International Fuel Tax Agreement

IFTA 101 International Fuel Tax Agreement 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 • Carriers – before IFTA • Provinces or states - before IFTA • 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 : • 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: • register andissue 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: • 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 makinguniform the administration of motor fuels use taxation lawswith respect to motorvehiclesoperated in multiple jurisdictions. (R130) • 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(R120) • The Agreement (article R…) • The ProceduresManual (article P…) • The Audit Manual (article A…)

IFTA AMENDMENT PROCESS

WHO CAN SUBMIT A PROPOSAL? Ballot Submissions (R1600)

Sponsors submit Proposals 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 How Ballots Work

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 Ballot Time Frames

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 Annual Business Meeting

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.

Definitions • Jurisdiction(R227) • 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(R212) • where qualified motor vehicles are based for vehicle registration purposes. • Licensee(R236) • a person who holds an uncancelled Agreement license issued by the base jurisdiction.

Definitions… • QualifiedMotorVehicle(R245) • a motorvehicleused, designed, or maintained for transportation of persons or property and: • Havingtwo axels and a grossvehicleweight or registeredgrossvehicleweightexceeding 26,000 pounds or 11 797 kilograms; or • Having 3 or more axlesregardless of weight; or • Is used in combinationwhen the weight of suchcombinationexceeds 26 000 pounds or 11 797 kilogramsgrossvehicleweight or registeredgrossvehicleweight. QualifiedMotorVehicledoes not includerecreationalvehicles.

Carriers • Advantages • One license and one set of decals for eachqualifiedmotorvehicle (QMV) to operatethrough all memberjurisdictions; • One tax return filledeach quarter (or annually) with the base jurisdiction; • One taxpayment or refund; • One audit by the base jurisdiction;

Carriers • Obligations • Renewannually (license and decals - R345); • File a quarterly (or annual) tax return and pay all taxes due (R910 and R930); • RecordkeepingRequirements • Maintaindetailed distance records (P540) and fuel purchases(P550); • Maintainsupporting documentation (R700, R1000 and P510) ; • Make documents/records available for an audit. (P520).

Jurisdictions • Advantages • Fewer carriers to administer • Audit carriers fromtheirownjurisdiction • Audit coverageincreased • Enforcementincreased • Administrative costs reduced.

Jurisdictions Obligations • Respect the Agreement and abide by the Governing Documents; • Pay Membership Dues (R1810.300); • Vote on amendments (R1650.100); • Update tax rates quarterly (P1120); • Undergo a Program Compliance Review and participate in the review of other member jurisdictions (section P1200); • Adhere to the Audit Requirements - Audit 3% (R1310 and A310); • Distribute fuel taxes collected to the member jurisdictions in a timely manner (section P1040); • Maintain fuel tax records for licensees (section P900); • Complete an Annual Report (P1110); • Update the communication lists and the exemption database; • Participate on committees and attend IFTA meetings.

IFTA, Inc. International Fuel Tax Association, Inc (R1800) • 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.

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

IFTA, Inc. - 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

IFTA Committees • Standing Committees (R1810.200) • Agreement Procedures Committee • Audit Committee • Industry Advisory Committee • Program Compliance Review Committee • Law Enforcement Committee • Dispute Resolution Committee • Clearinghouse Advisory Committee

IFTA Committees… • Special Committees • - Attorneys’ Section Steering Committee (ASSC) • - Information Technology Advisory Committee (ITAC) • - Re-Audit and Re-ExaminationWorking Group (RRWG)

Clearinghouse (Section R2100) • 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

Enforcement • Field/Roadside • Look for the decals (or temporarydecal permit) • Verify if the carrier has a copy of its IFTA license • 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 • Betweenjurisdictions • Exchange lists of revoked, suspended, and reinstatedlicenses (every 10 days) • Exchange quarterlylists of new and cancelledaccounts • Audit 3% of theirlicensees • Program ComplianceReview • Consensus BoardInterpretation • Dispute Resolution

Questions

Consult www.iftach.org

International Fuel Tax Agreement