in-20260729-IR-045260246NRA: LETTER OF FINDINGS: 42-20251778

DEPARTMENT OF REVENUE LETTER OF FINDINGS: 42-20251778 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 determined that, due to a lack of adequate records, Taxpayer had underreported the amount owed under the Agreement. In accordance with the Agreement, the Department issued a proposed assessment plus penalties and interest. Taxpayer protested the proposed assessment. After initially requesting an administrative hearing, Taxpayer subsequently waived its right to a hearing while maintaining its protest. This Letter of Findings is therefore based on the materials sent in by Taxpayer with its protest submission and on 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 have adequate or sufficient records. Taxpayer’s audited fuel records included third-party fuel transaction listings and its unit summary. These records included some required reporting information such as purchase dates, seller names and locations, and number of gallons purchased as well as price per gallon. Taxpayer also had internal controls or processes in place to validate jurisdictional tax-paid fuel credits and ensure that quarterly miles per gallon (“MPG”) figures were reasonable. In addition, Taxpayer also conducted an MPG analysis for its unit. While Taxpayer had in place some necessary controls or processes related to fuel reporting, Taxpayer’s internal controls included weaknesses such as not logging trip-specific information or distance to ensure reported figures were supported. This was in conjunction with Taxpayer’s distance records not providing trip specific odometer readings and its distance controls or procedures containing insufficiencies such as failing to corroborate its reported mileage. As a result, 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. 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). Taxpayer protested the proposed assessment and submitted distance reports collected by a third-party electronic logging device to supplement its audited fuel records. A preliminary review of Taxpayer’s supplemental documentation shows that further examination is needed and that the Department would most likely amend Taxpayer’s liability. The Department will review the documentation submitted through the protest process and confirm if it will result in a change to the liability. If so, the Department will recalculate the amount of IFTA taxes due based on the adequacy of Taxpayer meeting its reporting requirement burden. 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 explained above but denied in part as Taxpayer is not entitled to a waiver of the full amount. May 28, 2026 Replaces Finding Document: New