in-20260930-IR-045260333NRA: LETTER OF FINDINGS: 42-20252392

DEPARTMENT OF REVENUE LETTER OF FINDINGS: 42-20252392 International Fuel Tax Agreement For the Tax Year 2022 HOLDING Indiana trucking business was able to provide additional documents to reduce the proposed assessment; the Department will issue a supplemental audit bill. ISSUE

I. International Fuel Tax Agreement - Assessment.

Authority: IC 6-6-4.1-4; IC 6-6-4.1-14; IC 6-6-4.1-20; IC 6-6-4.1-24; IC 6-8.1-3-14; IC 6-8.1-5-1; IC 6-8.1-5-4; IFTA Agreement, Article XII, § R1210 (2022); IFTA Procedures Manual, §§ P530 and P540; Indiana Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014). Taxpayer protests the assessment of additional fuel taxes imposed pursuant to the International Fuel Tax Association, Inc.'s ("IFTA") Articles of Agreement ("Agreement") and the Indiana Code ("IC"). STATEMENT OF FACTS Taxpayer is an Indiana-based motor carrier business that provides trucking services. The Indiana Department of Revenue ("Department") audited Taxpayer related to the Agreement. The Department, due to absent fuel records, denied Taxpayer certain tax-paid fuel credits provided for under the Agreement and claimed by Taxpayer in its quarterly fuel tax returns. In accordance with the Agreement, the Department issued a proposed assessment plus penalties and interest. Taxpayer protested the proposed assessment. The Department held an administrative hearing with Taxpayer. This Letter of Findings is therefore based on the materials provided by Taxpayer in its protest submission and during the administrative hearing, in addition to the Department's records. Additional facts will be provided as necessary.

I. International Fuel Tax Agreement - Assessment.

DISCUSSION Taxpayer protests the imposition of additional IFTA taxes for the tax year 2022. The Department based its determination that additional IFTA taxes were due on the fact that Taxpayer did not fully substantiate, with supporting records, its reported fuel for its unit for the audit period. During the audit, Taxpayer submitted adequate fuel records which included retail purchase paper receipts, manually sourced documentation, as well as a unit summary that contained extensive required reporting information. Taxpayer's records included fuel type purchased, purchase dates and locations, as well as prices per gallon. Taxpayer also had internal controls and processes in place to validate most tax-paid fuel credits and ensure that distance as well as fuel were reported in the same quarter. In addition, Taxpayer also conducted a miles-per-gallon ("MPG") analysis for its unit. However, the Department found that certain tax-paid fuel credits claimed by Taxpayer were not supported by corroborating documentation, and thus, denied those tax-paid fuel credits. As a result, the Department adjusted the fuel figures for the audit period per the IFTA guidelines. As a threshold issue, it is Taxpayer's burden to establish that the existing proposed assessment is incorrect. As stated in IC 6-8.1-5-1(c): See also Indiana Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). The Department notes that, "when [courts] examine a statute that an agency is 'charged with enforcing . . . [courts] defer to the agency's reasonable interpretation of [the] statute even over an equally reasonable interpretation by another party.'" Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, all interpretations of Indiana tax law contained within this decision shall be entitled to deference. The Agreement is an agreement between various United States jurisdictions and Canadian provinces allowing for the equitable apportionment of previously collected motor carrier fuel taxes. The Agreement's stated goal is to simplify the taxing, licensing, and reporting requirements of interstate motor carriers such as Taxpayer. The Agreement itself is not a statute but was implemented in Indiana pursuant to the authority specifically granted under IC 6-6-4.1-14(a) and IC 6-8.1-3-14. Tax assessments of motor carrier fuel tax under IFTA are presumed to be valid. IC 6-6-4.1-24(b). A Taxpayer bears the burden of proving the assessment is incorrect. Id. A taxpayer also has a duty to maintain books and records and to respond to the Department's request to review such records. IC 6-6-4.1-20; IC 6-8.1-5-4(a). These requirements are elaborated in the Agreement. IFTA Agreement, Article XII, § R1210.300 (2022) provides that the assessment made by the base jurisdiction is presumed to be correct and the burden lies on the licensee to establish, by a fair preponderance of evidence, that the assessment is erroneous or excessive. IFTA Procedures Manual, § P530 (2022) requires licensees to maintain distance records "adequate to enable the base jurisdiction to verify the distances traveled and fuel purchased by the licensee for the period under audit and to evaluate the accuracy of the licensee's distance and fuel accounting systems for its fleet." The licensee must keep records to "substantially document the operations of the licensee's fleet." Id. Specifically, distance records produced by means other than a vehicle-tracking system must show the following: IFTA Procedures Manual, § P540.100 (2022). Further, distance records using a vehicle-tracking system ("GPS") should include: IFTA Procedures Manual, § P540.200 (2022). Taxpayer operated trucks on Indiana highways, consumed motor fuel, and traveled in other member jurisdictions as well. Thus, Taxpayer was subject to motor carrier fuel IFTA taxes. IC 6-6-4.1-4(a). After receiving the audit results and submitting its protest, Taxpayer provided additional fuel records at the administrative hearing. A preliminary analysis of the documents shows that the supplemental records are relevant to the denied tax-paid fuel credits and would most likely change Taxpayer's liability. The Department will further review the documentation submitted at the administrative hearing and will confirm if there will be a change to the assessed liability. Following its review, the Department will recalculate the amount of IFTA taxes due, if any, to the extent established by that documentation. To the extent Taxpayer's records are adequate to verify some additional fuel used, Taxpayer has met its burden imposed by the Agreement and IC 6-8.1-5-1(c). FINDING Taxpayer's protest is sustained to the extent that a supplemental audit will be conducted, and a supplemental notice of proposed assessment issued, consistent with this Letter of Findings. July 15, 2026 Replaces Finding Document: New