Distribution Management Corporation Inc

20-03

On September 25, 2018, the Department assessed the Taxpayer $36,110.92 in tax, penalty and interest as the result of an International Fuel Tax Agreement (IFTA) carrier audit for filing periods in 2015. On October 11, 2018, the Taxpayer protested the assessment. This protest involved the Taxpayer’s IFTA returns and the adequacy of records supplied upon audit and when contesting the assessment. The Taxpayer argued that it was able to replicate the fuel tax miles per gallon records using 2018 to support its 2015 reporting, which it believed to be comparable. The Taxpayer had explained that under its own internal records retention policy fuel purchase records were only kept for 90 days and so the required 2015 records had been destroyed. In order for tax to be correctly calculated the carrier needed to know precisely the miles traveled and the fuel used. IFTA requires carriers to retain supporting documents for four years. The records provided to the Department in the audit did not include many of the records that IFTA requires, including vehicle identification numbers, beginning and ending odometers, and origin and destination of trips. No original fuel receipts or fuel statements were kept. However, even though this was the case, the Department did come to the determination that the number miles reported was correct. Following the guidance of the IFTA audit manel the Department used the rate of 4 miles per gallon to calculate the tax on the estimated amount of fuel used. The Taxpayer argued that it was appropriate to use the 2018 reporting because the trucks being used had similar fuel mileage to the trucks used in 2018. The Taxpayer determined this to be 7.77 miles per gallon which would lower the amount of fuel used considerably. Though the Hearing Officer was willing to allow this as a possible method of reporting, and found the testimony of the Taxpayer’s witnesses credible, some of this testimony was directly contradicted by some of the documentary evidence and not enough support was presented to show that two tax years were similar. The burden on the Taxpayer is to overcome the presumption of correctness in the Department’s assessment. Ultimately, the lack of data made this difficult to achieve. Although the Department accepted the reported miles travelled in 2015, there remained variables unsupported by evidence. It was the Taxpayer’s responsibility to prove with substantial evidence that it properly reported the taxes owed and the Taxpayer kept no organized business records to support the fuel use taxes. Therefore, the Taxpayer failed to meet the burden to overcome the presumption of correctness in the Department’s assessment and so the Hearing Officer denied the protest and ordered the assessment paid.