United States: International Fuel Tax Agreement Proposed Amendments Would Change Audit Procedures And Program Compliance Peer Review

There are currently four proposals to amend the International Fuel Tax Agreement (IFTA), which are intended to promote an increase in compliance, promote uniformity in standards among member jurisdictions, and address changes in industry operations.1 In addition, the amendments have been proposed to better align IFTA standards with the processes and procedures of the International Registration Plan (IRP). Taxpayers in the transportation industry who are subject to IFTA and IRP standards should find these four proposed amendments important as the proposed amendments provide a significant update to processes and procedures that affect the industry's daily operations and regulatory compliance reporting.


The IFTA is an agreed upon set of uniform tax laws, commonly considered to be part of motor fuels use taxation, which are imposed on transportation companies for interstate travel through two or more jurisdictions. IFTA is only imposed on qualifying vehicles, which are used to transport persons or property, have two axles and a registered gross vehicle weight exceeding 26,000 pounds, have three or more axles regardless of weight, or have a combination of axles and the combined registered gross vehicle weight exceeds 26,000 pounds. Member jurisdictions of IFTA include the continental United States and certain Canadian provinces. Alaska, Hawaii and the District of Columbia do not participate in IFTA.2 For taxpayers, IFTA allows for consistent reporting and procedures regarding licensing and registration, forms and filing requirements, tax rates and qualified motor vehicle requirements.

The IRP is a reciprocity agreement between the continental United States and certain Canadian provinces to facilitate commercial vehicle registration and promote the payment of license fees on the basis of fleet distance operated in various jurisdictions.3 Similar to IFTA, IRP allows motor carriers to operate on an inter-jurisdictional basis once they are properly registered with their base state and the fees are collected from the base state on behalf of other member jurisdictions in which the taxpayer operates.4

IFTA Full Track Preliminary Ballot Proposals

The proposed amendments are sponsored jointly by the IFTA Audit Committee and IFTA Program Compliance Review Committee and three of the four proposed amendments would be effective January 1, 2016, while the fourth proposed amendment would be effective immediately if passed.

Compliance Review Cycle

Full Track Preliminary Ballot Proposal (FTPBP) No. 1-2014 addresses detailed language issues with the IFTA guidance. This proposal would reduce the IFTA program compliance review cycle from five years to four years to promote increased efficiency in peer review, especially as IFTA utilizes four regions for each annual review cycle. Although combined IRP peer review cycles were encouraged in the past, the combined peer review cycles did not occur as anticipated. Accordingly, the proposed amendment seeks a quicker IFTA compliance review cycle to identify any issues for resolution in a more efficient manner. FTPBP No. 1-2014 would be effective January 1, 2016 if passed by vote.

Findings of Noncompliance

FTPBP No. 2-2014 addresses the increasing number of complaints from member jurisdictions or taxpayers for findings of noncompliance by member jurisdictions. This proposed amendment seeks to address noncompliance with IFTA guidance for member jurisdictions that are found not to communicate timely and accurate information to taxpayers, and member jurisdictions that are found not to audit IFTA on behalf of all member jurisdictions. If these forms of noncompliance are found, the proposed amendment would require the member jurisdiction to appear before the IFTA Program Compliance Review Committee (PCRC) to determine whether the case should be considered a deemed dispute or potential disciplinary measures recommended. In comparison to prior guidance, the proposed amendment broadens the process for bringing forth a potential dispute to the PCRC and places greater accountability on the member jurisdictions for meeting and complying with IFTA standards in the best interest of both taxpayers and other member jurisdictions. FTPBP No. 2-2014 would be effective immediately upon passage by vote.

Articles of Agreement, Audit Manual and Procedures Manual

FTPBP No. 3-2014 proposes changes to several major sections of the IFTA provisions, including the Articles of Agreement, Audit Manual and Procedures Manual. These changes are probably the most material and substantive to industry members and specifically address various member jurisdiction audit standards and taxpayer recordkeeping requirements. This proposed amendment would provide significant updates to authoritative audit guidance and allow for more flexibility in recordkeeping to account for advances in technology in recording mileage and fuel. In addition, the proposed amendment also seeks to align the IFTA recordkeeping requirements with the IRP recordkeeping requirements, which already have been updated for known technological advances in taxpayer records of mileage and fuel. The amendment is in response to taxpayers in the transportation industry placing an increased reliance on electronic devices and Global Positioning Systems (GPS) for recording mileage and fuel, which may differ in certain instances from mileage and fuel calculated by revenue departments using less advanced methods.

This proposal also would allow more flexibility for taxpayers in recordkeeping by allowing mileage and fuel records to be in any format considered acceptable for audit. Accordingly, the IFTA member jurisdictions could not impose a general penalty for deemed bad records. Instead, an audit would be conducted to the extent possible with the records sufficient for audit provided by the taxpayer. To maintain and provide sufficient audit records, a taxpayer would need to maintain a quantity and quality of records sufficient for audit purposes.

FTPBP No. 3-2014 also would clarify the language describing a licensee's responsibilities along with the member jurisdiction requirements for which licensees would be held accountable during IFTA Program Compliance Reviews. The Articles of Agreement would contain a single document to reference a licensee's responsibilities and the Audit Manual would only include mandatory member jurisdiction requirements while nonmandatory items would be included under Best Practices. Generally, these changes would provide taxpayers with greater insight on audit processes and expectations, while providing greater uniformity of audit standards among IFTA member jurisdictions. FTPBP No. 3- 2014 would be effective January 1, 2016 if passed by vote.

Satisfaction of Member Jurisdiction's Quota Requirements

FTPBP No. 4-2014 would provide a language change to clarify when an audit qualifies to satisfy a member jurisdiction's quota requirements. Under previous guidance, an audit was required to cover all calendar quarters that a license was in effect within a calendar year to count towards a jurisdiction's audit requirements. However, the proposed amendment seeks to provide that an audit requirement may be satisfied by allowing audits of less than four periods in a calendar year if that amount of time was in effect for a taxpayer in a calendar year. FTPBP No. 4-2014 would be effective January 1, 2016 if passed by vote.


These proposed amendments would provide significant modifications for taxpayers in the transportation industry in an attempt to align processes, procedures, and guidance between IFTA and IRP to positively impact compliance in the transportation industry and to strengthen the relationship between the transportation industry and governing bodies of compliance. In addition, taxpayers would be allowed easier access to IFTA guidance and authoritative guidance would be better organized for taxpayer reference. The proposed amendments are available for public comment until June 12, 2014. After that date, the amendments will be discussed at the IFTA annual meeting in August and if further amendments are requested at the annual meeting, a second period for public comment will be available before a vote in the fall by IFTA membership.


1 The text of these proposals is available on the International Fuel Tax Association's Web site at www.iftach.org . This Web site also provides details of the IFTA as discussed below.

2 Id.

3 For details, see the International Registration Plan's Web site at www.irponline.org.

4 Id.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.