IFTA, Inc. International Fuel Tax Association

1st Period Comments on FTPBP #4 - 2025

Jurisdiction	Position	Comments
ALBERTA	Undecided	Alberta is supportive of reviewing and potentially reducing the required percentage of audits but has concerns this reduction may be too large to support compliance. There is a lack of adequate support/rationale provided to justify the proposed percentage change. More work should be done to determine what is the correct percentage. Alberta would support a study funded by IFTA Inc as suggested by South Dakota and encourages further discussion on how to lessen the audit burden without significantly impacting compliance.
Attorney Advisory Committee		The ballot proposes to reduce the required number of audits from 3 per cent to 1 per cent of the number of IFTA accounts required to be reported. Key rationales for the change include the IRS having an audit percentage of less than 1 per cent, and 41 per cent of jurisdictions failing to meet the 3 per cent threshold. However, the ballot does not provide an analysis of the estimated financial impact resulting from compliance being decreased by two-thirds. The Intent section states that the reduction allows jurisdictions to allocate their resources to other tax programs where audit hours yield higher returns. However, the audit percentage requirement is in place to, for example, protect the fuel tax base of all jurisdictions. A jurisdiction diverting resources to another tax program benefits only the particular jurisdiction, and is irrelevant to making a decision that will impact the fuel tax base of other jurisdictions. Furthermore, the impact and effectiveness of discretionary Records Reviews, for those jurisdictions that choose to perform them, has not been analyzed. It is suggested that, unless Records Reviews are made mandatory, their impact on the number of audits required to be performed by all jurisdictions is not particularly relevant and should not reasonably be used to justify a reduction in a mandatory audit requirement. The change(s) should be noted for reviewers of the ballot in red and not black underlined, since the other ballots have red bold for the changes. It is also noted that the audit statistics of the IRS are not relevant to the Canadian Region. While the Canada Revenue Agency does not publish audit statistics, the risk of being audited for income tax, sales and payroll taxes is generally understood to be between 3 and 5 per cent.
BRITISH COLUMBIA	Support	British Columbia supports the proposal to reduce the required percentage of IFTA audits from 3% to 1%. This will assist jurisdictions that have experienced ongoing challenges in recruiting and retaining qualified audit staff, which impacts their ability to meet the audit target. In British Columbia, audit recoveries under IFTA have historically been lower than recoveries from other tax programs. Reducing the IFTA audit requirement will allow audit resources to be allocated to higher-risk areas where compliance efforts yield a greater return. Ontario’s proposal to introduce two tiers based on registrant numbers is interesting, but it does not support jurisdictions below the threshold that are struggling to meet the target.
CALIFORNIA	Support	The intent of this ballot proposal is to reduce the minimum audit requirement to one percent (1%) per year. This change will benefit all jurisdictions by decreasing the minimum required number of audits and allow them to focus on more productive audits that may require more time within the IFTA program. This ballot does not prevent any jurisdiction from auditing more than 1% to meet their internal goals and program requirements. In addition, jurisdictions may elect to perform Records Reviews to educate licensees on IFTA reporting requirements, mitigating potential record keeping and compliance issues while providing audit credits to the jurisdiction for the effort.
CONNECTICUT	Support	Connecticut fully supports this ballot as presented by the sponsors.
ILLINOIS	Support	As the number of IFTA accounts in Illinois continues to grow, the IL Audit resources required to audit 3% of IFTA accounts has become disproportionately large compared to the number of taxpayers audited in other IL taxes. Reducing the minimum percentage of IFTA accounts audited to 1% will allow the Department to most effectively and efficiently use its finite audit resources while continuing to audit a significant number of IFTA accounts.
INDIANA	Support	Indiana supports this ballot and would like to thank California for addressing a very important issue. Audit is an essential function that verifies the accuracy of the fuel tax reporting, but must be completed in a manner that ensures compliance while also being effective and efficient from a cost/value standpoint.
Industry Advisory Committee		The IAC supports the intent of Ballot #04-2025 regarding audit percentage requirements. It is important to ensure that jurisdictions are not only able to meet their audit obligations, but also that audits serve as a useful tool for carriers. A thoughtful review will help ensure audits are conducted with consistency and quality, and that appropriate training can be provided to both auditors and industry representatives to support mutual understanding and compliance.
IOWA	Oppose	Iowa is in favor of a change to the 3% requirement, as it is not realistic for all jurisdictions. We do not believe this ballot is a one size fits all answer for the issue. We would suggest other ways to change the percentage of audits required per auditor, than an overall change in the percentage of audits required.
KANSAS	Support	For various reasons, Kansas has struggled to hire & keep a full staff of Auditors over the last several years. Meeting the 3% requirement can force jurisdictions to skip over large fleet carriers and audit the carriers that are at the low end of the High mileage and only those with a fleet of 10 or less. Thus, many carriers could never get audited. If a 1% requirement is passed, we could focus on choosing quality accounts over quantity.
KENTUCKY	Support	KY's audit group supports.
MANITOBA	Support
MARYLAND	Support	Maryland strongly supports this ballot. A decrease to a 1% requirement would have IFTA, Inc. in line with the Internal Revenue Service (IRS), which strives for adequate audit coverage and has an audit percentage of less than 1%. This change will benefit Maryland and all jurisdictions to help us free up the resources to make our IFTA audit programs more effective. A decreased audit percentage requirement allows jurisdictions to use their audit resources more wisely. Where jurisdictions see fit, they may allocate resources to other tax programs where audit hours yield much higher returns.
MASSACHUSETTS	Support	The Commonwealth of Massachusetts fully supports this ballot as presented by the sponsors.
MICHIGAN	Support
NEVADA	Undecided	As a joint shop, internally we can keep our procedures and policies in place to complete the 3% IFTA, along side of the requirement for 3% IRP, continuing our service to our customers. I am confident NV would not lose audit positions due to this decrease in IFTA minimum audits, for a variety of reasons. In addition, as jurisdictions cannot predict staffing shortages due to retirements, promotions and separations, the decreased minimum requirement, will provide jurisdictions to adapt during those difficult times and shortfalls without further implications. However, if Nevada is auditing at 3% IFTA and collecting for other jurisdictions that are only auditing at 1% IFTA, this would not be balanced. I would not be opposed to discussing 1.5% - 2% minmum thresholds. NV also feels that if reduce IFTA that someone should also do a ballot to reduce IRP Audit percentage, to keep IFTA and IRP on the same percetage.
NEW BRUNSWICK	Oppose	Doesn’t provide the compliance required.
NEW JERSEY	Support
NEW YORK	Support	New York supports this ballot. A more strategic approach toward audit selection, as opposed to a quota-based approach, results in a higher percentage of quality audits and promotes the taxpayer experience by reducing unnecessary enforcement engagement. Noncompliance indicators should primarily determine audit selection and the rate of audits. For example, in New York, we could leverage IRP audit enforcement (conducted by Department of Motor Vehicles) to identify viable IFTA audit candidates. We believe a 1% audit rate is more indicative of achieving this goal and identifying a higher percentage of noncompliant licensees.
NEWFOUNDLAND	Support
NORTH CAROLINA	Oppose	North Carolina opposes this ballot on the basis that reducing the percentage of required audits 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.
OKLAHOMA	Oppose	Oklahoma feels 1% is not a sufficient statistical sample of motor carriers to provide accurate reporting within any jurisdiction. Oklahoma supports and restates North Carolina’s position that audits are necessary for compact compliance assurance on behalf of partner jurisdictions, not just for the auditing jurisdiction itself. Oklahoma might support the substitution of records reviews for a mandatory audit minimum, however that is not an alternative listed in this ballot.
ONTARIO	Support	Ontario supports the proposal but recognizes that some jurisdictions may have concerns about reducing the audit rate to 1%, due to potential impacts on audit coverage and organizational capacity. To address these concerns while easing the burden on jurisdictions with large registrant bases, we propose a balanced alternative: maintain the 3% audit rate for the first 4,000 registrants (approximately the median across IFTA jurisdictions) and apply a reduced 1% rate to registrants beyond that threshold. For example, a jurisdiction with 8,000 registrants would conduct 160 audits instead of 240: 3% of the first 4,000 = 120 audits 1% of the remaining 4,000 = 40 audits This approach preserves audit integrity while allowing jurisdictions to allocate resources more strategically and focus on higher-risk audits to improve compliance outcomes.
PENNSYLVANIA	Undecided	Pennsylvania feels that the 1% proposal is too extreme and would be much more comfortable discussing a decrease to 2% and/or removing a jurisdictions cancelled accounts, instead of this 1% proposal...
QUEBEC	Support	Quebec supports the ballot and its intent, while also ackowledging that the problems raised by the sponsor might be encountered by multiple jurisdictions. Also, a quick and steep change in the audit percentage might raise questions regarding the loss of expertise and the allocation of the resources. Quebec would also entertain alternative solutions, such as the ones proposed by Ontario and Pennsylvania.
RHODE ISLAND	Support	The Rhode Island Division of Taxation supports Ballot #4. Overall, the reduction in the quantity of audits will allow states to improve quality and achieve more consistent results for all states. Specifically, approving Ballot #4 will have the following benefits: 1) Reducing the required number of audits will allow states to focus on higher volume audits and improve the quality of the audit process. 2) This improved quality would include the ability to choose audits based on poor reporting quality with less of a focus on achieving an audit count. 3) A focus on quality audits also allows for taxpayer education and improved voluntary compliance moving forward to improve consistent taxpayer filings.
SASKATCHEWAN	Support
SOUTH DAKOTA	Undecided	While South Dakota sees the intent the reduction seems to be too much to keep a compliance level that we have come to expect with IFTA. With this reduction there will be fewer accounts audited and that could lead to more non-compliance issues. South Dakota also is interested in the Jurisdiction of Ontarios suggestion of a cap to a certain base number (not sure the mean # of accounts is the correct base) with additional lower percentage above the base number of audits. This seems to be a good compromise to still maintain the level of audits to help with compliance as well as give some relief to the larger number of licensee jurisdictions. We believe more time and effort should be put into this suggestion to help fully understand the impact of the suggestion. South Dakota would also encourage a study to be funded by the IFTA Board of Trustees through use of jurisdictions fees that are paid to determine what is a good percentage of audits to be completed. This number should be based on data of what audit percentage will allow a fair level of compliance by the carrier due to audit practices as well as not being overly burdensome to jurisdictions. One other factor is that we are a joint shop so without a change in IRP audit percentages we will still be audit 3% of our carrier base to meet the required number of audits. We would continue to do the IFTA at the same time as an IRP audit because not doing the audit of IFTA would be a disservice to our customers to not complete both IFTA and IRP audits when at the business doing an audit.
TEXAS	Support	Texas strongly supports this ballot. The reduction of the audit requirement to one percent (1 %) per year would be very beneficial for how we use our employee resources. We have had many challenges retaining staff and our auditor resources have diminished during the last years. As our trained IFTA auditors resign or retire, we must invest additional resources and time to train new auditors. As one of the largest states, it has been a challenge to meet our 3% IFTA requirement. We believe that reducing the requirement to one percent will also allow us to perform more detailed and thorough quality audits.
UTAH	Support	Utah fully supports this ballot as presented by the sponsors.
VIRGINIA	Undecided	Obviously the ballot would lighten the load on member jurisdictions' audit staffs. It would be helpful to have a sense of the likely impact on revenue of reducing audits by two-thirds, and of how alternative approaches to licensee compliance truly could help compensate for the reduced audit efforts. The sponsors’ comments suggest that reducing the audit requirement from 3% to 1% would liberate member jurisdictions to pursue additional audits that might yield a better ROI, and/or to undertake additional records reviews in order to encourage licensee compliance. However, such extra efforts would be voluntary for member jurisdictions.
Support: 20 Oppose: 4 Undecided: 5

IFTA Ballot Comments

1st Period Comments on FTPBP #4 - 2025

Address:

(480) 748 5648