IFTA Ballot Proposals Comments

IFTA Ballot Comments

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1st Period Comments on FTPBP #2 - 2021

Jurisdiction Position Comments

ALABAMA
Support

BRITISH COLUMBIA
Support

CALIFORNIA
Support Generally, support the idea but there will need to be more details on how a jurisdiction would meet this goal and get an audit credit.  

IDAHO
Support

INDIANA
Support Indiana supports the ballot. The process of records reviews is in keeping with A100. A Records Review can help to ensure compliance with the IFTA through education, and is completed on behalf of all member jurisdictions.  However, some of the requirement language might need some clarification:
Line 33: ‘All accounts will be subject to a records review’. This appears as if all accounts must be review. Maybe a ‘may’ should replace the ‘will’.
Line 83-84: Replace ‘IFTA Peer Review’ with the updated ‘Program Compliance Review’. 
Lines 92-93: Does this contradict lines 95-97? That section indicates that the records review is not intended to find noncompliant licensees.

Industry Advisory Committee
The IFTA IAC supports any effort to assist in educating carriers on reporting correctly. Record reviews allows a jurisdiction to review the process and fix issues with more carriers than the current audit process. The ultimate goal is compliance and this is a good way to help with driving compliance.

KANSAS
Support Currently IRP allows the use of records reviews.  Since we do both types of audits we have not used that process since it only deals with IRP.   Having both organizations allowing records reviews will give us the opportunity to incorporate this into our audit program.   It may only marginally help us with meeting our numbers as there is a certain amount of time required to do the documentation, make contact, etc.  to get counted for an audit and it requires 3 to get credit for one. 

The effective date is January 1, 2021, are ballots usually retrospective?

Line 33 of the ballot, second sentence.    All accounts will be subject to a records review.    To us that implies everyone is going to have one.  I am thinking it should say can be subject to a records review. 

If the ballot passes then there should be education/promotion especially too the device providers and the carriers what the requirements are.

  

KENTUCKY
Undecided

MAINE
Oppose We do not perform record reviews for IRP and do not believe a record review for a tax return is appropriate and do not see this as auditing on behalf of all member jurisdictions. 

Update:
A few jurisdictions that appear in favor of record reviews for IFTA refer to “new licensees”.  This does not appear to be included in the current ballot language.  As currently proposed a record review can be performed on a licensee that has been in IFTA for years.  Is it the opinion of those judications that record reviews be performed only on new licensees?  If so, what should the limitation be for new? 18 months?
 

MANITOBA
Support Manitoba would be interested in receiving credits or partial credits for conducting IFTA Record Reviews on Licensees.
 
While conducting IFTA audits on new Licensees, auditors have found that many of them have inadequate records and internal controls.  We would welcome the opportunity to visit new Licensees (outside of an audit) to conduct a review of Licensees’ records and internal controls and provide recommendations for improvement and compliance.  Also, if these reviews take less time than an audit, we would be able to review more new licensees than we do currently.
 
In Manitoba, we currently conduct similar reviews of our new provincial sales tax registrants. They are contacted by our compliance unit, and are provided with general remittance information and recommendations on proper tax remittance procedures. These compliance reviews are typically well-received by registrants.
 

MARYLAND
Support

MICHIGAN
Oppose

MINNESOTA
Support

MISSOURI
Oppose Nothing explains what is required to get an audit credit for a record review, what is considered education?  How many records reviews equals an audit?  How will this be monitored?  Will the other jurisdictions be looking out for other States interests in a record review?   Seems like a way to get out of  doing actual audits.

NEBRASKA
Undecided While we support the records review process and the flexibility it affords jurisdictions in acheiving their audit count, we have one concern.

A510 .400 states that completing a records review does not preclude the jurs. from conducting an audit on that specified period.  While the very next sentence states the intent of a records review is to educate and should not be used to convert a records review to an audit due to poor records.    
We would be more inclined to support the ballot with the withdrawl of A510.400.     If a records review indicates poor records, the carrier should be given notice to correct their system.  A later audit could be scheduled covering a different period.
We also noted the effective date of 1-1-21 - is that a typo?   

NEVADA
Undecided There are a few areas of concern.  First, why list A240 in new section A510.100.005 is section A510.300 says otherwise?  Second, if serious deficiencies are found, tax adjustments should occur ensure all taxes are being properly paid to all member jurisdictions.  This carrier could require an audit to determine deficiencies and should occur sooner than later and not require a seperate engagement by jurisdiction.  Third, we are not sure if up to 25% of audit count be allowed on these records reviews.  That seems very high and could cause problems for jurisdictions who are using audit staff to complete these reviews to maintain the 3%.

If trying to seperate the records reviews from audits, the language should be written to allow reviews to be completed by non-audit staff only and only during first year.  A better seperatation is needed.

NEW BRUNSWICK
Oppose New Brunswick does not feel that a records review provides the same level of protection as an audit.

NEW HAMPSHIRE
Undecided New Hampshire would like clarfication. If you perform three record reviews would it count towards any audit? It appears that is the intention. New Hampshire could support this if it was not applied to the required low mileage percent (15%) and required high mileage ppercent (25%) audits. .

NEWFOUNDLAND
Support

NORTH CAROLINA
Oppose North Carolina has significant concerns with substituting audits for a review of a taxpayer's system of record and internal controls. Although a jurisdiction may substitute three "Records Reviews" for one audit, North Carolina does not consider a "Records Review," as provided in the ballot, a reasonable substitute for an audit. This evaluation was based, in part, on the following characteristics of a "Records Review":

(1) The Review prohibits the review of IFTA records maintained by the licensee.

(2) Regardless of how inadequate a jurisdiction may find a licensee's system of record and internal controls, a Review may not be converted into an audit or result in a tax assessment. It further provides that the review "is not intended to find noncompliant Licensees for audit."

(3) Upon finding inadequate system of record and controls, a jurisdiction is only "strongly recommended that the base jurisdiction conduct a follow up contact with the Licensee . . . ."

ONTARIO
Support ON strongly supports the concept of the proposal. It is taking a proactive stance by focusing on early education in a more modern approach to encourage early compliance rather than relying solely on post-activity audits. This is a balanced methodology ensuring that a substantial number of traditional audits are still a significant requirement but also considers the potentially limited or constrained resources affecting jurisdictions. We also question the retrospective effective date as noted by Kansas – if this was intentional, a prospective date is more practical for ease of application.

QUEBEC
Support We agree with this ballot as long as it's on a voluntary basis. However, the question is how many visits to obtain one audit file ?
 

SASKATCHEWAN
Undecided Would like to see some more rigger around books and records, what is required, oversight on records reviews for other jurisdictions, and what is expected of the record review. 25% is a high percentage to adjust audits by. 

SOUTH DAKOTA
Support South Dakota believes this will be a way for the IFTA team to work with new carriers to educate and verify that they are keeping adequet records. The 3 reviews per audit is a way for some jurisdictions to help with audit requirements. This also does not count toward any numbers for the high and low milage requirements. We strongly urge all jurisdictions to carefully consider how this review process could help them gain further compliance in the IFTA reporting. 

TEXAS
Support Texas believes that there should be a limit on the number of IFTA record reviews that would be allowed for credit for each State.  Audits are the primary means of reallocating funds to the rightful States.  A records review would not accomplish this and if too many record reviews are performed, some states may end up losing this revenue. 

WASHINGTON
Support Generally support; audit staff reviewing still and may provide comment second round.
Support: 15
Oppose: 5
Undecided: 5