RSF 138: IFTA Auditing Methods and Fuel Tax Assessment Impacts

Grants and Contracts Details

Description

Abstract RSF 138, IFTA Auditing Methods and Fuel Tax Assessment Impacts Kentucky’s annual IFTA revenues represent a significant amount of revenue which is used to build, repair and maintain Kentucky’s highway infrastructure. Given the importance of IFTA compliance in terms of revenue for state infrastructure funding and indirect impacts on highway safety, Kentucky Transportation Cabinet administrators would like to request funding to conduct research into how differences in IFTA audit policies and procedures of member jurisdictions impact IFTA tax evasion assessments. Differences in administrative level of effort, discretionary authority to select carriers for audit, cooperation with other member jurisdictions, access to alternative records that document fleet or carrier mileage filings, the volume and quality of vehicle screening and inspection data, penalties for non-compliance, and general audit policy and processes could impact assessed tax evasion for commercial motor vehicle fuel taxes. There is substantial variation in IFTA audit policies and processes across jurisdictions. Some conduct the minimum number of required audits; others audit a larger proportion of carriers. There are different selection mechanisms for the balance of IFTA audits not required to be selected from low- or high-mileage accounts. Some members have statutes or regulations that require all audits be random; others have greater discretionary authority for fuel tax audits. Additional policy and process distinctions include the balance of field audits and office audits; proclivity to participate in inter- jurisdictional audits; usage of International Registration Plan mileage filings or other data to compare to IFTA mileage filings; different degrees of collection and usage of commercial motor vehicle screening and inspection data; emphasis on possible irregularities such as unusual total taxable mileage, miles per gallon, or a large amount of exempted mileage; the number of audit personnel and resources dedicated to IFTA audits; the overall proportion of a base jurisdiction’s mileage that is audited in a given year; and various other differences. Despite these policy and process differences, there has been little research into how different procedures and policies impact IFTA audit assessments. OBJECTIVES • Identify and classify differences in jurisdictional approach to IFTA audit policies and processes. • Survey IFTA jurisdictions about their IFTA audit policies and processes • Analyze IFTA demographic, transmittal, and audit reports to determine differences in overall assessment rates. • Conduct an analysis of the association between policy and process classifications and IFTA tax evasion assessments. • Identify best practices for jurisdictions to uncover additional IFTA-related motor fuel tax evasion.
StatusActive
Effective start/end date5/1/233/31/26

Funding

  • KY Transportation Cabinet: $265,000.00

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