International Fuel Tax Agreement IFTA 101 IFTA Managers

International Fuel Tax Agreement IFTA 101 IFTA Managers and Law Enforcement Workshop September 22 -24, 2010 Presented by Ghyslaine Lepage (QC) Debora K. Meise (IFTA, Inc. ) Lonette L. Turner (IFTA, Inc. ) Andrew Markle (ON)

Contents n n n Carriers – before IFTA Provinces or states - before IFTA Agreement IFTA Definitions Carriers (Advantages and Obligations) Jurisdictions (Advantages and Obligations) IFTA, Inc. IFTA Committees Clearinghouse Enforcement Questions

Carriers Before IFTA A carrier travelling from Quebec to New York and Ontario would have to : n n n get a decal from each province or state file a return to each place where traveled pay the fuel tax due to each, if required wait for the reimbursement from each, if any keep records for each province or state traveled to, for an audit purpose.

Provinces or states Before IFTA A province or a state would have to: n n register and issue decal to each requesting carrier receive returns from carriers located every where issue reimbursement when requested wait for the payment from carriers A province or state would have: n no control on what they are getting no control on fuel, export and import to do audits in different states or provinces.

IFTA AGREEMENT States and provinces, when they sign the IFTA Agreement, become a member ‘‘Jurisdiction’’

IFTA – What is it? • International Fuel Tax Agreement • to promote and encourage the fullest and most efficient possible use of the highway system by making uniform the administration of motor fuels use taxation laws with respect to motor vehicles operated in multiple jurisdictions. (R 130) • An agreement on tax collection, by and among the 48 contiguous states and the 10 Canadian provinces bordering the US. Managed by the International Fuel Tax Association, Inc.

Governing Documents (R 120) The Agreement (article R…) The Procedures Manual (article P…) The Audit Manual (article A…) Managed by the International Fuel Tax Association, Inc.

Managed by the International Fuel Tax Association, Inc.

WHO CAN SUBMIT A PROPOSAL? Ballot Submissions (R 1600) Member jurisdictions Audit Committee Agreement Procedures Committee Law Enforcement Committee Program Compliance Review Committee Board of Trustees Managed by the International Fuel Tax Association, Inc.

How Ballots Work Sponsors submit Proposals distributed for comment period Proposals discussed at Annual Business Meeting Sponsors review proposals and may submit revisions Proposals distributed for second comment period Sponsors review and may submit revisions Ballots distributed for vote All comments and votes are submitted through IFTA, Inc. website Managed by the International Fuel Tax Association, Inc.

Ballot Time Frames Full Track 45 days – comment period 45 days – sponsor review after ABM 45 days – comment period 60 days - vote Short Track 30 days – comment period 30 days – sponsor review after ABM 30 days – comment period 30 days - vote Managed by the International Fuel Tax Association, Inc.

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 Managed by the International Fuel Tax Association, Inc.

IFTA… • Each jurisdiction retains its Sovereign Authority to determine tax rates, exemptions and exercice other substantive tax authority. • Only the motor fuel taxes imposed by each jurisdiction on the consumption of motor fuel in qualified motor vehicle is collected via IFTA. Managed by the International Fuel Tax Association, Inc.

Definitions • Jurisdiction (R 227) – a state of the United States of America and the District of Columbia – a province or territory of Canada or, – a state of the United Mexican States. • Base Jurisdiction (R 212) – where qualified motor vehicles are based for vehicle registration purposes. • Licensee (R 236) – a person who holds an uncancelled Agreement license issued by the base jurisdiction. Managed by the International Fuel Tax Association, Inc.

Definitions… • Qualified Motor Vehicle (R 245) – a motor vehicle used, designed, or maintained for transportation of persons or property and: • Having two axels and a gross vehicle weight or registered gross vehicle weight exceeding 26, 000 pounds or 11 797 kilograms; or • Having 3 or more axles regardless of weight; or • Is used in combination when the weight of such combination exceeds 26 000 pounds or 11 797 kilograms gross vehicle weight or registered gross vehicle weight. Qualified Motor Vehicle does not include recreational vehicles. Managed by the International Fuel Tax Association, Inc.

Carriers • Advantages – One license and one set of decals for each qualified motor vehicle (QMV) to operate through all member jurisdictions; – One tax return filled each quarter (or annually) with the base jurisdiction; – One tax payment or refund; – One audit by the base jurisdiction; Managed by the International Fuel Tax Association, Inc.

Carriers • Obligations – Renew annually (license and decals - R 345); – File a quarterly (or annual) tax return and pay all taxes due (R 910 and R 930); – Recordkeeping Requirements • Maintain detailed distance records (P 540) and fuel purchases (P 550); • Maintain supporting documentation (R 700, R 1000 and P 510) ; • Make documents/records available for an audit. (P 520). Managed by the International Fuel Tax Association, Inc.

Jurisdictions • Advantages – Fewer carriers to administer – Audit carriers from their own jurisdiction – Audit coverage increased – Enforcement increased – Administrative costs reduced. Managed by the International Fuel Tax Association, Inc.

Obligations • • • Jurisdictions Respect the Agreement and abide by the Governing Documents; Pay Membership Dues (R 1810. 300); Vote on amendments (R 1650. 100); Update tax rates quarterly (P 1120); Undergo a Program Compliance Review and participate in the review of other member jurisdictions (section P 1200); Adhere to the Audit Requirements - Audit 3% (R 1310 and A 310); Distribute fuel taxes collected to the member jurisdictions in a timely manner (section P 1040); Maintain fuel tax records for licensees (section P 900); Complete an Annual Report (P 1110); Update the communication lists and the exemption database; Participate on committees and attend IFTA meetings. Managed by the International Fuel Tax Association, Inc.

IFTA, Inc. International Fuel Tax Association, Inc (R 1800) • A not-for-profit association incorporated under the 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 nine-member Board of Trustees. Managed by the International Fuel Tax Association, Inc.

IFTA, Inc. – Services Provided • Administration of 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 participation in the required program compliance reviews; • Maintain a website; • Plan and prepare the different meetings; • Administer the Clearinghouse and Funds Netting Managed by the International Fuel Tax Association, Inc.

IFTA, Inc. The People Lonette L. Turner – Executive Director Debora K. Meise – Program Director Jason De. Graf – Information Services Administrator Tammy Trinker – Events Coordinator Tom King – Webmaster Jessica Eubanks – Executive Assistant Richard O. Beckner – Program Compliance Administrator Managed by the International Fuel Tax Association, Inc.

IFTA Committees • Standing Committees (R 1810. 200) – – – – Agreement Procedures Committee Audit Committee Industry Advisory Committee Program Compliance Review Committee Law Enforcement Committee Dispute Resolution Committee Clearinghouse Advisory Committee Managed by the International Fuel Tax Association, Inc.

IFTA Committees… Special Committees - Attorneys’ Section Steering Committee (ASSC) - Information Technology Advisory Committee (ITAC) - Re-Audit and Re-Examination Working Group (RRWG) Managed by the International Fuel Tax Association, Inc.

Clearinghouse (Section R 2100) • A database into which jurisdictions upload data that can be viewed and retrieved by the participating member jurisdictions. – Demographic Data – Transmittal Data – IFTA, Inc. advises each jurisdiction of the amount due to or from the jurisdictions for purposes of funds netting. – Interjurisdictional Audit reports – Decal Numbers Managed by the International Fuel Tax Association, Inc.

Enforcement n Field/Roadside • Look for the decals (or temporary decal permit) • Verify if the carrier has a copy of its IFTA license n If none of the above, ask for the trip permit • Verify the status of the license • Verify the fuel • And may impose fine to the delinquent carriers

Enforcement n Between jurisdictions • Exchange lists of revoked, suspended, and reinstated licenses (every 10 days) • Exchange quarterly lists of new and cancelled accounts • Audit 3% of their licensees • Program Compliance Review • Consensus Board Interpretation • Dispute Resolution

Questions

Consult www. iftach. org