21 st IFTA Annual Business Meeting July 30 31, 2004 Baltimore, Maryland

Transcription

1 21 st July 30 31, 2004 Baltimore, Maryland Call to Order Ms. Kathleen Morley, (AZ) IFTA, Inc. Board of Trustees (Board) President, called the meeting to order. Ms. Morley introduced Ms. Valinda Keemer, who sang the National Anthems of the United States and Canada. Ms. Keemer is from the office of the Comptroller of Maryland. Ms. Morley then introduced Mr. Stephen M. Cordi, Maryland Deputy Comptroller. Welcome Mr. Cordi offered the opening comments and officially welcomed the delegates to the 21 st and to the great State of Maryland. He acknowledged the personnel from the Comptroller s office that worked on the preplanning of the business meeting and wished membership a successful conference as well as thanking them for coming to Baltimore. Roll Call Mrs. Tammy Trinker, IFTA, Inc. Events Coordinator, conducted the roll call of membership. Mrs. Trinker announced that there was a quorum present to conduct the Association s business. A total of fifty-seven voting jurisdictions were present in person or by proxy. President s Report Ms. Morley offered the President s Report. Key issues facing the organization include interest, compliance, the IFTA, Inc. Clearinghouse, the Dispute Resolution Process (DRP) and the exciting and challenging future of the North American Free Trade Agreement (NAFTA). IFTA is about coordination among the jurisdictions and industry in the fair and equitable administration of fuel use taxes. It is the job of all members to reconcile consistency with the core principles adopted by the membership from the State Legislation and Constitutional Provisions Project Final Report. The members must also deal with the day-to-day events of tax administration and the variety of ways motor carriers conduct business. The members administer and educate in the area of fuel use tax administration and work to resolve issues in a consistent manner. In addition, IFTA members work with industry to maintain equitable standards. Voting 101 Mr. Scott Bryer, IFTA Commissioner for New Hampshire Department of Safety and member of the Board, presented a review of the voting requirements and procedures for ballots, Consensus Board Interpretations (CBI), Board elections, and other business matters. Page 1 of 18

2 Nominating Committee Report Mr. Kirk Davenport, Tax Policy Administrator for the Texas Comptroller of Public Accounts, Board member and Chair of the Nominating Committee presented this report. Four Board positions were open for election. Current Board member, Mr. Mark Bell (KY), has chosen not to run for re-election. Mr. Davenport reported that Mr. Bryer, Mr. Julian Fitzgerald (NC), and Mr. Gary Frohlick (SK) were seeking re-election. In addition, the Nominating Committee s slate included Mr. Kevin Park (UT) for election to the Board. Following the Nominating Committee report, Mr. Davenport opened the floor for nominations. Nomination: Mr. Paul Sload, IFTA Commissioner for the Pennsylvania Department of Revenue, nominated Mr. Jim Poe, IFTA Commissioner for the Indiana Department of Revenue, to the Board. Mr. Phil Embry, IFTA Commissioner for the Georgia Department of Revenue, seconded the nomination. Board Election Results Following the nominations, a vote by written ballot was conducted. Mr. Tim Galbraith (WI) and Mr. Doug Shepherd (CA) counted the ballots. After a review of the ballots, Ms. Morley announced the results of the Board elections. Re-elected to the Board were Mr. Bryer, Mr. Fitzgerald and Mr. Frohlick. Mr. Park was elected to the Board for a first two-year term beginning January 1, Ms. Morley announced that she will resign her position of President of the Board in January Further, she thanked Mr. Bell for his service and dedication. Approval of the 2003 Meeting Minutes Ms. Morley presented the 2003 minutes for approval. Ms. Morley asked for comments or corrections to the minutes as written. Motion: Mr. Roland Marr, Illinois Assistant IFTA Commissioner and Board member, moved to accept the minutes as written. Mr. Dar Walters, Idaho IFTA Commissioner, seconded the motion. Motion carried. Audit Committee Report Mr. Michael Dougherty, Assistant Director of the Motor Fuel Tax Division for the Comptroller of Maryland and Chair of the IFTA Audit Committee, presented this report. There are two (2) vacancies on the committee, one from the Western region and one from the Canadian region. The committee continues to work on several projects including the 2005 IFTA / IRP Audit Workshop, an on-going review of the Audit Manual, the electronic exchange of the IFTA Interjurisdictional Audit Report, and a Best Practices Manual. The committee views the Best Practices Manual as a guide for auditors to use as a tool when conducting IFTA audits and not as a governing document to replace the IFTA Audit Manual. A rough draft of the manual is expected before the 2005 Audit Workshop. Page 2 of 18

3 Future projects include the issue of multiple audit counts, electronic auditing, and electronic exchange of reports. Ongoing issues that the committee reviews include the exemption database and other electronic tools available to membership such as the IFTA, Inc. website and the message board. Industry Advisory Committee Report Mr. Tom Klingman, Operating Tax Manager for United Parcel Service and Chair of the IFTA Industry Advisory Committee Chair gave this report. The committee met prior to the Annual Business Meeting to provide an open meeting forum for membership and industry. The committee discussed the NCSL report and the recent Dispute Resolution decision issued by the Board. Industry disagrees with the Board s decision and the implications that it has to the IFTA as an Agreement. The committee is concerned that the deliberation process does not offer industry the opportunity to participate. Discussion was had regarding industry s concerns pertaining to the deliberation process during the Dispute Resolution Hearing. Several jurisdictions offered perspectives on this issue. It was noted that the IFTA Dispute Resolution Process (DRP) is a public process in which industry comments are welcomed during the actual process. The IRP Dispute Resolution Process was reviewed. Mr. Poe, President of the IRP, Inc. Board of Directors, offered information concerning the IRP DRP. It was indicated that industry representatives participate in the IRP process, but are non-voting members of the Dispute Resolution Committee (DRC). IFTA membership spoke both for and against industry s participation during the deliberation process of a Dispute Resolution Hearing. Concluding the discussion, Ms. Morley requested a straw vote asking membership if they would like to pursue looking into the Dispute Resolution Process to include non-voting industry participation during the deliberations by the Board. A majority of membership voted in favor of this inclusion in the process. Agreement Procedures Committee Report Mr. Kevin Park, Assistant IFTA Commissioner of the Department of Motor Vehicles and the Utah State Tax Commission, and Chair of the IFTA Agreement Procedures Committee offered this report. Mr. Hugh Hughson (BC) is Vice-Chair of the committee. Planning for the October 2004 IFTA Managers Workshop and Law Enforcement Seminar is underway. The committee is in the process of drafting a questionnaire that will be distributed to all IFTA Commissioners regarding best practices. Mr. Park asked the Commissioners to review and complete the questionnaire prior to the seminar. Full Track Preliminary Ballot Proposal # Committee-sponsored ballots were then presented for discussion. IFTA Full Track Preliminary Ballot Proposal (FTPBP) # addresses the issue of temporary decal permits. The intent of this ballot proposal is to clarify the language in Section R263 and R650 to state that the temporary permit is a temporary decal permit. Page 3 of 18

4 Motion: Mr. Rick LaRose (CT) moved that FTPBP # be moved to the short track ballot process. Mr. Bernie Meagher, IFTA Commissioner for Nova Scotia, seconded the motion. The motion passed. Full Track Preliminary Ballot Proposal # FTPBP # addresses technical revisions to the IFTA Articles of Agreement. The intent of this ballot proposal is to provide greater clarity and make the language within and between the IFTA Manuals more consistent. Motion: Mr. Richard Carey, Maryland IFTA Commissioner, moved that FTPBP # be moved to the short track ballot process. Mr. Meagher seconded the motion. The motion passed. Full Track Preliminary Ballot Proposal # This ballot addresses technical revisions to the IFTA Procedures Manual. The intent of this ballot is to provide greater clarity and make the language within and between the IFTA Manuals more consistent. Motion: Mr. Meagher moved that FTPBP # be moved to the short track ballot process. Mr. Frohlick seconded the motion. The motion passed. Full Track Preliminary Ballot Proposal # This ballot addresses technical revisions to the IFTA Audit Manual and the intent of this ballot is to provide greater clarity and make the language within and between the IFTA Manuals more consistent. Motion: Mr. Meagher moved that FTPBP # be moved to the short track ballot process. Mr. Marr seconded the motion. The motion passed. NAFTA Fuel Tax and Registration Working Group Representatives of the four Border States (Texas, New Mexico, California and Arizona), were present to provide a review of the three Full Track Preliminary Ballot Proposals for consideration. In addition, a panel presented an update on the Working Group. The panel representatives were Ms. Morley, Mr. Davenport, Mr. Ed King (CA), IFTA Commissioner, Ms. Jackie Garcia (NM), Mr. Jack Ranby (AZ), and Mr. Oscar Cruz, Secretariat of Communications and Transportation (SCT), United Mexican States. In addition, Mr. Michael Onder, Federal Highway Administration, and Mr. Rodolfo Giacoman, TMI, Incorporated, were also on hand. Mr. Cruz presented the requirements for carriers based in the United States and Canada to travel within the borders of Mexico. Registration and fees were reviewed. It was explained that registration with Mexico is valid indefinitely. Required vehicle identification was also reviewed and includes license plates, decals and cab cards, driver s license, hours of service logbook, insurance policies and inspection certificates. Page 4 of 18

5 Following Mr. Cruz presentation of Mexican requirements for carriers, Ms. Morley reported that the US Border States had drafted three ballot proposals for review. These ballot proposals would allow Mexican carriers to license in a Border State for the purposes of the IFTA. Mr. Ranby then presented the ballot proposals for discussion. Full Track Preliminary Ballot Proposal # FTPBP # addresses the issue of base jurisdiction determination and the due date of a tax return. The intent of this ballot proposal is to clarify that a member jurisdiction may license a Mexican motor carrier and that such motor carrier must either pay audit expenses or make the records available in the base jurisdiction at the discretion of the base jurisdiction. In addition, in order to facilitate the timely filing of a tax return by a Mexican motor carrier, this ballot proposes to authorize the use of any national postmark to determine timely filing. Much discussion was had regarding the ballot language. Membership expressed concern regarding the ballot language not limiting the base jurisdiction to the four Border States. Motion: Mr. Park moved that FTPBP # be moved to the short track ballot process. Mr. George Higdon, Assistant IFTA Commissioner of Mississippi, seconded the motion. The motion passed. Full Track Preliminary Ballot Proposal # This ballot proposal addresses the issue of bonding and the payment of tax due by guaranteed funds. The intent of FTPBP # is to allow a member jurisdiction to require a bond when licensing a carrier under R325. It was explained that the IFTA Articles of Agreement, Section R340, currently allows for member jurisdictions to request bonds from motor carriers based throughout the United States and Canada per Section R and R Motion: Mr. Park moved that FTPBP # be moved to the short track ballot process. Mr. Meagher seconded the motion. The motion passed. Full Track Preliminary Ballot Proposal # FTPBP # addresses the issue of tax-paid retail and bulk fuel purchases. The intent of this ballot proposal is to clarify that credit may be taken only for tax-paid fuel purchased in member jurisdictions and to make the provisions of the governing documents consistent. It was explained that the Border States had worked for over a year on these ballot proposals and that it would not be possible to predict what effect there would be if one or all of the ballots failed. Motion: Mr. Park moved that FTPBP # be moved to the short track ballot process. Mr. Dan Taylor, West Virginia IFTA Commissioner, seconded the motion. The motion passed. Page 5 of 18

6 IRP, Inc. Update Mr. David Saddler, Executive Director of IRP, Inc., provided an update of activities surrounding IRP, Inc. and its membership. Mr. Saddler reported that IRP, Inc. is a shining example of government communication, coordination and cooperation. It was stated that IRP is a model of efficiency for jurisdictions with savings for industry. Through IRP, jurisdictions have collected more than two billion dollars in fees and is considered a national and international economic engine. IRP, Inc. established a Strategic Plan in The Strategic Plan was necessary after growing independence from AAMVA and guides the organization s present and future activities. The priority objectives of the IRP Strategic Plan are to provide: Distinct identity for IRP, Inc. Strong financial resources Improved Plan compliance A clear, streamlined, updated Plan Mr. Saddler also reviewed the secondary and other objectives as outlined by the IRP Strategic Plan as well as the major projects and incentives the Plan outlined. As a result, IRP, Inc. recently reorganized its staff structure to provide increased service to its members. There are now two departments: Member Services and Communication Services. Mr. Saddler also spoke about synergy between both IRP, Inc. and IFTA, Inc. and noted the similar audiences and memberships of the two organizations. He stated that there are many opportunities for the two organizations to work together. Consensus Board Interpretation Process Ms. Kim Craig, Assistant IFTA Commissioner of Ontario and Board member, provided an overview of this process. The definition of consensus was discussed. Consensus does not necessarily mean a unanimous opinion. Through the Bylaws, the definition of Board and majority were reviewed as well. Ms. Craig reviewed the reasoning behind the Board changing to a majority vote on CBIs. She explained that the Bylaws govern the Board s decisions and that the Board agreed that unanimity is not required for consensus. In addition, membership ratifies all CBIs brought forward by the Board. Ballots Affecting Consensus Board Interpretation Provisions Presentation of Short Track Preliminary Ballot Proposal Mr. Walters presented Short Track Preliminary Ballot Proposal (STPBP) # for discussion. STPBP # considers membership vote requirements regarding the CBI. This ballot proposal removes the reference to consensus and allows the Board to issue interpretations / commentary to membership, based on a majority vote of at least six (6) trustees. This ballot proposal would assure jurisdictions that any issues presented to the Board would be addressed and, in most cases, presented to membership for ratification. Page 6 of 18

7 Presentation of Full Track Preliminary Ballot Proposal Mr. Poe presented FTPBP # which references the issue of the Board s voting requirement for CBIs. The intent of this ballot proposal is to require a unanimous vote by participating Board members for a CBI to be issued to membership for ratification. Discussion was had regarding both ballot proposals. During the discussion, it was explained that commentary included in the Agreement is binding on membership, as stated in R Commentary becomes binding upon ratification of the CBI by membership. Motion: Mr. Walters moved that STPBP # continue on the short track ballot process. Mr. Phil Embry, Georgia IFTA Commissioner, seconded the motion. During discussion of the motion, commissioners were asked to vote in favor of continuing the ballot even if they were not in favor of the ballot at this time. Following the comments on the motion, membership voted. The motion failed. Law Enforcement Committee Report Mr. Robert Crawford, Assistant Director of the Motor Fuel Tax Division of the Maryland Comptroller and Chair of the IFTA Law Enforcement Committee, and Sergeant Charles Burton of the Kansas Highway Patrol and Vice-Chair of the committee, presented this committee report. The committee continues planning for the October 2004 IFTA Managers and Law Enforcement Seminar. The seminar will be held at the Grace Inn in Phoenix, Arizona October Committee membership was reviewed. The Law Enforcement Committee consists of eleven (11) members with 2 Canadian representatives and nine (9) US representatives. The committee continues to work on drafting several ballot proposals. The committee intends to make these ballot proposals available in 2005 for membership review and discussion. Mr. Crawford noted that joining the IFTA, Inc. Clearinghouse is only the first step in assisting with a universal source for roadside enforcement as well as desk side administration. Mr. Crawford remarked that, for proper enforcement of the many factors involved in vehicle operations, a greater emphasis has to be placed on obtaining, and making available accurate, complete data which is not redundant. Mr. Burton spoke about the Adopt-A-Region program the committee started. This program assigns jurisdictional liaisons to the committee members based on regions so that current contacts could be established and maintained. The committee also recognized Co-Board Liaison Mr. Bell for his dedication and support of the IFTA Law Enforcement Committee. Current Dispute Resolution Process Mr. Garry Hinkley, Maine Assistant IFTA Commissioner and Board member, reviewed proposed amendments to the DRP proposed by the Board. The proposed amendments would add a provision allowing the Board to reconsider findings issued in a dispute. It Page 7 of 18

8 was explained that, following the last DRP decision, the Board was asked to reconsider its decision, but that no process had been formally established before hand. As a result, the Board set guidelines for reconsidering findings issued in a dispute. Membership expressed concern regarding the time allotted to the parties involved for responding in writing to the receipt of request for reconsideration. Discussion was also had regarding a reconsideration altering the Board s previous decision and what, if any, problems that could present to the process and pending issue(s). Following the discussions, revisions proposed by membership will be incorporated into the DRP. Motion: Mr. Hinkley moved to ratify the amendments to the Dispute Resolution Process to include the reconsideration process, with the suggested changes offered by membership. Mr. Park seconded the motion. The motion passed. CBI Mr. Hinkley presented this issue for ratification. This interpretation resulted from a request by Idaho for an interpretation regarding the calculation of interest. The proposed CBI was that the language of R is unclear and may be interpreted in more than one way by the reader. Membership discussed the Board s finding and reviewed the Article R1230. It was explained that the Board was presented with an issue for interpretation and, although the Board s finding was split, the Board has issued an interpretation and leaves the issue open for a possible ballot proposal to further address the issue. Following a roll call vote on CBI 59-03, the interpretation did not receive sufficient votes from membership for ratification. Ballots Affecting Interest Calculations and Rates Presentation of Short Track Preliminary Ballot Proposal Mr. Walters presented this ballot to membership. The intent of this ballot proposal is to identify two (2) acceptable methods for calculating interest on delinquent tax payments and still be in compliance. The methods outlined include calculating interest on a monthly basis and on a daily basis. Discussions surrounding this ballot proposal included the creation of an interest matrix which would work similarly to the tax rate matrix. Concern was voiced regarding the responsibility for maintaining and publishing interest rate data prepared in a matrix database to the general public. Industry voiced concerns with this ballot proposal, believing that the Agreement should support one method of interest calculation to avoid conflicts and promote consistency. Motion: Mr. Bob Turner, Montana Assistant IFTA Commissioner, moved that STPBP # continue on the short track ballot process. Mr. Bryer seconded the motion. The motion did not pass. Page 8 of 18

9 Presentation of Full Track Preliminary Ballot Proposal Mr. Hinkley presented this Board-sponsored ballot. The intent of FTPBP # is to require that a full month s interest shall accrue for any portion of a month on which tax owed is late or remains unpaid from a tax return. It was noted that industry supports this ballot proposal. Much discussion was had regarding the sovereignty of the jurisdictions and the current options available to jurisdictions for the purpose of calculating interest on tax payments. Presentation of Short Track Preliminary Ballot Proposal Mr. Walters presented this ballot proposal. The intent of this ballot is to change the US jurisdiction interest rate to a variable rate which would be adjusted every calendar year to reflect the economic conditions of the US economy. Industry announced that they were in favor of this ballot proposal. It was noted that this ballot proposal offers a similar method that the Canadian jurisdictions currently follow in regards to interest rates. It was noted that the ballot is offering an alternative effective date of January 1, 2007, so that jurisdictions would have ample time to allow for system changes. Motion: Mr. Park moved to continue STPBP # on the short track ballot process. Mr. Scott Greenawalt, Deputy Director in the Oklahoma Tax Commission, seconded this motion. The motion did not pass. Proposed Changes to the IFTA, Inc. Bylaws Board Changes Ms. Lonette Turner, IFTA, Inc. Executive Director, presented proposed changes to the IFTA, Inc. Bylaws. These changes were proposed by the Board to change the reference of the office location from Tempe, AZ to Chandler, AZ. In addition, the Bylaws were changed to add Section 12 to Article 4 which provides that no member of the Board shall serve as the chair, vice-chair or as a member of a Standing Committee. It was explained that Section 12 is already being observed by the Board. Motion: Mr. Marr moved to adopt the changes to the IFTA, Inc. Bylaws as presented. Mr. Bryer seconded the motion. The motion passed. Idaho Changes Mr. Walters presented additional amendments suggested by Idaho to the IFTA, Inc. Bylaws. These amendments reflect the terminology of a majority and of a quorum. Currently, the Bylaws allow for a simple majority (51%) for both membership and the Board to conduct Association business. These proposed amendments change the membership quorum to conduct business from a simple majority to two-thirds (67%) majority. The same change would be made to the Board quorum provisions. In addition, these changes would be made to the Board s manner of acting from a simple majority to a two-thirds majority. These changes would require that thirty-nine (39) member Page 9 of 18

10 jurisdictions and six (6) Board members to constitute a quorum for conducting Association business. Membership discussed the changes proposed by Idaho at length. It was noted that the IFTA, Inc. Bylaws were written to reflect normal guidelines of other organizations. Concern was expressed for the current language which permitted five (5) Board members to establish a simple majority and only thirty (30) jurisdictions to establish a simple majority. Motion: Mr. Embry moved to ratify the amendments proposed by Idaho to the IFTA, Inc. Bylaws as amended during discussion. Ms. Patricia Platt, IFTA Commissioner for Kansas, seconded the motion. The motion passed. Saturday July 31, 2004 Call to Order The President of the Board called the meeting to order. Ms. Morley recognized and thanked the staff of the Maryland Comptroller s office for their work in preparing and hosting this year s Annual Business Meeting. Then she introduced Mr. Rod Massman, Assistant Counsel to the Missouri Motor Carrier Services and past Chair of the IFTA Attorneys Section Steering Committee. Attorneys Section Steering Committee Report Mr. Massman provided this report to membership. The 2004 IFTA Attorneys Section Meeting was held in Tempe, Arizona and attended by twenty-six (26) representatives from eighteen (18) jurisdictions. Important topics such as NAFTA, ethics and international practices, audit selection and analysis, as well as the IFTA Dispute Resolution Process were discussed. The committee continues to search for ways to improve attendance for their meeting and hopes that by rotating bi-annually throughout the different IFTA regions, interest and awareness will be raised. The 2005 IFTA Attorneys Section Meeting will be held in Manchester, New Hampshire in April. Mr. Massman urged the jurisdictions to send a representative to this meeting. He also acknowledged the Board s continued support of and liaison roles with the committee. Program Compliance Review Update Mr. Dick Beckner, IFTA, Inc. Program Compliance Administrator, provided the Program Compliance Review update. He reported on the top administrative and audit findings from 2003, the status of the 2004 Program Compliance Reviews and those jurisdictions that will be reviewed in The top administrative findings cited in 2003 included tax return required information, interest, tax rate information and transmittal timeliness for exceptions and mailings. The top audit findings cited included audit documentation, sampling, communication of audit findings, audit file contents, and audit reports. Page 10 of 18

11 Of the twelve (12) reviews scheduled for 2004, eight (8) have been completed to date. In 2005, fifteen (15) reviews will be conducted in the Northeast Region. Mr. Beckner asked the Commissioners to consider volunteers to participate on the Program Compliance Review Teams for Program Compliance Review Committee Update Ms. Vicki Haydon, Tax Audit Supervisor for Arkansas State Highway and Transportation Department and Chair of the IFTA Program Compliance Review Committee, reported on the activities of the committee. The committee has spent the majority of its time working on the Program Compliance Review Guide changes, which would ultimately allow the Program Compliance Review Committee to take enforcement action against a jurisdiction through the Dispute Resolution Process. In addition, the committee developed a Compliance Committee Member Guide. This guide is available on the web site and summarizes the work expected of the committee members. The committee also has two new members. Ms. Cathy Beedle (NE) and Mr. Reggie Little (NC) have recently joined the Program Compliance Review Committee. Dispute Resolution Looking to the Future Committees Work on Complete Process Mr. Hinkley, Ms. Haydon, Mr. Massman, Mr. Jay Starling (AL) and Ms. Marta Modigliani (NH) presented this report to membership. Mr. Starling is Vice-Chair of the IFTA Program Compliance Review Committee and Ms. Modigliani is the current Chair of the IFTA Attorneys Section Steering Committee. This discussion focused on the work of the two committees. The project scope of these committees was two-fold: to streamline the current Dispute Resolution Process and to provide a mechanism through which the Program Compliance Review Committee could bring an enforcement action against a member jurisdiction that remains out of compliance. The proposed changes to the Program Compliance Review process were presented, as were the proposed changes to the Dispute Resolution Process. Based on membership comments regarding the cumbersome and lengthy process, the proposal includes deleting the pre-complaint process, and streamlining the procedures from the beginning to the end of the process. It also provides a mechanism for the Program Compliance Review Committee to bring a dispute. As drafted, it is hoped that the process would not be burdensome on the committee. In addition, a Dispute Resolution Committee would hear the initial disputes with any appeals going to the IFTA, Inc. Board of Trustees. Much concern was expressed regarding whether criteria should be set for the Program Compliance Review Committee to bring a dispute. Another item of concern was the types of noncompliance issues that could be brought into dispute. It was explained that jurisdictions have the option of proposing ballots that would amend the Agreement on issues that they are cited out of compliance with, when they do not agree with the results of the Program Compliance Review. It was recommended that the Agreement Procedures Committee review the Agreement for all the shall and will directives to help alleviate the materiality issues and concerns voiced by membership during discussion. Page 11 of 18

12 Following much discussion, Ms. Morley proposed several straw votes to membership regarding the proposed changes to the Program Compliance Review process and the Dispute Resolution Process. Based on a majority response, membership replied in favor for: Changing the Dispute Resolution Process, Including a Dispute Resolution Committee to the Dispute Resolution Process, Providing authority to the Program Compliance Review Committee so that it might bring a dispute forward, and Establishing minimum standards for the Program Compliance Review Committee to follow in determining when to bring a dispute forward Concluding the discussions, Ms. Morley announced that the Board of Trustees, Program Compliance Review Committee and IFTA Attorneys Section Steering Committee would continue to work on this project and consider memberships concerns and views. Presentation of 2003 Compliance Review Final Reports Public Notification to Membership Mrs. Debora Meise, Program Director for IFTA, Inc., presented the compliance findings from the 2003 Program Compliance Reviews. In 2003, the Western Region had been reviewed. Of the fifteen (15) reviews conducted, eleven (11) reviews have been closed, three (3) are under either reassessment or follow-up and one (1) review is still pending. Nine (9) categories of findings were presented and noted those jurisdictions that were out of compliance in each category. The categories of noncompliance included: Tax return form and content processing (R , P730), Base jurisdiction accounting (transmittals) (P1040), Information provided to licensees (R360), Account Identification (P200), IFTA license application contents (P155), General audit standards (A220), IFTA auditing standards (A310, A320), General guidelines (A500), and The audit process (A600) Concluding the report, it was explained that all of the Final Reports are available on the secured portion of the IFTA, Inc. web site. The purpose of identifying the areas of noncompliance and those jurisdictions cited for these areas is to spread awareness to membership regarding compliance issues. IFTA, Inc. Website Update Mr. Tom King, IFTA, Inc. Webmaster, reported on the improvements to the IFTA, Inc. website over the past year. The improvements have helped to make the site more user- Page 12 of 18

13 friendly. Mr. King, with Mrs. Meise, worked with membership to ensure each jurisdiction submitted their Annual Report in a timely manner. Using the Administrative Control page available to IFTA, Inc., it shows that all members have updated the Annual Report and fifty-five (55) jurisdictions have updated the General Audit Reports information sections. In addition, Mr. King and Mrs. Meise have worked to update the exemption database. Changes to the commissioner s voting booth were also made to improve the ballot voting process. Mr. King continues to work on the ballot comment process. The message board is an important communication tool for the jurisdictions. Another vital tool for jurisdictions will be the What s New page. This web page is ready to launch and can be accessed to see the most recent items posted to the website. Mr. King continues to work on cosmetic updates to the IFTA, Inc. website as well. Exemption Databases Mr. Frohlick presented this report. An objective of the IFTA, Inc. Strategic Plan is to keep the exemption databases complete and useful. The Board felt that this objective was needed to address a concern that the database was not being updated and used to its potential. Many jurisdictions had either no data entered or had simply entered no exemptions. IFTA, Inc. has taken steps to meet this objective through recent changes like the website control center and through increased monitoring to ensure jurisdictions are updating the exemption database as well as fulfilling the annual reporting requirement. Part of the action plan calls for the Board (a small ad hoc committee of the Board) to review the current wording and structure of the database with a view to making it more useful. The primary purpose of the exemption information should be to assist licensees in completing the tax return and for auditors to verify the legitimacy of claims for nontaxable distance. The committee felt that reporting should include distance traveled by qualified motor vehicles which are: Operated by specific entities, Used on specific roads/off road, and Registered for specific uses The committee further felt that reporting should exclude distance traveled by: Vehicles which are excluded from the qualified motor vehicle definition, Non-motive fuel usage, Fuel product types, and Fuel usage that is unrelated to consumption in a qualified motor vehicle. Page 13 of 18

14 It was suggested that the exemption database be a very good topic for the upcoming IFTA Managers Workshop and Law Enforcement Seminar. Presentation of Full Track Preliminary Ballot Proposal Mr. Bell presented this Board-sponsored ballot. The intent of FTPBP # is to amend R215 and R410 to clarify the definition of cancellation and how a license may be canceled. Concern was expressed that the proposed amendment placed a compliance requirement, regarding the removal of the decals, on the jurisdictions that may not be able to be met. Alternative language for the proposal was suggested. Mr. Bell stated that the Board would review the language during the sponsor review period following the Annual Business Meeting. Presentation of Full Track Preliminary Ballot Proposal Ms. Craig presented this Board-sponsored ballot. The intent of FTPBP # is to change the requirements of R1655 to be consistent with R1650. This ballot would require only a three-fourths vote, rather than a unanimous vote, to pass an alternative effective date of a ballot. In addition, it would change a non-vote from an affirmative vote to a negative vote. Industry announced that they supported this ballot as it clears up the confusion of when a jurisdiction does not vote on either a ballot or on the ballot s effective date. Presentation of Full Track Preliminary Ballot Proposal Mr. Dougherty presented this Maryland-sponsored ballot regarding information on the Annual Report. The intent of this ballot is to remove the requirement to report the number of license cancellations, suspensions and revocations on the Annual Report. In addition, the intent of FTPBP # is to add language so that the reporting requirement for audits with adjustments (assessments and credits) is uniform in the manual and on the report. Motion: Mr. LaRose moved that FTPBP # be moved to the short track ballot process. Mr. Frank LaQua, Assistant IFTA Commissioner for North Dakota, seconded the motion. The motion passed. Financial Report Ms. Turner presented the IFTA, Inc. financial report. She reviewed the IFTA, Inc. personnel, assets of the corporation, property and equipment, as well as the operating budget, past and present. Assets of the corporation include corporate bonds, government securities, Comstock, emerging growth funds, real estate investments and trust and equity income. The budget for Fiscal Year 04/05 had been approved by the Board in April. It was reported that the objective to maintain cash in reserve had not only been met but that it was exceeded. In addition, IFTA, Inc. is in excellent financial condition as of the end of FY 03/04 and the projected budget shows for a sound financial position of the organization through to FY 06/07. Page 14 of 18

15 Ms. Turner also reported that the audit for that fiscal year is underway. Telecommunications for IFTA, Inc. has also been changed which has greatly reduced the communication expenses. Dispute Resolution Findings on Complaint Ms. Morley, Mr. Klingman, Mr. Poe, Mr. Bob Pitcher (American Trucking Associations), Ms. Karen Winchell, IFTA Commissioner for Nevada, and Mr. Michael LaPutt (NV) presented comments regarding the Dispute Resolution findings on complaint issued in 2004 by the Board in the matters concerning the jurisdictions of Nevada and Indiana and the jurisdiction of Nevada and New Bern Transportation Corporation. Mr. Pitcher offered an industry response to the decision in these matters. It was viewed as being a decision of a technical nature where industry feels that the issue goes to the fundamental issue of the administration of IFTA. Industry expressed concern regarding the implications of the majority decision. Ms. Winchell and Mr. LaPutt presented information regarding Nevada s position. They explained that IFTA was set up for vehicles operating in multiple jurisdictions and those vehicles which operate solely within a single jurisdiction should remain under the control of that jurisdiction and not the IFTA. Discussion was had regarding the difference between an interstate and intrastate vehicle. Presentation of Full Track Preliminary Ballot Proposal Mr. Poe presented this Indiana-sponsored ballot. The intent of this ballot is to clarify that it is a licensee s choice whether to include on its IFTA return any of its vehicles operated entirely within a non-base jurisdiction, along with its interstate vehicles. In addition, it intends to establish just how and when that decision is effected, and to retain the 2000 amendment to R840 which prevented carriers from abusing this discretion by frequently shifting reporting jurisdictions for reporting of such vehicles. Much discussion was had regarding this ballot proposal. Membership voiced concern both for and against this ballot. Following discussions, the ballot will be reviewed by the sponsor and continue on the full track ballot process. Consensus Board Interpretation Mr. Frohlick presented CBI to membership for ratification. The Board issued an interpretation in response to an issue brought by Idaho and IFTA, Inc. concerning Licensee Audit Reports. The following interpretation was issued by the Board after careful review of both interpretations offered by the requesting jurisdiction: To meet the requirements of A and A , a jurisdiction must include in its Licensee Audit Report the net distance adjustment and the net tax paid fuel purchases adjustment by showing the actual difference between the reported and audited figures regardless of the format or location in the Report. This may be shown as the net difference for all jurisdictions or by individual jurisdiction. Anything less would not constitute a complete report documenting the audit as required by A Page 15 of 18

16 Following a roll call vote on CBI 60-03, the interpretation received sufficient votes from membership for ratification. Ballots Affecting Audit Provisions Presentation of Short Track Preliminary Ballot Proposal Mr. Walters presented STPBP # to membership. This ballot proposes amendments to A The intent of this ballot is to clearly define the information requirements for the licensee audit report and to identify the essential pieces of information which must be presented to the licensee in the form of data or narrative, to help the licensee understand the written audit report and the net result of the audit. Membership discussed this ballot proposal and questioned the amount of information being required and the need for such information to be included in the report. Concern was expressed regarding the language becoming citable during a Program Compliance Review once it is included in the Agreement. It was explained that the ballot did not change any of the data elements, but included clarification language only. Motion: Mr. Bryer moved that STPBP # continue on the short track ballot process. Ms. Linda Palmer, IFTA Commissioner for New Mexico, seconded the motion. By roll call vote, the motion failed. Presentation of Short Track Preliminary Ballot Proposal Mr. Walters presented STPBP # which is sponsored by both Idaho and Ohio. This ballot proposes amendments to A310. The intent of this ballot is to create an equitable multiple count audit methodology and define the criteria a jurisdiction must meet to receive additional audit count towards its 3% auditing requirement. Membership offered concerns and comments regarding this ballot proposal. Motion: Mr. Embry moved that STPBP # continue on the short track ballot process. Mr. Marr seconded the motion. By roll call vote, the motion failed. Presentation of Short Track Preliminary Ballot Proposal Mr. Marr presented Illinois-sponsored STPBP # This ballot proposes amendments to R630 and R655. The intent of this ballot is to remove the grace period and to allow carriers renewing credentials to operate with the IFTA decals and license two months prior to the effective date. Membership discussed the significance and importance of the IFTA decal. It was noted that the ballot proposal does not ask for the decal to be eliminated, but that it allows carriers the option of displaying the following year s decal credentials two months prior to the start of that calendar year. It also requires that the carriers still maintain the current year s decals and license. Motion: Mr. Park moved to continue STPBP # on the short track ballot process. Mr. Meagher seconded the motion. The motion failed. Page 16 of 18

17 Clearinghouse Advisory Committee Report Clearinghouse Industry Advisory Committee Mr. Hinkley offered the report of the IFTA Clearinghouse Advisory Committee. The Board created the committee to advise the Board and Executive Director on issues related to the establishment and maintenance of Clearinghouse business rules. The committee consists of representatives from each of the major IFTA processing systems, a jurisdiction representing an independent system, a non-clearinghouse member jurisdiction, and the IFTA, Inc. personnel. These representatives include Mr. Tim Galbraith (WI), Ms. Patricia Platt and Mr. Scott Miller (KS), Mr. Bill Kron (MS), Mr. Frohlick (SK), and Mr. Hinkley (ME). The goal of this committee is to make the Clearinghouse as valuable and as useful as possible by ensuring as much consistency and quality as possible. The Clearinghouse Committee has recommended that participating jurisdictions adopt five (5) standard tax return codes identified as and including the following: (OR) Original Return (AR) Amended Return (AU) Audited Return (PA) Processing Adjustment (RV) Reversed Return In addition, the committee has developed thirteen (13) field definitions that participating jurisdictions should adopt to describe transmittal data which include: Base Jurisdiction Travel Jurisdiction Transmittal Period Transmittal Year Transmittal Number Total Distance Taxable Distance Taxable Fuel Tax-Paid Fuel Net Taxable Fuel Tax Due Interest Due Total Due At the Second Quarter Board Meeting, the Board approved the adoption of these fields and definitions as the pre-requisite for jurisdictions to enter the Clearinghouse and not have to issue paper transmittals. Page 17 of 18

18 Clearinghouse Update Mr. Jason DeGraf, IFTA, Inc. Information Services Administrator, provided some basic information concerning the Clearinghouse. Currently, thirty-five (35) members have joined the Clearinghouse. The benefits of joining the Clearinghouse were reviewed. Some of the benefits include paperless transmittals, paperless audit reports, paperless weekly and quarterly demographic status reports, timely revoked carrier information, and the ability to review a new licensee s previous history in other member jurisdictions. Accessing the Clearinghouse was then discussed. Mr. DeGraf stated that inquiries from jurisdictions concerning the possibility of accessing the Clearinghouse via the Internet have been received. Previously, jurisdictions had requested that such a connection not be made available. During a straw poll, a majority of the jurisdictions were now in favor of IFTA, Inc. moving forward to establish an Internet connection for the IFTA, Inc. Clearinghouse. Adjournment Following the conclusion of the business meeting, the Maryland hosting staff, IFTA, Inc. personnel and participating jurisdictions were recognized. Ms. Morley then asked for a motion to adjourn the Annual Business Meeting. Motion: Mr. Walters moved to adjourn the 21 st Annual IFTA Business Meeting. Mr. Marr seconded the motion. The motion passed unanimously. Page 18 of 18