Full Track Ballot 05 2015 August 12 2015

Full -Track Ballot #05 -2015 August 12, 2015 San Antonio, TX August 12 -13 2015 Annual Business Meeting San Antonio, Texas

FT #05 -2015 • Is not a dual fuel issue – The same problem exists for any interjurisdictional carrier with a pure LNG vehicle – We need a consistent process for LNG reporting and disbursement of taxes between jurisdictions (Like CNG FT#5 - 2013) August 12 -13 2015 Annual Business Meeting San Antonio, Texas

FT #05 -2015 • Is not a dual fuel issue (continued) – There is no impact to sovereignty (a jurisdiction tax rates and units of measure are their responsibility) – Other standards exist to ensure consistent reporting and distribution of taxes between IFTA members (e. g. , distances, volumes, and currency) • All we are changing is how to report LNG for IFTA purposes August 12 -13 2015 Annual Business Meeting San Antonio, Texas

FT #5 -2015 • Natural gas is sold in two physical states: 1. Compressed Natural Gas (CNG) • A high pressure gas (e. g. , 3, 000 to 3, 600 psi) 2. Liquefied Natural Gas (LNG): • A super-cooled liquid (e. g. , -260°F or -170°C) August 12 -13 2015 Annual Business Meeting San Antonio, Texas

FT #05 -2015 • LNG is sold three different units of measure: 1. Gallons (3. 5 lb per G) in 24 jurisdictions 2. Diesel Gallon Equivalents jurisdictions (6. 06 lb per DGE) in 24 3. Kilograms in 10 jurisdictions August 12 -13 2015 Annual Business Meeting San Antonio, Texas

FT #05 -2015 CDN Jurisdictions US Jurisdictions Fuel Purchases Kilograms DGE - Energy Equivalent (6. 06 pounds = 1 DGE) DG - Straight Weight (3. 5 lb = 1 gallon) Two Questions: 1. What does a carrier report regarding LNG purchases to their base jurisdiction? 2. How does the carrier convert their purchases accurately and consistently?

FT #05 -2015 CDN Jurisdictions Kilograms US Jurisdictions DLE - Energy Equivalent (0. 73 kg = 1 DLE) DGE – Energy Equivalent (6. 06 pounds = 1 DGE) DG - Straight Weight (3. 5 lb = 1 gallon)

FT #05 -2015 P 1320 - FUELS NOT MEASURED IN LITERS OR GALLONS For reporting tax rates, and audit results and for transmittals between IFTA jurisdictions, liquefied natural gas shall be reported in diesel energy equivalent measures, using the following conversion factors: – a diesel gallon equivalent in U. S. jurisdictions weighs 6. 06 pounds, and – a diesel liter equivalent in Canadian jurisdictions weighs 0. 73 kilograms). August 12 -13 2015 Annual Business Meeting San Antonio, Texas

FT #05 -2015 CDN Jurisdictions US Jurisdictions Fuel Reporting Kilograms DLE (Energy Equivalent) (0. 73 kg = 1 DLE) DGE (Energy Equivalent) (6. 06 pounds = 1 DGE) DG (Straight Weight ) (3. 5 lb = 1 gallon) 100 136. 99 DLE 36. 19 DGE 62. 657 gallons Tax Rate $0. 25 CDN $0. 1825 CDN $0. 59 US $0. 34 US Total Tax $25. 00 CDN $21. 50 US Amount Purchased

FT #05 -2015 – Jurisdictional changes: • Convert and provide to IFTA their LNG tax rates in energy equivalents (if not already) – IFTA converts for volume and currency differences and posts for use by all jurisdictions as they do now • Obtain LNG energy equivalent tax rates from IFTA and then: – – August 12 -13 Share with carriers Instruct carriers to use and how to convert their purchases: » Kilograms to DLE or DGE » Gallons to DLE or DGE 2015 Annual Business Meeting San Antonio, Texas

FT #05 -2015 – Jurisdictional Changes: • Jurisdiction tax systems process tax returns in energy equivalents • Transmit via the Clearinghouse (and non. Clearinghouse jurisdictions) in energy equivalents • Report audit activities in energy equivalents August 12 -13 2015 Annual Business Meeting San Antonio, Texas

Questions / Discussion August 12 -13 2015 Annual Business Meeting San Antonio, Texas

Updates - Duel Fuel • Four new fuel types have been added to the Clearinghouse for dual fuel reporting: – For Diesel / LNG vehicles: • • DL - The fuel type to report diesel used in a dual fuel vehicle with LNG; DLG - The fuel type to report LNG used in a dual fuel vehicle with diesel – For Diesel / CNG vehicles • • August 12 -13 DC - The fuel type used to report for diesel used in a dual fuel vehicle with CNG; and DCG - The fuel type to used to report CNG used in a dual fuel vehicle with diesel 2015 Annual Business Meeting San Antonio, Texas

Updates - Duel Fuel • DL and DC fuel types are: – Diesel fuel, taxed at the diesel tax rate shown on the tax rate matrix. – Simply used to report diesel fuel used in dual fuel vehicles (where LNG or CNG is the second fuel). • DLG and DCG fuel types are: – LNG and CNG respectively, taxed at the applicable rates shown on the tax rate matrix. – Simply used to report LNG and CNG used in dual fuel vehicles (where diesel is the second fuel). August 12 -13 2015 Annual Business Meeting San Antonio, Texas

DL/ DC DLG DCG

Questions / Discussion August 12 -13 2015 Annual Business Meeting San Antonio, Texas

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FYI - Following slides are for reference purposes in case questions come up, and include and example of a complete IFTA Return reporting process for three fleets: • Pure diesel • DL / DLG • DC / DCG August 12 -13 2015 Annual Business Meeting San Antonio, Texas

Dual Fuel Vehicles - 101 • At a high level: – Pure Diesel Purchased / Distance – Dual Fuel Diesel Purchased / Distance LNG Purchased / Distance

Dual Fuel Vehicles - 101 – Think of the dual fuel vehicle as two different trucks (or fleets) DL Purchased / Prorated Distance DLG Purchased / Prorated Distance

Recommended Reporting Process • At a high level: – Dual fuel vehicles must be treated and reported separately (e. g. , gasoline fleet, diesel fuel fleet, LNG fleet, dual fuel fleet) – Duel fuel vehicles must be treated and reported as two vehicles: • Separately reporting the distances travelled and fuel purchased • Pro-rating the distances to avoid double counting Fleet Type Pure Diesel Dual Fuel Type IFTA Return or Return Line Actual Distance Travelled Distances Reported Diesel “D” Return #1 100 Diesel “DL” Return #2 100 (pro-rated) 25 LNG “DLG” Return #3 (pro-rated) 75

Recommended Reporting Process Assumptions Total Distance * DL (gallons) DLG (gallons) J 1 8, 000 500 J 2 2, 000 - 1, 000 10, 000 500 1, 000 1, 500 Total - Total Fuel 500 * No exempt distances were traveled in either jurisdiction. Prorate Distances by Jurisdiction Between Fuel Types Total Fuel by Type DL Ratio 500 0. 3333 1, 000 0. 6667 1, 500 DLG Total Distance Total J 1 8, 000 J 2 2, 000 10, 000 Ratio 0. 3333 0. 6667 DL DLG Prorated Distance 2, 667 5, 333 667 1, 333 10, 000 22

Recommended Reporting Process • • Pro-rating more complicated if a carrier has exempt distances Developed and tested worksheet which can be used to accurately prorate the “Total Distance” and “Taxable Distance” between fuel types. Pro-Rating Worksheet These fields auto-populate and then transferred to the appropriate d. D and d. L form/return for each jurisdiction TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total Distance DL Portion J 1 8, 000 0 2, 667 5, 333 0 5, 333 J 2 2, 000 0 667 1, 333 0 1, 333 Total Miles 10, 000 0 3, 333 6, 667 0 6, 667 Exempt Distance Txbl Distance DL Portion Total Distance DLG Portion Txbl Distance DLG Portion Exempt Distance

Recommended Reporting Process Dual Fuel Vehicles – Diesel Fuel Type Jurisdiction Average MPG Total Distance Txbl Volume Tax Paid Volume Net Txbl Volume 6. 67 Tax Rate Tax Due DL J 1 2, 667 400 500 -100 0. 2000 -$ 20. 00 DL J 2 667 100 0. 1000 $ 10. 00 3, 333 500 0 -$ 10. 00 Sub-total Dual Fuel Vehicles – LPG Fuel Type Jurisdiction Average MPG Total Distance Txbl Volume Tax Paid Volume Net Txbl Volume 6. 67 Tax Rate Tax Due DLG J 1 5, 333 800 0. 0500 $ 40. 00 DLG J 2 1, 333 200 1, 000 -800 0. 1000 -$ 80. 00 6, 667 1, 000 0 -$ 40. 00 10, 000 1, 500 -$ 50. 00 Sub-total TOTAL DUAL-FUEL VEHICLES

Complex Example - IFTA Tax Return Reporting • Assumptions: – 1 Carrier with three IFTA fleets: • Pure Diesel; • DL/DLG; and • DC/DCG – No exempt fuel purchases and no exempt distances – All fuel purchases and distances have been converted into the base jurisdiction’s units of measure and currency

Example - IFTA Tax Return Reporting Pure Diesel Fuel Fleet Diesel Fleet Total Distance J 1 1, 600, 000 J 2 400, 000 Total Exempt Distance D 2, 000 DL 500, 00 0 550, 00 0 DLG DC MPG DL-DLG Fleet Total Distance J 1 50, 000 DL/DLG Fleet J 2 40, 000 Total Exempt Distance D DL DLG DC J 1 DC/DCG Fleet J 2 Total 16, 000 12, 000 8, 000 Exempt Distance D DL DLG DC 4. 50 DCG 3, 000 4, 000 20, 000 DCG 8, 000 90, 000 Total Distance 3. 64 12, 000 MPG DC-DCG Fleet DCG 1, 000 3, 000 MPG 1, 000 5. 00

Example – For DL/DLG Fleet Prorate the Miles by Jurisdiction Between Fuel Total Fuel Types DL 00 DLG 00 Fuel by Type 20, 0 Ratio 000 12, 0. 6000 (12, 000 / 20, 000 = 0. 60) 000 8, 0. 4000 (8, 000 / 20, 000 = 0. 40) Pro-Rating Worksheet ENTER BELOW FOR YOUR DL / DLG VEHICLES TOTAL EXEMPT DISTANCE TRAVELLED These Field Auto-populated Transfer these to the DL DLG Form Transfer these to the DL Form Total Distance – DL Portion Txbl Total Exempt DL Distance – distance DL DLG Portion Transfer these to the DLG Form Exempt DLG distance Txbl Distance DLG Portion J 1 50, 000 0 30, 000 20, 000 J 2 40, 000 0 24, 000 16, 000 Total miles 90, 000 0 54, 000 36, 000

Example – For DC/DCG Fleet Prorate the Miles by Jurisdiction Between Fuel Types Total Fuel DC 00 DCG 00 Fuel by Type 4, 0 Ratio 00 3, 0 0. 7500 00 1, 0 0. 2500 Pro-Rating Worksheet ENTER BELOW FOR YOUR DC / DCG VEHICLES TOTAL EXEMPT DISTANCE TRAVELLED Transfer these to the DC Form Total Distance – DC Portion These Field Auto-populated Transfer these to the DC DCG Form Txbl Total Distance – DC DCG Portion Exempt DC distance Transfer these to the DCG Form Exempt DCG distance Txbl Distance DCG Portion J 1 16, 000 0 12, 000 4, 000 J 2 4, 000 0 3, 000 1, 000 Total miles 20, 000 0 0 15, 000 0 5, 000 15, 000

Result for the 3 Fleets Final Tax Return Pure Diesel Fleet Dual (DL/DLG) Fleet Dual (DC/DCG) Fleet A B C E Taxable Fuel Tax Paid Taxable Distance Volume F G H Net Taxable Volume Tax Rate Tax Due Fuel Type Jurisdiction D J 1 1, 600, 000 440, 000 500, 000 (60000) 0. 2000 -$ 12, 000. 00 D J 2 400, 000 110, 000 50, 000 60000 0. 1000 $ 6, 000. 00 DL J 1 30, 000 6, 667 12, 000 (5333) 0. 2000 -$ 1, 066. 67 DL J 2 24, 000 5, 333 - 5333 0. 1000 $ 533. 33 DLG J 1 20, 000 4, 4444 0. 0500 $ 222. 22 DLG J 2 16, 000 3, 556 8, 000 (4444) 0. 2000 -$ 888. 89 DC J 1 12, 000 2, 400 3, 000 (600) 0. 2000 -$ 120. 00 DC J 2 3, 000 600 0. 1000 $ 60. 00 DCG J 1 4, 000 800 0. 2500 $ 200. 00 J 2 1, 000 2, 110, 000 200 574, 000 DCG Totals (All Fleets) Total Distance D 1, 000 574, 000 (800) 0. 1500 -$ 120. 00 -$ 7, 180. 00

Results for the 3 Fleets (Just a different way to display results) Final Tax Return A B C Jurisdiction Fuel Type Total Distance Taxable Distance J 1 D 0 DL All Activity in J 1 DLG DC J 2 All Activity in J 2 Total 0 0 0 DCG 0 DLG 0 DCG 0 1, 600, 00 30, 00 20, 00 12, 00 400, 00 24, 00 16, 00 2, 110, 000 3, 00 0 1, 00 0 D E Taxable Fuel Tax Paid Volume F G H Net Taxable Volume Tax Rate Tax Due 1, 600, 000 440, 000 500, 000 (60000) 0. 2000 -$ 12, 000. 00 30, 000 6, 667 12, 000 (5333) 0. 2000 -$ 1, 066. 60 20, 000 4, 444 12, 000 2, 400 4, 000 3, 000 800 4444 0. 0500 $ 222. 20 (600) 0. 2000 -$ 120. 00 800 0. 2500 $ 200. 00 400, 000 110, 000 50, 000 60000 24, 000 5, 333 - 5333 0. 1000 $ 533. 30 16, 000 3, 556 (4444) 0. 2000 -$ 888. 80 600 0. 1000 $ 60. 00 (800) 0. 1500 -$ 120. 00 1, 00 2, 110, 000 8, 000 600 200 574, 000 1, 000 574, 000 0. 1000 $ 6, 000. 00 -$ 7, 179. 90

Questions / Discussion August 13 -14 2014 Annual Business Meeting Pittsburgh, Pennsylvania

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