NOTICE: IC § 6-8.1-3-3.5 and IC § 4-22-7-7 require the publication of this document in the Indiana Register. This document provides the general public with information about the Department's official position concerning a specific set of facts and issues. This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register. The "Holding" section of this document is provided for the convenience of the reader and is not part of the analysis contained in this Letter of Findings.

Indiana Motor Carrier was unable to establish that the Department's assessment of additional International Fuel Taxes, based on the best information available, was incorrect; Indiana Motor Carrier did not maintain accurate or complete records and the Department was unable to conduct a "true mileage audit."

I. International Fuel Tax Agreement - Assessment.

Authority: IC § 6-6-4.1-4(a); IC § 6-6-4.1-14(a); IC § 6-6-4.1-20; IC § 6-6-4.1-24(b); IC § 6-8.1-3-14; IC § 6-8.1-5-4(a); IFTA Articles of Agreement, § R530 (2013); IFTA Articles of Agreement, § R1210 (2013); Procedures Manual, § P510 (2013); IFTA Procedures Manual, § P530 (2013); IFTA Procedures Manual, § P540 (2013); IFTA Procedures Manual, § P550 (2013).

Taxpayer protests the assessment of additional tax.

Taxpayer is an Indiana motor carrier which - according to publicly available information - operates five trucks and provides inter-state and in-state transportation services. Taxpayer chose Indiana as its base jurisdiction for purposes of the International Fuel Tax Association ("IFTA") and the International Registration Plan ("IRP"). The Indiana Department of Revenue ("Department") conducted an IFTA and IRP audit, which resulted in the assessment of additional IFTA taxes and IRP fees.

Taxpayer disagreed with the assessment and submitted a protest to that effect. Two administrative hearings were conducted during which Taxpayer's representatives explained the basis for the protest. This Letter of Findings results.

I. International Fuel Tax Agreement - Assessment.

The Department conducted an audit and determined that Taxpayer owed additional IFTA fuel taxes for 2014. The Department concluded that Taxpayer did not provide the necessary records. Due to the lack of documentation, the Department assessed tax based upon the best information available. Taxpayer protests the Department's assessment of motor carrier fuel taxes pursuant to IFTA.

IFTA is an agreement between various United States jurisdictions and Canada allowing for the equitable apportionment of previously collected motor carrier fuel taxes. The agreement's stated goal is to simplify the taxing, licensing, and reporting requirements of interstate motor carriers such as Taxpayer. The agreement itself is not a statute but was implemented in Indiana pursuant to the authority specifically granted under IC § 6-6-4.1-14(a) and IC § 6-8.1-3-14.

Taxpayer operated trucks in Indiana. As such, it operated on Indiana highways and consumed motor fuel. Therefore, the Taxpayer was subject to motor carrier fuel taxes under the IFTA. IC § 6-6-4.1-4(a).

Tax assessments of motor carrier fuel tax under IFTA are presumed to be valid. IC § 6-6-4.1-24(b). The taxpayer bears the burden of proving that any assessment is incorrect. Id. The taxpayer has a duty to maintain books and records and present them to the Department for review upon the Department's request. IC § 6-6-4.1-20; IC § 6-8.1-5-4(a).

IFTA Articles of Agreement, § R1210.300 (2013) provides the standard for determining whether a proposed assessment may successfully be challenged by the licensee. "The assessment made by a base jurisdiction pursuant to this procedure shall be presumed to be correct and, in any case where the validity of the assessment is questioned, the burden shall be on the licensee to establish by a fair preponderance of evidence that the assessment is erroneous or excessive." Id.

Taxpayer, as an IFTA licensee, is subject to the rules of IFTA. According to the IFTA Procedures Manual, § P540 (2013) states that:

The IFTA Procedures Manual at § P550 (2013) provides that:

The Department's audit found that Taxpayer failed to maintain travel routes, jurisdictional trip miles, or vehicle mileage summaries, on its trip sheets. The audit also noted that its vehicles "summaries" "could not be reconciled with [its] reported information." In addition, Taxpayer's "retail fuel purchase receipts did not include the subject truck number" and its retail fuel purchases did not coincide with its trip miles.

As a result, a "mpg analysis could not be conducted; therefore the auditor determined total gallons by using an audited mpg of 4.39."

During the administrative hearing, Taxpayer suggested that it was able to verify its mileage records by referring to the zip codes areas through which its vehicles traveled. However, Taxpayer failed to establish that its "zip code" records were complete or that its vehicles traveled to or within the areas indicated by those records. Taxpayer's representative also argued that certain numbers included in the audit report were incorrect. However, Taxpayer failed to explain why the numbers were incorrect or - if the audit numbers were incorrect - what were the correct numbers.

Part of the requirements of being an IFTA licensee is maintaining records such as fuel receipts per § P550 and detailed distance records with supporting documentation per § P540 of the IFTA Procedures Manual (2013). According to the IFTA Procedures Manual, § P510 (2013) states that:

§ P530.100 (2013) goes on to provide that: "Failure to maintain records upon which the licensee's true liability may be determined or to make records available upon proper request may result in an assessment as stated in IFTA Articles of Agreement Section R1200."

IFTA Articles of Agreement, § R1210 (2013) states that:

It is Taxpayer's responsibility to maintain specific, detailed, and accurate information concerning its fuel purchases and jurisdiction miles. In the absence of complete source documentation, the Department's best information available audit assessment is reasonable and supported by law and the IFTA Audit Manual procedures. Taxpayer has not "establish[ed] by a fair preponderance of the evidence that the assessment is erroneous or excessive." IFTA Articles of Agreement, § R1210.300 (2013).

Taxpayer's protest is respectfully denied.