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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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 able to provide additional documents to reduce the initial proposed assessment. The Department will issue a supplemental audit bill.

ISSUE

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 submitted additional documents to show it does not owe the full audit assessment amount.

Taxpayer is an Indiana company that provides trucking services. As the result of an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer had underreported the amount owed under the International Fuel Tax Agreement ("IFTA") because of inadequate records. The Department issued a proposed assessment for IFTA taxes plus penalties and interest. Taxpayer submitted a protest requesting a final determination without a 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 2020. The Department based its determination that additional IFTA taxes were due on the fact that Taxpayer had inadequate records. As a result, the Department adjusted the reported figures for each quarter of the audit period per the IFTA guidelines. Reducing the miles per gallon ("MPG") and listing the new audited MPG.

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):

See also Indiana Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007).

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 September 25, 2022). 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, 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, § P540 (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 did not provide adequate records during the initial audit. After receiving the audit results and submitting the protest, Taxpayer provided additional documents in order to reduce its audit bill. The Department will review the documentation supplied in the protest process and will confirm that the documentation is new and relevant. After that, the Department will recalculate the amount of IFTA taxes due to the extent established by that documentation.

As provided above, it is Taxpayer's responsibility to maintain specific, detailed, and accurate records concerning its fuel purchase and jurisdiction miles. To the extent Taxpayer's records are adequate to verify some additional fuel used, Taxpayer has partially met its burden imposed by the IFTA agreement and Indiana Code.

Taxpayer's protest is sustained to the extent explained above but denied in part as Taxpayer is not entitled to waiver of the full amount.

October 16, 2023