IFTA Ballot Proposals Comments

IFTA Ballot Comments

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2nd Period Comments on FTPBP #2 - 2021

Jurisdiction Position Comments

ALABAMA
Support

CALIFORNIA
Support

KANSAS
Support

KENTUCKY
Oppose Unsure how these would be counted and/or reviewed by other jurisdictions.

MAINE
Oppose We do give the carrier many opportunities to learn from us the record keeping requirements.  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. 

It appears this ballot would allow a record review to be conducted on a carrier audited in the past.

MANITOBA
Support

MISSOURI
Oppose Nothing explains what is required to get an audit credit for a record review, what is considered education? How many record reviews equal an audit? How will this be monitored?

NEVADA
Oppose records review should be allowed to convert to audit and assessment.  our job is to protect fuel tax revenue and if reveals underreporting of tax, the assessment must occur

NEW BRUNSWICK
Oppose New Brunswick does not feel that a records review provides the same level of control as an audit.  Records could be accurate but not properly utilized for filling.  NB does an educational visit with every new account.

NEWFOUNDLAND
Oppose In the opinion of NL, these reviews should be limited to new licensees for educational purposes, with other licensees subject to the normal audit process.  Also, the existence of a review should not preclude the ability of a jurisidction to raise an assessment when non-compliance is identified.  Current legislation in NL requires the issuance of an assessment when it appears from an examination of books and records that a taxpayer has failed to pay tax due as required under the legislation.      

NORTH CAROLINA
Oppose North Carolina's opposition to this ballot remains steadfast. The changes made to the ballot reinforce North Carolina's concerns that this is not an effective means to ensure compliance with IFTA.
 
Substituting audits for a review of a taxpayer's system of record and internal controls is imprudent. 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) It is not clear whether a Review precludes a jurisdiction from reviewing return information to evaluate the system of record. The ballot language states that a Review "cannot compare records to a quarterly tax return to determine adjustments." Thus, can a Review use return data for other purposes, such as to evaluate the system of Record? Assessing the accuracy of the returns by using the records maintained by the Licensee can be valuable in effectively assessing the system of record.
 
(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. Not only is a Review designed not "to find noncompliant Licensees for audit" but the ballot creates Licensees who are immune to an assessment for at least 180 days after completion of the review. This is a dangerous precedent and may result in return periods that cannot be audited because of the ever-ticking-clock of the statute of limitations.
 
(3) The ballot language fails to hold the jurisdiction accountable for finding deficiencies. 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 . . . ." By making a follow-up a "recommendation" instead of a requirement, the value of a "Records Review" decreases substantially in comparison to an audit.
 
(4) It is important to note that nothing in the ballot creates a clear distinction between a "Records Review" and a follow-up to a "Records Review." Therefore, nothing prevents a jurisdiction from 'double-dipping' by counting the follow-up review as a distinct, separate "Record Review." This potential strategy, again, further devaluates a Review.
 
(5) There is no reason to limit the scope of a Review as provided in the ballot. The new language provides that an audit "will be limited in scope to less than a full Reporting Period." This limitation is incomprehensible and is inconsistent with the scope of the evaluation established in A320, which is incorporated in the ballot. How is a jurisdiction to determine what fraction of a reporting period to use? How would the 180 day audit immunity period apply to a part of a reporting period? If a jurisdiction is allowed to use a quarterly tax return to evaluate the system of record, how is that possible if the review must be limited to less than a reporting period?
 
(6) The ballot states that "Reviews may be conducted by personnel processing Licensee applications . . . " This provision further devaluates Reviews as compared to audits. It is not reasonable to assume that auditors and persons processing applications can equally and effectively evaluate internal controls of a complex system. There is no reason to believe that there is an existing overlapping skill set held by these groups of persons for evaluating a system of record.  Documenting the existence of internal controls, reviewing and testing the reliability of the Licensee’s internal controls, and identifying strengths and weaknesses in distance and fuel accounting systems are complex tasks. There is a high risk that the personnel processing Licensee applications cannot perform the same level of review that an auditor is capable of performing. Although significant training can reduce this capability gap, the risk remains.

NORTH DAKOTA
Support

ONTARIO
Support

PENNSYLVANIA
Support

QUEBEC
Support

RHODE ISLAND
Oppose

SASKATCHEWAN
Undecided Would like to see more rigor around the books and records review in regard to oversight and what is required in order to count as a records review.  25% seems like a high amount to adjust audits by.
Support: 8
Oppose: 8
Undecided: 1