISC and/or 1099-NEC if, in the course of business, they make certain types of payments to non-corporate recipients (and, in some cases, to corporations) totaling at least the applicable threshold during the calendar year. Personal payments are not reportable.

The most common types of forms 1099 that motorcoach companies need to be aware of are:

  • Form 1099-MISC
  • Form 1099-NEC

Forms 1099-MISC are issued for certain payments and/or bartering transactions of at least $600.

1. Paid to individuals or entities not taxed as corporations, including:

  • Rents (Box 1)
  • Prizes and awards (Box 3)
  • Other income (Box 3)
  • Deceased Employee Wages (Box 3)

2. Paid to individuals or any entities including those taxed as corporations, including:

  • Medical and healthcare payments (NOT health insurance premiums) (Box 6)
  • Payments to an attorney even if taxed as a corporation (Box 10)

3. Direct sales of at least $5,000 of consumer products for resale.

Do NOT report on Form 1099-MISC:

  • Payments to corporations (with exceptions as above)
  • Payments for merchandise, telegrams, telephone, freight, storage, and similar items
  • Wages to employees (report on Form W-2)
  • Payments to tax-exempt organizations, governments, or most corporations (with exceptions)
  • Personal payments

Due dates:

  • Forms 1099-MISC are required dates are as follows:
    • To the recipient, by January 31, 2026
    • To the IRS, by February 28, 2026 filed by paper
    • To the IRS, by March 31, 2026 filed electronically

Forms 1099-NEC are issued for certain payments and/or bartering transactions of at least $600, paid to individuals or entities not taxed as corporations, for services performed by non-employees with no exclusion for parts and materials.

  • Services performed by someone who is not your employee (including parts and materials)
  • Fees, commissions, prizes, and awards for services
  • Payments to attorneys for legal services (must be reported in Box 1 even if the entity is a corporation)
  • Directors’ fees
  • Payments to nonemployee entertainers
  • Other forms of nonemployee compensation

Do NOT report on Form 1099-NEC:

  • Payments for merchandise, rent, or other items not considered compensation for services
  • Wages to employees (report on Form W-2)
  • Payments to tax-exempt organizations, governments, or most corporations
  • Payments for personal (non-business) services [2].

Due dates:

  • Forms 1099-NEC are required dates are as follows:
    • To the recipient, by January 31, 2026
    • To the IRS, by January 31, 2026 filed by paper or electronically

Forms 1099K are issued by credit card processors and payment service providers, such as Square and Venmo. These credit card processors and service providers are responsible for the reporting compliance. Do not report these payments on forms 1099-MISC or 1099-NEC.

Planning Opportunity: Consider paying vendors and independent contractors by credit card or through payment service providers to reduce your business’s Form 1099 filing requirements.

Note: The IRS has several different documents that provide guidance for Forms 1099. What we have presented here is the most common uses that effect the Motorcoach Operator. We recommend that you discuss the final preparation with your CPA before submitting your Forms 1099.

Written by Tracy Fickett, BUSBooks, LLC