in-20250430-IR-045250172NRA: DEPARTMENT OF REVENUE

DEPARTMENT OF REVENUE LETTER OF FINDINGS: 42-20232344 International Fuel Tax Agreement Assessment For the Tax Year 2017 HOLDING 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 Tax – 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 Article XII, § R1210; IFTA Procedures Manual, § 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); INTERNATIONAL FUEL TAX AGREEMENT, https://www.iftach.org/manual2020.php. Taxpayer submitted additional documents claiming it does not owe the full audit assessment amount. STATEMENT OF FACTS Taxpayer is a trucking business that provided regional, interregional, and long-haul transportation services. The subject vehicles were used to transport palletized and heavy shipments of general freight. As the result of an audit, the Indiana Department of Revenue (“Department”) determined that, due to insufficient supporting documentation, Taxpayer had underreported the amount owed under the International Fuel Tax Agreement (“IFTA”). The Department issued a proposed assessment for IFTA taxes plus penalties and interest. Taxpayer protested the proposed assessment. The Taxpayer provided additional documentation in support of its protest. The Taxpayer requested a decision without an administrative hearing. This Letter of Findings results. Additional facts will be provided as necessary.

I.    International Fuel Tax Agreement Tax – Assessment.

DISCUSSION Taxpayer protests the imposition of additional IFTA taxes for the 2017 tax year. The Department based its determination that additional IFTA taxes were due on the fact that Taxpayer had insufficient records during the audit. The Department adjusted the reported figures for each quarter of 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. IFTA is an agreement between various United States jurisdictions and Canadian provinces allowing for the equitable apportionment of previously collected motor carrier fuel taxes. International Fuel Tax Agreement, https://www.iftach.org/manual2020.php (last visited February 16, 2025). 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 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 Article XII, § R1210.300 (2017) 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, § P540.200 (2017). The base jurisdiction may assess the licensee a penalty of $50.00 or 10 percent of delinquent taxes, whichever is greater, for failing to file a tax return, filing a late tax return, underpaying taxes due. IFTA Article XII, § R1220.100 (2017). IC 6-8.1-10-2.1(a)(3) requires that a ten-percent penalty be imposed if the tax deficiency results from the taxpayer’s negligence. IC 6-8.1-10-2.1(a)(2) requires a ten-percent penalty if the taxpayer “fails to pay the full amount of tax shown on the person’s return on or before the due date for the return or payment.” IC 6-8.1-10-2.1(b) states that, “Except as provided in subsection (g), the penalty described in subsection (a) is ten percent [10 percent] of: IC 6-8.1-10-2.1(d) states that, “If a person subject to the penalty imposed under this section can show that the failure to . . . pay the full amount of tax shown on the person’s return . . . or pay the deficiency determined by the department was due to reasonable cause and not due to willful neglect, the department shall wave the penalty.” Departmental regulation 45 IAC 15-11-2(b) defines negligence as “the failure to use such reasonable care, caution, or diligence as would be expected of an ordinary reasonable taxpayer.” Negligence is to “be determined on a case-by-case basis according to the facts and circumstances of each taxpayer.” Id. Departmental regulation 45 IAC 15-11-2(c) requires that in order to establish “reasonable cause,” the taxpayer must demonstrate that it “exercised ordinary business care and prudence in carrying out or failing to carry out a duty giving rise to the penalty imposed. . . .” Again, under IC 6-8.1-5-1(c), “The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.” An assessment – including the negligence penalty – is presumptively valid. Taxpayer operated trucks on Indiana highways, consumed motor fuel, and traveled in other member jurisdictions. Thus, Taxpayer was subject to motor carrier fuel IFTA taxes, IC 6-6-4.1-4(a). Taxpayer did not possess sufficient records during the initial audit. After receiving the audit results and submitting the protest, the Taxpayer provided additional documents. Taxpayer was cooperative with the Department, answering inquiries in a timely manner. However, there is insufficient information to establish that Taxpayer’s lack of required records was so egregious as to constitute “negligence” and subsequently “willful neglect.” Based on a “case-by-case” analysis, and after reviewing “the facts and circumstances of each taxpayer,” the Department agrees that the ten-percent (10%) negligence penalty should be abated. The Taxpayer provided documentation which will change the assessment. The Department will recalculate the amount of IFTA taxes to the extent established by the documentation. FINDING The Taxpayer’s protest is sustained to the extent explained above, but denied in part as Taxpayer is not entitled to a waiver of the full amount. February 19, 2025 Replaces Finding Document at: New