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Presented by
IFTA Managers’ Workshop and Law Enforcement Seminar
September 21-24, 2005
Ron Hester
Tax Administration Manager
ON Ministry of Finance
Lt. John Moses
Alabama
Department of Revenue
What You’ll Learn
The Basics – the core principles and the benefits
How IFTA Works – from A to Z The Amendment Process – how IFTA
changes Compliance – jurisdiction and carrier –
administrative and roadside enforcement Some Issues – What’s on the horizon IFTA, Inc. – Who we are and the services
we provide
WHAT IS IFTA?
The International Fuel Tax Agreement A tax collection agreement by and among
the 48 contiguous States and the 10 Canadian Provinces bordering the US
Uniform administration of motor fuels use taxation laws with respect to qualified motor vehicles operated in more than one member jurisdiction
IFTA’S CORE PRINCIPLES
Base JurisdictionRetention of Sovereign Authority to determine tax rates, exemptions and exercise other substantive tax authorityUniform Definition of Qualified Motor Vehicle
BASE JURISDICTION
Where qualified motor vehicles are registered (IRP)Where operational control and operational records are maintained or can be made availableWhere some travel is accrued
TAX COLLECTED THROUGH IFTA
Motor fuel use taxes that are imposed by each jurisdiction on the consumption of motor fuel in qualified motor vehicles.
QUALIFIED MOTOR VEHICLE
Motor vehicle used, designed or maintained for the transportation of persons or property andGross vehicle or registered gross vehicle weight over 26,000 lbs. or 11,797 kgs.Three-axles regardless of weight
Used in combination when the weight of the combination exceeds 26,000 lbs. or 11,797 kgs.
WHO MAY LICENSE?
Any person based in a member jurisdiction operating a qualified motor vehicle in two or more member jurisdictions
THE BENEFITS TO THE LICENSEE
One license and one set of decals for each qualified motor vehicle to operate through all member jurisdictionsOne tax return filed each quarter with the base jurisdictionOne tax payment or refundOne audit by the base jurisdictionReduced administrative costs
BENEFITS TO THE JURISDICTION
Fewer taxpayersLower administrative costsIncreased audit coverageIncreased enforcement
GETTING STARTED
Carrier submits licenseapplication
to base jurisdiction1Base jurisdiction
reviews and processeslicense application
of qualifiedcandidate
2
Base jurisdiction issuesone IFTA license to
carrier and 2 decals foreach QMV operated
3Licensee operates
and prepares quarterlyIFTA tax return with
base jurisdiction4
Base Jurisdiction (BJ) is a US jurisdictionBase Jurisdiction (BJ) is a US jurisdiction
THE IFTA TAX RETURN
Total Miles Total Fuel MPG
10000 2000 5.00
Jurisdiction Total Miles Tax. Miles Tax. Fuel Tax-Pd Fuel Net Tax. Fuel Tax Rate Tax Int. TotalBJ 2500 2500 500 1000 -500 0.15 (75.00)$ 0 (75.00)$ AA 2500 2500 500 500 0 0.09 -$ 0 0.00BB 2500 2500 500 300 200 0.25 50.00$ 0 50.00CC 2500 2500 500 200 300 0.23 69.00$ 0 69.00
Total 44.00$
WHAT HAPPENS NEXT
Licensee files tax returnwith base jurisdiction
and remits $44.005Base jurisdiction
reviews and processestax return and
remittance6
Base jurisdiction processes all other tax
returns received7
At the end of each monthbase jurisdiction sendstransmittal reports to all
other memberjurisdictions.
8
TRANSMITTAL REPORT
License # Total Miles Tax. Miles MPG Tax. Fuel Tax-Pd Fuel Net Tax. Fuel Tax Int. TotalBJ123456789 2500 2500 5.00 500 1000 -500 (125.00)$ 0 (125.00)$ BJ234567891 2500 2500 5.00 500 500 0 -$ 0 -$ BJ345678911 2500 2500 5.00 500 300 200 50.00$ 0 50.00$ BJ456789111 2500 2500 5.00 500 200 300 75.00$ 0 75.00$ BJ567891111 2500 2500 5.00 500 2000 -1500 (375.00)$ 0 (375.00)$
Totals 12500 12500 25 2500 4000 -1500 (375.00)$ 0 (375.00)$
Transmittal from Base Jurisdiction to Jurisdiction AA
05/2200
WHAT HAPPENS NEXT
Base jurisdiction sendsthe transmittal report
to Jurisdiction AA andall other member
jurisdictions
9Base jurisdiction
processes all transmittalreports and payments
received fromother jurisdictions
(including $375 fromJurisdiction AA)
10
Base jurisdiction sendsrefunds to licensees and
issues assessmentsfor any taxes due
11
AUDITS
The base jurisdiction will conduct audits for itself and all member jurisdictionsJurisdictions must complete audits on an average of 3% of its licensees each yearOf the 3%, 25% of the audits must involve high-distance accountsOf the 3%, 15% of the audits must involve low-distance accountsAudit monies are transmitted with the monthly transmittal reports; audit reports are sent upon completion
The IFTA Articles of Agreement, R1600 provides that the following may propose amendments to the IFTA Articles of Agreement Procedures Manual or Audit Manual:
Committees: Agreement Procedures/Audit/ Law Enforcement/Program Compliance Review
The IFTA, Inc. Board of Trustees
Any Member Jurisdiction
WHO CAN SUBMIT A PROPOSAL?WHO CAN SUBMIT A PROPOSAL?
How Ballots Work
Sponsors submit ProposalsProposals distributed for comment periodProposals discussed at Annual Business MeetingSponsors review proposals and may submit revisions
Proposals distributed for second comment periodSponsors review and may submit revisionsBallots distributed for voteAll comments and votes are submitted through IFTA, Inc. website
Ballot Time Frames (1/05)
Full Track*45 days – comment period45 days – sponsor review after ABM45 days – comment period*60 days - vote
Short Track30 days – comment period30 days – sponsor review after ABM30 days – comment period30 days - vote
*Change: from 90 days*Change: from 90 days
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
2005 BALLOT PROCESS STATUS
Short Track:Second 30-day comment period
ending October 10, 2005
Full TrackSecond 45-day comment period
ending October 28, 2005
2006 BALLOT PROCESS
Deadline for Submitting Ballot Proposals:
Consensus Board InterpretationsDispute ResolutionProgram Compliance ReviewsEnforcementIFTA, Inc. Clearinghouse
CONSENSUS BOARD INTERPRETATIONS
A process through which provisions of the IFTA governing documents may be interpreted and commentary added to the affected provisions
A jurisdiction, committee or Board member requests an interpretation
The Board may issue a proposed interpretationA proposed interpretation must be ratified by ¾ affirmative vote of the membership at an Annual Business MeetingIf ratified, commentary is added to the affected IFTA governing document
Changes to the Review Guide General Information PCR Committee PCR Scheduling Terms Review Topics & Worksheets Scheduling PC Reviews Review Report Process Follow Up Reassessment Appeal Process
PROGRAM COMPLIANCEPROGRAM COMPLIANCE
Top List of PCR Citings for 2004Top List of PCR Citings for 2004
P1040 Late Transmittal of Funds (Returns) 9 P1040 Late Payment of Billing Transmittals 7 P1040 Late Mailing of Transmittals 7 P1040 Late Payment of Transmittals 5 R1230.300.010 Incorrect Audit Interest 4 A660.100.030 Net Distance Adjustments Not On Licensee Audit Report 4 A660.100.035 Net Tax Paid Fuel Purchases Adjustments
Not On Licensee Audit Report 4
ENFORCEMENT OF IFTA
Jurisdictions exchange quarterly a listing of new and cancelled accountsJurisdictions exchange, at least every 10 days, the following:
Listing of suspended licensesListing of revoked licensesListing of reinstated licenses
USES OF INFORMATION
Administrative To ensure that a carrier in a revoked
license in one jurisdiction does not receive a license from another
Roadside To ensure that a carrier in a revoked,
suspended, or cancelled status is not continuing operations
ROADSIDE ENFORCEMENT
Credentials A jurisdiction issues one license to the
carrier The carrier must copy the license and place
a copy in each qualified motor vehicle A Jurisdiction issues two decals to the
carrier for each qualified motor vehicle The carrier must display a decal on each
side (driver and passenger) of each qualified motor vehicle
OTHER CREDENTIALS
An IFTA temporary decal permit This permit may be carried ONLY in place of
the decals It is valid for only 30 days It is vehicle specific (VIN must be included) It’s main purpose is to allow a carrier to add a
qualified motor vehicle immediately – places a copy of the license in the vehicle and the jurisdiction faxes the temporary permit until permanent decals reach the carrier
Trip Permit A jurisdiction may issue a trip permit to a
carrier This trip permit is in lieu of an IFTA license
Most jurisdiction trip permits are limited by time (i.e. days, hours, etc.)
This is NOT an IFTA trip permit – it allows the carrier to travel through the jurisdiction that issued it and no other
A trip permit has to be obtained for each jurisdiction separately
WHY ENFORCE?
If a carrier is operating on a suspended or revoked license, this indicates that the carrier is not complying with the terms of IFTA Including failure to file tax returns, failure to pay a tax
return, failure to pay an audit assessmentIf a carrier is operating on a cancelled license, the carrier has indicated to the jurisdiction that he or she is no longer operating― Stopping the carrier from operating in your jurisdiction
stops the carrier from operating in all jurisdictions – payment by this carrier pays your taxes too
Mark Bell (KY)(a/k/a The IFTA Gipper)
NAFTAInterestMultiple Count Audits
INTERNATIONALFUEL TAX
ASSOCIATION, INC.Manages
The International Fuel Tax Agreement
What is IFTA, Inc.?
A not-for-profit association incorporated under laws of the State of ArizonaMembership in IFTA constitutes membership in IFTA, Inc.Association is funded by membership duesIncorporated to conduct business activitiesMembership elects a 9-member Board of Trustees
THE PEOPLELONETTE 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
Services Provided
Administering the ballot process and the IFTA governing documentsGathering and distribution of the quarterly tax ratesProviding technical assistance to the member jurisdictions and licenseesGathering and distribution of the jurisdiction annual reportsLeading and participating in the required program compliance reviews
Other Services
Planning and preparation of an annual audit workshop (along with IRP), an attorneys’ meeting, an annual business meeting, a managers’ workshop and law enforcement training seminarParticipating in other related association and government meetingsMonitoring activities such as NAFTA
IFTA/IRP AUDIT WORKSHOPJANUARY 6-9, 2006
Tempe Mission Palms HotelTempe, Arizona
IFTA Attorneys' Section MeetingAPRIL 21-22, 2006
Sheraton San MarcosChandler, Arizona
Questions