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The Department conducted an audit and determined that Taxpayer owed additional IFTA fuel taxes for that year. The Department concluded that Taxpayer did not provide the necessary records. Due to the lack of documentation, the Department assessed tax based upon the best information available. Taxpayer protests the Department's assessment of motor carrier fuel taxes pursuant to IFTA.
IFTA is an agreement between various United States jurisdictions and Canada 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.
Taxpayer operated trucks in Indiana. As such, it operated on Indiana highways and consumed motor fuel. Therefore, the Taxpayer was subject to motor carrier fuel IFTA taxes. IC § 6-6-4.1-4(a).
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The Department's auditor requested that Taxpayer provide daily trip reports to document mileage, which Taxpayer was required to maintain under the IFTA Procedures Manual; however, Taxpayer did not provide this information. Taxpayer was also not able to provide any of the following: beginning/ending of trip odometer readings; actual routes of travel; and fuel receipts. Therefore, Taxpayer's recordkeeping was determined to be inadequate.
Taxpayer's general manager initially stated during the audit that they did not keep records after six months because of DOT rules, apparently referring to 49 C.F.R. § 395.1. However, Taxpayer's owner says that Taxpayer does have the records, but that the records are missing or misplaced due to Taxpayer moving its business location twice in 2010.
During the hearing, Taxpayer provided "trip sheets" to the Department, which Taxpayer claims would back up their original returns. However, the "trip sheets" are still inadequate, as they are reports generated from Taxpayer's own system and are not source documents. They also do not include origins and destinations of trips.
Taxpayer claims that fuel receipts were not provided because they are in boxes somewhere, but they are not readily available as a result of the business's move to a new location. Taxpayer argues that tax was obviously paid at the pump, so even though they cannot produce the receipts, it does not mean that Taxpayer did not pay the taxes.
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It is Taxpayer's responsibility to maintain specific, detailed, and accurate information concerning its fuel purchases and jurisdiction miles. In the absence of complete source documentation, the Department's best information available audit assessment is reasonable and supported by law and the IFTA Audit Manual procedures. Taxpayer has not "established by a fair preponderance of the evidence that the assessment is erroneous or excessive." IFTA Articles of Agreement, § R1210.300 (2013).
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Taxpayer operated "units" in Indiana and other states, but Taxpayer selected Indiana as its base jurisdiction, pursuant to Article IV of the Plan (2013). In conjunction with the IFTA audit, the Department conducted an IRP audit under the terms of Articles XV and XVI of the Plan (2013) and the International Registration Plans Audit Procedures Manual.
The Department selected 2010 as the registration year to audit. The Department determined that taxpayer owed additional IRP fees based upon the same documentation that was provided to calculate the IFTA assessment. Taxpayer again argues that it cannot locate the records and that the taxes were already paid. These issues are discussed in detail above.
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Taxpayer supplied the same records to dispute the assessment of additional IRP fees, which are similarly inadequate for the purposes of IRP. Additionally, Taxpayer argues that it should not be subject to 100 percent assessment for inadequate records. § 901 of the International Registration Plan Audit Procedures Manual (2012) provides in relevant part that:
(b) The Registrant must maintain and make available adequate records to support the apportioned registration application; otherwise, the privilege to apportion can be denied.
(c) Any Registrant failing to maintain adequate records from which true liability can be determined is subject to an estimated fee assessment, 100[ percent] fee assessment to the Base Jurisdiction, the application of penalty as prescribed by the laws of the Base Jurisdiction, and/or the cancellation of registration.
(See also §603(a) of the International Registration Plan Audit Procedures Manual (2012))
It is Taxpayer's responsibility to maintain specific, detailed, and accurate information concerning its fuel purchases and jurisdiction miles. In the absence of complete source documentation, the Department's best information available audit assessment and a 100 percent fee assessment is reasonable and supported by law and the Plan and its Audit Procedures Manual. The taxpayer bears the burden of proving that any assessment is incorrect, and Taxpayer has failed to meet that burden. IC § 6-8.1-5-1(c); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007).
