IFTA, Inc. International Fuel Tax Association

1st Period Comments on FTPBP #10 - 2025

Jurisdiction	Position	Comments
ALBERTA	Opposed	Alberta supports the intent of this ballot to provide more choice and reduce potential bias in audit selection but has concerns with basing this on sets of decals issued. Alberta would support looking at alternatives to measuring audits to allow more choice and reduce bias as part of the overall analysis of what is the appropriate number of audits required to ensure sufficient compliance.
Attorney Advisory Committee		Edits are not in red, like other ballot proposals. The ballot proposes to permit the number of required audits to be based on a lower percentage of decals issued, as an alternative to being based on a higher percentage of the number of IFTA accounts. The proposed amendment to A250 of the Audit Manual states, “…either 3 percent per year of the number of IFTA accounts or 1 percent of the units represented by the number of decals issued required to be reported by that jurisdiction on the annual reports filed pursuant to the IFTA Procedures Manual, Section P1110.300.005 excluding new licensees…” It is suggested that this proposal and the proposed amendments in respect of P1110 of the Audit Manual are problematic for several reasons. Examples as follows: The reference to “units” in the proposed amendment to A250 is ambiguous. For example, the Agreement (including Board Interpretation) refers to “fuel storage unit”, “power unit”, “supply storage unit”, and “trailing unit”. If the reference to “units represented by the number of decals issued” in the proposed amendment is intended to refer to a qualified motor vehicle, then such clarity should be provided. The wording of A250 implies that the number of IFTA accounts required to be reported is pursuant to P1110.300.005, which is consistent with the reference in P1110.300.005 to “Number of total IFTA accounts…” The total number of sets of decals issued is specified in P1110.300.015, not in .005. Accordingly, it is questioned whether the proposed amendment to A250 should also include a reference to P1110.300.015? It is questioned whether the reference to “represented by the number of decals issued” in the proposed amendment to A250 should instead be “represented by the number of sets of decals issued”? If each qualified motor vehicle is issued a set of two decals, then it seems that calculating the number of required audits based on the total number of decals issued would artificially double the product? The relevance of the proposed amendment to P1110.300.015, to include “number of sets of decals issued to new licensees”, is unclear. Section A250 specifically excludes new licensees. If the audit requirement is based on a percentage of decals (or sets of decals) issued to existing licensees, then it seems more relevant that a jurisdiction would have to report decals issued to licensees other than new licensees. However, the reporting of such information has not been required to date. Currently, A250 is based on a percentage of the number of IFTA accounts required to be reported. However, the proposed alternative is based on a percentage of [qualified motor vehicles] represented by the number of [sets] of decals. It is suggested that perhaps the alternative should be based on “the number of [qualified motor vehicles] as represented by the number of [sets of] decals issued”. The proposed amendment to P1110.400.005, to include “and the total number of decals/units in all audits”, is confusing. It is suggested that the information reported pursuant to P1110.400.005 should more clearly relate to the number of required audits, as referred to in A250. It is also noted that, if a jurisdiction opts to calculate the number of required audits on the basis of the number of decals issued, then reporting the number of audits issued may not be relevant. Accordingly, consideration might be given to ensuring that P1110.400 is amended in a way that acknowledges that some information may be necessary under one option, but not under the other. For example, P1110.400.005 could be updated to state, “Number of accounts audited or the number of [qualified motor vehicles] audited on the basis of sets of decals issued, as the case may be.” The number of sets of decals is already required to be reported pursuant to P1110.300.015. More generally, the ballot indicates that the current requirements discourage jurisdictions from choosing accounts with a larger number of vehicles. However, no additional information or analysis has been provided to support that conclusion, nor to support the implication that choosing accounts with a larger number of vehicles would be preferred. That is, the ballot implies that the alternative calculation could help jurisdictions choose accounts that better reflect the overall population of accounts, and states that the intention is to reduce [bias] in the audit selection process. However, such suggestions are not further explained or supported. Indeed, it could be argued that basing audit requirements on a percentage of decals issued will encourage jurisdictions to audit larger but fewer carriers, rather than auditing a broader cross-section of carriers. One could argue that smaller carriers with less sophisticated systems in place pose a greater risk (make more errors) than larger carriers with stronger internal control mechanisms in place. Overall, the ballot does not include an analysis to support how the alternative calculation would result in no greater risk of loss of tax revenue to the impacted jurisdictions in comparison to the current calculation. The ballot does not indicate whether the proposed alternative calculation has any impact on A260 of the Audit Manual, or how (if at all) the alternative calculation would impact the calculation and inclusion of low-distance and high-distance accounts in selecting audits.
BRITISH COLUMBIA	Oppose
ILLINOIS	Oppose	IL supports ballot 4 to change it to a flat 1% of IFTA accounts. While this approach might help with efficient allocation of IDOR audit resources, the 1% of IFTA accounts cap is more straightforward and likely more efficient for IL. In addition, the reporting requirements equate decals issued to units. This is not necessarily the same thing, since decals are not dedicated to a specific unit and thus decals issued might exceed the number of units. Terminology is also imprecise. Instead of “unit” it should say “commercial motor vehicle”. Instead of “decal” it should say “set of decals.”
INDIANA	Oppose	Indiana is not in favor of this ballot. We believe it will have unintended consequences. For example, Indiana provides over 500,000 sets of decals each year. One percent of this is 5000 sets. This ballot would allow us to choose to audit 5000 units represented by the number of decals issues. One of our largest carriers operates 15,000-20,000 power units. By this ballot, we could audit that single carrier, and it would provide us with 80% of our audit requirement over the five-year PCR cycle. Does that provide us with an overall determination of our carrier base? Almost assuredly, it would not. If this carrier has a very compliant system, we would not be required to research and audit other, less compliant carriers, allowing us to educate those other carriers and bring them into compliance. We understand that there is not much incentive to audit larger carriers, as they have great cost in terms of a jurisdiction’s resources. But this ballot does not provide the intended incentive. Perhaps another alternative might be to provide credit for multiple high distance accounts if we were audit carriers within the top 5% of the carriers in terms of distance, for example. Perhaps a jurisdiction would receive credit for 10 high distance audits if they were to audit a carrier in the top 5%. Using decals as the basis is also misleading. Jurisdictions do provide more decals to carriers over the course of any given year, as the carrier replaces, or sells trucks. Or if the carrier’s owner/operator leaves them for another carrier. There are other ideas or opportunities for providing incentives to auditing some larger carriers. But this is not one of them.
Industry Advisory Committee		The IAC opposes Ballot #10-2025 due to concerns that its implementation could unintentionally influence jurisdictions to disproportionately target large motor carriers in an effort to meet annual audit requirements with fewer audits. Such an approach could undermine fairness and consistency in the audit process. We support the comments submitted by South Dakota recommending that a study be conducted to determine the appropriate audit methodology needed to ensure compliance across the diverse carrier population.
IOWA	Oppose	Iowa is not in favor of this ballot as written.
KANSAS	Undecided
KENTUCKY	Oppose	KY Audit Group does not support.
MANITOBA	Oppose
MARYLAND	Oppose	Maryland would have no issue with being able to have the option of choosing between the percentage requirement and the decal option. This could potentially allow us to audit the larger carriers in the high mileage stratum without negatively affecting our required audit completions. Under the current structure there is no real reward/benefit in auditing the larger taxpayers in the high mileage stratum with multiple decals from a required completion standpoint. However, Maryland will vote against this as the audit percentage requirement is 3%, which is in opposition of our ballot (#4) proposal of 1%. Maryland does not currently limit the number of decals issued, so we would have to implement something to limit the number of decals issued to a carrier, or otherwise the benefit could be relatively small. Currently there is no cost for decals and many carriers register for extra decals which may remain inactive. If the audit percentage was 1% and in-line with our ballot proposal (#4) we would consider supporting this.
MICHIGAN	Oppose
NEVADA	Oppose	NV currently issues additional decals which can cause the number audits required to be skewed.
NEW BRUNSWICK	Oppose
NEW JERSEY	Oppose
NEWFOUNDLAND	Oppose
NORTH CAROLINA	Oppose	North Carolina opposes this ballot on the basis that auditing using the number of decals as a threshold could significantly reduce the number of audits completed. This reduces compliance that comes from those audits. It is important to note that audits are not only conducted by a jurisdiction for itself but conducted on behalf of other jurisdictions. The importance of this interdependence should not be overlooked. North Carolina notes that after reviewing of IFTA data, the calculation proposed by the sponsor would be equivalent to the sponsor completing 1% of the number of IFTA accounts. However, if this ballot passed, North Carolina could comply with amended A250 by completing two audits: one to meet the low-distance and one to meet high-distance. North Carolina has issued many licensees for which it has issued over 1,000 decals. This would be the equivalent of North Carolina auditing 0.02% of its IFTA accounts.
OKLAHOMA	Oppose	Oklahoma has concerns this ballot could cause jurisdictional audit reliability issues by incentivizing audit focus only on large fleets.
ONTARIO	Undecided	Ontario recommends using a word other than “unit” since “unit” already refers to several different things throughout the Guiding Documents. Ballot Ontario is interested in the idea but would want more clarity on how this would impact the high/low distance requirements. A couple of specific questions for clarification: 1) Unused Decals: If a registrant has been issued multiple IFTA decals but only a portion are actively in use, should the unused decals still be included in the audit count? 2) Sampling Methodology for Large Carriers: In the case of a large carrier with, for example, 100 decals issued, if a sample of 20 decals is audited, would credit for audit completion be extended to all 100 decals based on the sample results, or only to the 20 that were sampled in audit? How would this need to be amended in the case that Ballot 4-2025 also passes? Effective date Ontario recommends an effective date of January 2027 to provide sufficient time to make necessary system changes.
PENNSYLVANIA	Oppose
QUEBEC	Oppose
SASKATCHEWAN	Support
SOUTH DAKOTA	Oppose	This ballot would tie audits to decals that are unregulated to a certain vehicle. While some jurisdictions take steps to limit decals to more closely align to the number of vehicles in a fleet some jurisdictions do not. This could create an imbalance for auditing numbers that is an unattended consequence of the ballot. Also, like Ballot 4 all percentage of audits have been as far as we know to an arbitrary number. Again South Dakota would urge the membership to ask the Board of Trustees to commission a study to try and use data to determine the correct percentage of audits that will have a fair reflection on compliance from carriers without being overly burdensome on the jurisdictions.
VIRGINIA	Undecided
Support: 1 Oppose: 17 Undecided: 3

IFTA Ballot Comments

1st Period Comments on FTPBP #10 - 2025

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