Attorneys Section Steering Committee
||IFTA Ballot Proposal #04-2018
Comment of the IFTA Attorneys’ Section
IFTA Ballot Proposal #04-2018 as written seeks to establish a firm cutoff date or lockdown date for tax rate changes, whereby member jurisdictions must notify the IFTA repository of any tax rate changes not less than 55 days prior to the return due date and would further disallow any member jurisdiction from implementing any other jurisdiction’s tax rate changes if the above deadline is not met.
Procedures Manual §1120.100 presently states that member jurisdictions are required to notify the IFTA repository of all tax rate changes at the earliest possible time. Failure to report tax rate changes is addressed at P1120.300, which states that if a member jurisdiction fails to report a tax rate change to the repository at least 60 days prior to the quarterly return due date, other member jurisdictions are not required to take “extraordinary measures” to implement the tax rate change.
The IFTA Attorneys’ Section makes the following observations regarding IFTA Ballot Proposal #04-2018:
1. Articles of Agreement R130.100 sets out the three core provisions to effect the purpose of the IFTA Agreement. Included as one of those core provisions is the “[r]etention of each jurisdiction’s sovereign authority to determine tax rates, exemptions and exercise other substantive tax authority.” (see R130.100.010). The implementation of a firm cutoff date coupled with disallowing jurisdictions from implementing another jurisdictions untimely tax rate change (per the proposed ballot language), might be construed as contrary to or a limitation upon a jurisdictions authority to determine and set tax rates. Because the core provisions of the Agreement are authorized by Congress pursuant to the Compact Clause of the United States Constitution, this type of change may result in challenges that IFTA is acting outside the Congressional approval.
2. As written, this ballot would deny jurisdictions the opportunity to seek assistance from other jurisdictions if, for example, a jurisdiction has a tax rate change enacted outside the specified reporting time or if a jurisdiction has an error in their tax rate on the IFTA tax matrix. Under the current provisions, the jurisdiction with the late or erroneous tax rate can notify other jurisdictions of the rate discrepancy (especially neighboring jurisdictions where it is known there will be mileage and fuel reported) and request the other jurisdictions update their system with the correct information, if doing so does not require extraordinary measures. These other jurisdictions are not required to make the correction, but allows the jurisdictions the opportunity to work cooperatively if possible, thereby mitigating any negative effects.