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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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.

Business was not able to meet the burden of proving the proposed assessment was wrong; therefore, the assessment remains as issued.

I. International Fuel Tax Agreement Tax - Assessment.

Authority: IC 6-6-4.1-4; IC 6-6-4.1-14; IC 6-6-4.1-20; IC 6-6-4.1-24; IC 6-8.1-3-14; IC 6-8.1-5-1; IC 6-8.1-5-4; IFTA Article XII, § R1210; IFTA Procedures Manual, § P540; IFTA Procedures Manual, § 570; Indiana Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); International Fuel Tax Agreement, https://www.iftach.org/manual2020.php.

Taxpayer argues that the assessment of additional IFTA taxes is unwarranted.

Taxpayer is an Indiana company that provides trucking services. As the result of an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer failed to provide all quarterly inventory records required under the International Fuel Tax Agreement ("IFTA") because of a reporting error. The Department issued a proposed assessment for IFTA taxes plus penalties and interest. Taxpayer protested the proposed assessment sent by the Department. Taxpayer requested the Department to make its determination based on the records submitted with the protest and without an administrative hearing. This Letter of Findings results. Additional facts will be provided as necessary.

I. International Fuel Tax Agreement Tax - Assessment.

Taxpayer protests the imposition of additional IFTA taxes for the tax year 2019. The Department based its determination that additional IFTA taxes were due on the fact that Taxpayer had submitted incomplete and inadequate records. As a result, the Department adjusted the reported figures for each quarter of the audit period per the IFTA guidelines.

As a threshold issue, it is Taxpayer's responsibility to establish that the existing proposed assessment is incorrect. As stated in IC 6-8.1-5-1(c):

The Department notes that, "when [courts] examine a statute that an agency is 'charged with enforcing. . .[courts] defer to the agency's reasonable interpretation of [the] statute even over an equally reasonable interpretation by another party.'" Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, all interpretations of Indiana tax law contained within this decision shall be entitled to deference.

IFTA is an agreement between various United States jurisdictions and Canadian provinces, allowing for the equitable apportionment of previously collected motor carrier fuel taxes. International Fuel Tax Agreement, https://www.iftach.org/manual2020.php (last visited August 30, 2023). 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, on Indiana highways, in other member jurisdictions, and consumed motor fuel. Thus, Taxpayer was subject to motor carrier fuel IFTA taxes. 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). A taxpayer bears the burden of proving the assessment is incorrect. Id. A taxpayer has a duty to maintain book and records and respond to the Department's request to review such records. IC 6-6-4.1-20; IC 6-8.1-5-4(a).

IFTA Article XII, § R1210.300 (2017) provides that the assessment made by the base jurisdiction is presumed to be correct and the burden lies on the licensee to establish by a fair preponderance of evidence that the assessment is erroneous or excessive.

The IFTA Procedures Manual, § P530 (2017) requires licensees to maintain distance records "adequate to enable the base jurisdiction to verify the distances traveled and fuel purchased by the licensee for the period under audit and to evaluate the accuracy of the licensee's distance and fuel accounting systems for its fleet." The licensee must keep records to "substantially document the operations of the licensee's fleet." Id. Specifically, distance records produced by means other than a vehicle-tracking system must show the following:

IFTA Procedures Manual, § P540.100 (2017).

Further, distance records using a vehicle-tracking system ("GPS") should include:

IFTA Procedures Manual, § P540.200 (2017).

Taxpayer provided neither complete nor adequate records during the initial audit for each quarterly report required. After receiving the audit results and submitting the protest, Taxpayer provided additional documents. However, the records were still incomplete because Taxpayer did not provide complete documentation for each quarter. Here, quarters one (1) and four (4) lacked the full records needed by the Department as Taxpayer did not provide the records for the beginning of the first quarter and the end of the fourth quarter. The records were not adequate to verify miles traveled or fuel used by the Taxpayer for all quarters.

When a jurisdiction finds that there are inadequate records, then the base jurisdiction shall impose an additional assessment by either "adjusting the licensee's reported fleet MGP to 4.00 or 1.70 KPL; or reducing the licensee's reported MPG or KPL by twenty percent." IFTA Procedures Manual, § 570.100 (2017). As provided above, it is the taxpayer's responsibility to maintain specific, detailed, and accurate records concerning its fuel purchase and jurisdiction miles. Because Taxpayer lacks the required records, the Department's original audit is reasonable and supported by the law and the IFTA Procedures Manual. Taxpayer has not shown the Department's assessment is erroneous.

Taxpayer's protest respectfully denied.

August 31, 2023