Presented by
Ron Hester Lt. John Moses
Tax Administration Alabama
Manager
Department of Revenue
ON Ministry of
Finance
IFTA Managers’ Workshop and Law
Enforcement Seminar
September 21-24, 2005
What You’ll Learn
The Basics – the core principles and the
benefits
How IFTA Works – from A to Z
The Amendment Process – how IFTA
changes
Compliance – jurisdiction and carrier –
administrative and roadside enforcement
Some Issues – What’s on the horizon
IFTA, Inc. – Who we are and the services
we provide
WHAT IS IFTA?
The International Fuel Tax Agreement
A tax collection agreement by and among
the 48 contiguous States and the 10
Canadian Provinces bordering the US
Uniform administration of motor fuels use
taxation laws with respect to qualified
motor vehicles operated in more than one
member jurisdiction
IFTA’S CORE PRINCIPLES
Base Jurisdiction
Retention of Sovereign Authority to
determine tax rates, exemptions and
exercise other substantive tax
authority
Uniform Definition of Qualified Motor
Vehicle
BASE JURISDICTION
Where qualified motor vehicles are
registered (IRP)
Where operational control and
operational records are maintained or
can be made available
Where some travel is accrued
TAX COLLECTED THROUGH IFTA
Motor fuel use taxes that are
imposed by each jurisdiction on
the consumption of motor fuel in
qualified motor vehicles.
QUALIFIED MOTOR VEHICLE
Motor vehicle used, designed or
maintained for the transportation of
persons or property and
Gross vehicle or registered gross vehicle
weight over 26,000 lbs. or 11,797 kgs.
Three-axles regardless of weight
Used in combination when the weight of
the combination exceeds 26,000 lbs. or
11,797 kgs.
WHO MAY LICENSE?
Any person based in a member
jurisdiction operating a
qualified motor vehicle in two
or more member jurisdictions
THE BENEFITS TO THE
LICENSEE
One license and one set of decals for
each qualified motor vehicle to operate
through all member jurisdictions
One tax return filed each quarter with
the base jurisdiction
One tax payment or refund
One audit by the base jurisdiction
Reduced administrative costs
BENEFITS TO THE
JURISDICTION
Fewer taxpayers
Lower administrative costs
Increased audit coverage
Increased enforcement
GETTING STARTED
Base jurisdiction
Carrier submits license reviews and processes
1 application
to base jurisdiction 2 license application
of qualified
candidate
Base jurisdiction issues Licensee operates
3 one IFTA license to
carrier and 2 decals for
each QMV operated
4 and prepares quarterly
IFTA tax return with
base jurisdiction
THE IFTA TAX RETURN
Total Miles Total Fuel MPG
10000 2000 5.00
Jurisdiction Total Miles Tax. Miles Tax. Fuel Tax-Pd Fuel Net Tax. Fuel Tax Rate Tax Int. Total
BJ 2500 2500 500 1000 -500 0.15 $ (75.00) 0 $ (75.00)
AA 2500 2500 500 500 0 0.09 $ - 0 0.00
BB 2500 2500 500 300 200 0.25 $ 50.00 0 50.00
CC 2500 2500 500 200 300 0.23 $ 69.00 0 69.00
Total $ 44.00
Base Jurisdiction (BJ) is a US jurisdiction
WHAT HAPPENS NEXT
Base jurisdiction
Licensee files tax return
5 with base jurisdiction
and remits $44.00 6 reviews and processes
tax return and
remittance
At the end of each month
7 Base jurisdiction
processes all other tax
returns received
8 base jurisdiction sends
transmittal reports to all
other member
jurisdictions.
TRANSMITTAL
REPORT
05/2200
Transmittal from Base Jurisdiction to Jurisdiction AA
License # Total Miles Tax. Miles MPG Tax. Fuel Tax-Pd Fuel Net Tax. Fuel Tax Int. Total
BJ123456789 2500 2500 5.00 500 1000 -500 $ (125.00) 0 $ (125.00)
BJ234567891 2500 2500 5.00 500 500 0 $ - 0 $ -
BJ345678911 2500 2500 5.00 500 300 200 $ 50.00 0 $ 50.00
BJ456789111 2500 2500 5.00 500 200 300 $ 75.00 0 $ 75.00
BJ567891111 2500 2500 5.00 500 2000 -1500 $ (375.00) 0 $ (375.00)
Totals 12500 12500 25 2500 4000 -1500 $ (375.00) 0 $ (375.00)
WHAT HAPPENS NEXT
Base jurisdiction
Base jurisdiction sends processes all transmittal
9 the transmittal report
to Jurisdiction AA and
all other member
10 reports and payments
received from
other jurisdictions
jurisdictions (including $375 from
Jurisdiction AA)
Base jurisdiction sends
11 refunds to licensees and
issues assessments
for any taxes due
AUDITS
The base jurisdiction will conduct audits
for itself and all member jurisdictions
Jurisdictions must complete audits on an
average of 3% of its licensees each year
Of the 3%, 25% of the audits must
involve high-distance accounts
Of the 3%, 15% of the audits must
involve low-distance accounts
Audit monies are transmitted with the
monthly transmittal reports; audit reports
are sent upon completion
WHO CAN SUBMIT A PROPOSAL?
The IFTA Articles of Agreement, R1600 provides that the following
may propose amendments to the IFTA Articles of Agreement
Procedures Manual or Audit Manual:
Any Member Jurisdiction
Committees: Agreement Procedures/Audit/
Law Enforcement/Program Compliance Review
The IFTA, Inc. Board of Trustees
How Ballots Work
Sponsors submit Proposals distributed for
Proposals second comment period
Proposals distributed Sponsors review and
for comment period may submit revisions
Proposals discussed at Ballots distributed for
Annual Business vote
Meeting All comments and votes
Sponsors review are submitted through
proposals and may IFTA, Inc. website
submit revisions
Ballot Time Frames (1/05)
Full Track Short Track
*45 days – 30 days –
comment period comment period
45 days – sponsor 30 days – sponsor
review after ABM review after ABM
45 days – 30 days –
comment period comment period
*60 days - vote 30 days - vote
*Change: from 90 days
Annual Business Meeting
Short track ballot proposals must receive
an affirmative vote of ¾ of the member
jurisdictions to continue on the short
track – if not, ballot proposal dies
Full track ballot proposals may be moved
to short track – must receive an
affirmative vote of ¾ of the member
jurisdictions to move to short track – if
not, ballot stays on full track and moves
forward
2005 BALLOT PROCESS STATUS
Short Track:
Second 30-day comment period
ending October 10, 2005
Full Track
Second 45-day comment period
ending October 28, 2005
2006 BALLOT PROCESS
Deadline for Submitting Ballot
Proposals:
Consensus Board Interpretations
Dispute Resolution
Program Compliance Reviews
Enforcement
IFTA, Inc. Clearinghouse
CONSENSUS BOARD
INTERPRETATIONS
A process through which provisions
of the IFTA governing documents
may be interpreted and
commentary added to the affected
provisions
A jurisdiction, committee or Board
member requests an interpretation
The Board may issue a proposed
interpretation
A proposed interpretation must be
ratified by ¾ affirmative vote of the
membership at an Annual Business
Meeting
If ratified, commentary is added to
the affected IFTA governing
document
PROGRAM COMPLIANCE
Changes to the Review Guide
General Information
PCR Committee
PCR Scheduling
Terms
Review Topics & Worksheets
Scheduling PC Reviews
Review
Report Process
Follow Up
Reassessment
Appeal Process
Top List of PCR Citings for 2004
P1040 Late Transmittal of Funds (Returns) 9
P1040 Late Payment of Billing Transmittals 7
P1040 Late Mailing of Transmittals 7
P1040 Late Payment of Transmittals 5
R1230.300.010 Incorrect Audit Interest 4
A660.100.030 Net Distance Adjustments Not On
Licensee Audit Report 4
A660.100.035 Net Tax Paid Fuel Purchases Adjustments
Not On Licensee Audit Report 4
ENFORCEMENT OF IFTA
Jurisdictions exchange quarterly a
listing of new and cancelled accounts
Jurisdictions exchange, at least every
10 days, the following:
Listing of suspended licenses
Listing of revoked licenses
Listing of reinstated licenses
USES OF INFORMATION
Administrative
To ensure that a carrier in a revoked
license in one jurisdiction does not
receive a license from another
Roadside
To ensure that a carrier in a revoked,
suspended, or cancelled status is not
continuing operations
ROADSIDE ENFORCEMENT
Credentials
A jurisdiction issues one license to the
carrier
The carrier must copy the license and place
a copy in each qualified motor vehicle
A Jurisdiction issues two decals to the
carrier for each qualified motor vehicle
The carrier must display a decal on each
side (driver and passenger) of each
qualified motor vehicle
OTHER CREDENTIALS
An IFTA temporary decal permit
This permit may be carried ONLY in place of
the decals
It is valid for only 30 days
It is vehicle specific (VIN must be included)
It’s main purpose is to allow a carrier to add a
qualified motor vehicle immediately – places a
copy of the license in the vehicle and the
jurisdiction faxes the temporary permit until
permanent decals reach the carrier
Trip Permit
A jurisdiction may issue a trip permit to a
carrier
This trip permit is in lieu of an IFTA license
Most jurisdiction trip permits are limited
by time (i.e. days, hours, etc.)
This is NOT an IFTA trip permit – it allows
the carrier to travel through the
jurisdiction that issued it and no other
A trip permit has to be obtained for each
jurisdiction separately
WHY ENFORCE?
If a carrier is operating on a suspended or revoked
license, this indicates that the carrier is not
complying with the terms of IFTA
Including failure to file tax returns, failure to pay a tax
return, failure to pay an audit assessment
If a carrier is operating on a cancelled license, the
carrier has indicated to the jurisdiction that he or she
is no longer operating
― Stopping the carrier from operating in your jurisdiction
stops the carrier from operating in all jurisdictions –
payment by this carrier pays your taxes too
Mark Bell (KY)
(a/k/a The IFTA Gipper)
NAFTA
Interest
Multiple Count
Audits
INTERNATIONAL
FUEL TAX
ASSOCIATION, INC.
Manages
The International Fuel Tax
Agreement
What is IFTA, Inc.?
A not-for-profit association incorporated
under laws of the State of Arizona
Membership in IFTA constitutes
membership in IFTA, Inc.
Association is funded by membership
dues
Incorporated to conduct business
activities
Membership elects a 9-member Board of
Trustees
THE PEOPLE
LONETTE L. TURNER – EXECUTIVE DIRECTOR
DEBORA K. MEISE – PROGRAM DIRECTOR
JASON DEGRAF – INFORMATION SERVICES
ADMINISTRATOR
TAMMY TRINKER – EVENTS COORDINATOR
TOM KING - WEBMASTER
JESSICA EUBANKS – EXECUTIVE ASSISTANT
RICHARD O. BECKNER – PROGRAM COMPLIANCE
ADMINISTRATOR
Services Provided
Administering the ballot process and the
IFTA governing documents
Gathering and distribution of the
quarterly tax rates
Providing technical assistance to the
member jurisdictions and licensees
Gathering and distribution of the
jurisdiction annual reports
Leading and participating in the required
program compliance reviews
Other Services
Planning and preparation of an annual
audit workshop (along with IRP), an
attorneys’ meeting, an annual business
meeting, a managers’ workshop and law
enforcement training seminar
Participating in other related association
and government meetings
Monitoring activities such as NAFTA
IFTA/IRP AUDIT WORKSHOP
JANUARY 6-9, 2006
Tempe Mission Palms Hotel
Tempe, Arizona
IFTA Attorneys' Section Meeting
APRIL 21-22, 2006
Sheraton San Marcos
Chandler, Arizona
Questions