in-20260729-IR-045260245NRA: LETTER OF FINDINGS: 42-20241329

DEPARTMENT OF REVENUE LETTER OF FINDINGS: 42-20241329 International Fuel Tax Agreement  For the Tax Year 2021 HOLDING Indiana trucking business was not able to meet its burden of proving the proposed assessment was wrong; therefore, the assessment remains as issued. 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 (2017); IFTA Procedures Manual, §§ P530 and P540 (2017); 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 inadequate 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. The Department held an administrative hearing with Taxpayer. This Letter of Findings is therefore based on Taxpayer’s explanation and analysis presented at the hearing, 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 2021. The Department based its determination that additional taxes were due on the fact that Taxpayer did not have sufficient or adequate documentation available for review. Taxpayer provided manually sourced driver trip sheets as distance records during the audit. While these records contained some elements of the required reporting information, they were deficient as the distance records did not include trip odometer readings, routes of travel, jurisdictional trip distance, and total trip distance. In addition, Taxpayer did not provide evidence that it had a process in place to capture and check trip information for appropriateness and to verify accuracy of trip distance. Taxpayer lacked the necessary internal controls or processes related to distance. As a result, distance could not be audited. Taxpayer’s submitted fuel records were comprised of by unit summaries on trip sheets and third-party fuel transaction listings. Included in these records were types of fuel and total gallons purchased, dates of purchase, purchaser’s name, seller names and locations, as well as unit numbers or vehicle identification. Taxpayer also had internal controls or procedures in place to validate tax paid fuel credits. However, Taxpayer did not conduct a miles per gallon (“MPG”) analysis by vehicle and had no internal controls or procedures in place to ensure jurisdictional continuity or that distance as well as fuel were reported in the same quarter. As a result, the Department adjusted reported fuel figures for all quarters 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 (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. The IFTA Procedures Manual, § P530 (2017) 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 (2017). Further, distance records using a vehicle-tracking system (“GPS”) should include: IFTA Procedures Manual, § P540.200 (2017). 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 did not provide adequate records during the initial audit. Taxpayer protested the proposed assessment and submitted a protest letter citing its reason for the protest. During the protest process, Taxpayer did not respond to the Department’s requests for additional documentation, information, or records. Thus, Taxpayer’s records remain inadequate. When a jurisdiction finds that there are inadequate records, then the base jurisdiction shall impose an additional assessment by either “adjusting the licensee’s reported fleet MGP to 4.00 or 1.70 KPL; or reducing the licensee’s reported MPG or KPL by twenty percent.” IFTA Procedures Manual, § 570.100 (2017). As provided above, it is Taxpayer’s responsibility to maintain specific, detailed, and accurate records concerning its fuel purchase and jurisdiction miles. Because Taxpayer lacks the required records, the Department’s original audit is reasonable and supported by the law and the IFTA Procedures Manual. Taxpayer has not shown the Department’s assessment is wrong as required by IC 6-8.1-5-1(c). FINDING Taxpayer’s protest is respectfully denied. May 29, 2026 Replaces Finding Document: New