Tax and Revenue Administration  International Fuel Tax Agreement (IFTA)  Information Circular IFTA-4R6

IFTA-4R6 / February 2012

ALBERTA FUEL TAX ACT INFORMATION CIRCULAR - IFTA:
INTERNATIONAL FUEL TAX AGREEMENT - ADMINISTRATION

NOTE: This information circular is intended to explain the International Fuel Tax Agreement Articles of Agreement and relevant legislation, and to provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in the interpretation between this information circular and the articles of agreement or legislation, the articles of agreement and legislation take precedence.

This information circular discusses the following topics:

• Refunds
• Interest Charges
• Penalties
• Licence Revocation, Reinstatement and Cancellation
• Assessments
• Objections and Appeals
• Enforcement, Assessments and Penalties
• Waiver of Penalties
• Record Keeping Requirements

Refunds

1. A refund may be claimed on field 40 of form AT2059, "IFTA Quarterly Tax Return" for any overpayment of tax in a reporting quarter. A refund will be issued once Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA) determines that all tax liabilities to all member jurisdictions, including any outstanding audit assessments, have been paid and all returns have been filed. Refunds determined to be properly due will be paid within 90 days after receipt of a request for payment from a licensee. Otherwise, TRA will pay interest from the date the refund was due until the date the refund is paid. TRA will not provide a refund if the licensee has not filed or is late filing any Alberta IFTA quarterly tax returns.

Interest Charges

2. Form AT2059, Alberta "IFTA Quarterly Tax Return" and remittance are to be submitted to TRA by the last day of the month immediately following a quarterly reporting period. If the due date falls on a weekend or government holiday, the return and payment are to be submitted by the next business day.

3. If the return or payment is not received by the due date, interest is charged on any tax due to any jurisdiction from the due date to the date when both the return and payment have been received. Interest column 8a has been added to Alberta form AT2060, “IFTA Fuel Type Schedule” for reporting these interest calculations. This column does not have to be completed at the time of filing. When processing the return, TRA will calculate any applicable interest charges and issue a notice of assessment.

4. The return and remittance are considered received and filed on the date stamped on the envelope by the U.S. Postal Service, Canada Post or the national postal service of the United Mexican States, or the date they were mailed with satisfactory proof of the date of mailing. Hand-delivered returns or payments are considered filed on the date they were received by TRA.

5. Interest is not calculated on any overpayments to jurisdictions. When interest is calculated, there is no set-off among the amounts due to, and from, the various jurisdictions.

6. Interest is charged at a quarterly-adjusted rate. It is the average interest rate, rounded up, on 90-day Canadian federal treasury bills during the first month of the preceding quarter, plus two per cent.
   
   
7. Interest is calculated on the principal amount owing from the date the amount was due to the date that the amount is paid. If an amount is overdue on the first day of a month, a complete month’s interest is added to the balance due.

Penalties

8. TRA charges a penalty for late or non-filing of a return, but not for insufficient payment. For insufficient payments, interest charges apply. Refer to the above section for information about interest charges.

9. The late filing penalty amount assessed is $50 or 10 percent of the assessed delinquent taxes, whichever is greater, for not filing a return or filing a late return. Nil and credit returns filed late will be assessed the $50 penalty.

10. Delinquent taxes are defined as the net taxes due (net of all assessed debits and credits reported by the licensee for the period). Taxes are considered delinquent when a return is not received by the last day of the month following the close of the period.

11. TRA will recalculate penalties, if required, based on additional information provided by the licensee or as a result of reassessments issued by TRA.

Licence Revocation, Reinstatement and Cancellation

12. A carrier’s Alberta IFTA fuel tax licence may be revoked if the carrier does not:

a) file the Alberta IFTA fuel tax return and pay taxes,

b) provide security for fuel taxes payable when requested to do so,

c) maintain proper records (see paragraphs 23 through 29 below), or

d) make records available to TRA on request.

13. A carrier’s Alberta IFTA fuel tax licence may be reinstated if the carrier corrects the compliance issues, files a new application form and pays a reinstatement fee of $100.00.

14. A carrier may cancel its Alberta IFTA fuel tax licence if it no longer operates qualified motor vehicles in at least two IFTA jurisdictions. Before the IFTA fuel tax licence will be cancelled, however, the carrier is required to complete an Alberta IFTA fuel tax return for the last quarter of operation and indicating it is a final return. Until the IFTA licence is cancelled, a carrier must file returns every quarter, even if it did not operate in two or more IFTA jurisdictions during the quarter. On cancellation, the carrier must return the original Alberta IFTA fuel tax licence and all unused IFTA decals to TRA. A final audit may be conducted by any member jurisdiction at, or after, the time of cancellation.

Assessments

15. A notice of assessment will be issued to the Alberta IFTA licensee if changes have been made to the return during processing. The sets out any balance due or refundable, including one resulting from calculation errors. An assessment estimating tax that should have been paid may be issued if a licensee has not filed a return by the due date. Reassessments may be issued later based on audits or new information provided by the carrier.

Objections and Appeals

16. If a licensee disagrees with a TRA assessment or reassessment, the licensee may file form AT4762, "Notice of Objection," setting out relevant facts and reasons for the objection. An objection may also be filed to TRA's refusal to issue a licence, revocation of a licence, or cancellation of a licence. The notice is to be either faxed to 780-427-5074 or mailed to:

    Tax Services Branch
    Tax and Revenue Administration
    9811 109 St
    Edmonton AB T5K 2L5

within 90 days of the date of the action to which the licensee is objecting.

17. Form AT4762, "Notice of Objection," may be obtained from TRA’s website or by telephoning 780-427-3044 (Edmonton calling area) or toll-free within Alberta by dialing 310-0000, then 780-427-3044.
    

18. The Tax Services branch will review the objection and notify the objector of the decision by letter.
    
    
19. If the licensee is dissatisfied with the decision, the licensee may file an appeal to the Court of Queen’s Bench of Alberta within 90 days of the date TRA mailed its response to the objection. If a licensee has not received a response to the objection from the Tax Services branch within 90 days of filing the objection, the licensee may file an appeal to the Court of Queen’s Bench of Alberta. Any appeal is to be served on the Minister of Finance and a copy filed with the Clerk of the Court. The Court may dismiss or allow the appeal and make an order relating to costs. Under certain circumstances, the decision of the Court of Queen’s Bench may be appealed to the Court of Appeal of Alberta and, subsequently, to the Supreme Court of Canada.

Enforcement, Assessments and Penalties

20. The Minister of Finance can enforce the Alberta Fuel Tax Act (the Act) and ensure that the terms of IFTA are met. Through use of appointed officials and, when warranted, the courts, the Minister may:

a) inspect and audit the licensee’s records to determine whether the correct amount of tax has been paid;

b) demand, through search warrant or other court action, any information necessary to determine the amount of tax payable;

c) assess or reassess the amount of any tax and/or penalties payable within four years from the end of the calendar year in which it became payable;

d) charge interest on any unpaid tax for the period over which the amount was payable;

e) take legal action to recover any taxes, penalties and interest payable;

f) assess a 50 per cent penalty on the tax owing against a person or business, if in TRA’s opinion the amount is owing because of neglect, carelessness or wilful default by, or on behalf of, the person or business that owes the amount, or because of fraud or evasion committed by, or on behalf of, that person or business; and

g) require a licensee to provide security if the licensee has not filed timely reports or paid the required tax, or audit finds problems severe enough that, in TRA’s opinion, security is needed to protect the interests of IFTA jurisdictions.

21. Any person who:
    • makes false statements;
    • makes records unavailable;
    • makes false or deceptive entries in records;
    • alters or destroys records; or
    • wilfully evades, or attempts to evade, compliance with the Act and Regulation
      
    
    is subject to prosecution. On conviction, the person could be fined up to 300 percent of the tax evaded or sought to be evaded and could be sentenced to a jail term or up to two years.
    
    
22. If a licensee does not maintain books and records as required, the person is liable to a fine of $50 for each day from the day the person receives notification of the requirement to the day the person complies with the requirement.

Waiver of Penalties

23. TRA may waive penalties for reasonable cause.
    
    
24. Reasonable cause includes extraordinary circumstances that prevented a licensee or its agent from complying with the Fuel Tax Act (the Act) or the IFTA Articles of Agreement. Examples of such circumstances include:

• natural disasters such as flood or fire storm;
• personal tragedy, such as a serious illness or death of, or in the family of, the person who oversees and ensures compliance with the Act and Regulation or the IFTA Articles of Agreement;
• civil disturbances.

25. TRA must be satisfied that, despite the extraordinary circumstance, the person made all reasonable efforts to comply with the Act or the IFTA Articles of Agreement. This includes filing returns by the due date. If a person does not file a return by the due date and the extraordinary circumstances leading to the request for a waiver did not occur until after the due date, TRA generally will not waive the penalty.
    
    
26. An applicant’s history of compliance with its obligations under the Act or the IFTA Articles of Agreement, efforts to prevent the liability or take corrective action, and care in conducting its affairs are all factors considered by TRA before a decision for a waiver is made.
    
    
27. Persons or their agents who believe the case meets the above guidelines should send a request for waiver of penalties with reasons supporting their request, in writing, to:

    Tax Services Branch
    Tax and Revenue Administration
    9811-109 STREET
    Edmonton AB T5K 2L5

28. An application for a waiver of penalties must be made within four calendar years from the end of the calendar year in which the penalties were assessed.
    
    
29. The person requesting the waiver will be informed of the final decision in writing.

Record Keeping Requirements

30. The licensee must maintain records that support the information reported on the Alberta IFTA fuel tax return. All licensees are required to maintain detailed distance records for each vehicle. Such records are to contain, but are not limited to:

    a) both taxable and non-taxable use of fuel,

    b) distance travelled for taxable and non-taxable use,

    c) distance records for each vehicle for each jurisdiction in which the vehicle operates.
    
    The licensee must maintain records for tax-exempt fuel separate from those for taxable fuel.

31. The Individual Vehicle Mileage Record, as required for the International Registration Plan, is an acceptable source document for recording vehicle distance information. Another acceptable source document is a trip report which includes the following data:

    a) starting and ending dates of the trip,

    b) origin of trip and destination (including city and province/state),

    c) either routes of travel on the trip or beginning and ending odometer readings for the trip,

    d) total trip kilometres,

    e) distance by jurisdiction,

    f) vehicle unit number or vehicle identification number,

    g) vehicle fleet number, and

    h) licensee’s name.

32. The carrier is required to maintain complete records of all fuel purchases, with separate totals for each fuel type.
    
    The fuel records are to contain the following:
    
    • date of purchase,
    • name and address of the seller,
    • number of gallons or litres purchased,
    • type of fuel purchased,
    • price per gallon or litre,
    • unit number of the vehicle into which the fuel was placed, and
    • purchaser’s signature.
      
      
33. Acceptable fuel receipts include an invoice, a credit card receipt or verifiable microfilm/microfiche of an invoice. Receipts that contain alterations or erasures will not be accepted.
    
    
34. A licensee who maintains a bulk fuel storage facility should base the IFTA tax calculations on fuel withdrawals from the facility instead of on fuel purchases delivered to the facility.
    
    The following records should be maintained to support each withdrawal:
    
    
    • date of withdrawal,
    • number of gallons or litres withdrawn,
    • fuel type, and
    • unit number of the vehicle into which the fuel was placed.

    Also to be kept are purchase and inventory records proving that tax was paid on all bulk fuel purchases.

35. The records referred to above are to be kept for a period of four years from the due date of the return or the date it was filed, whichever is later. Records must be made available on request by any member jurisdiction. Not providing records requested for audit extends the four-year retention requirement until the records are provided. Non-compliance with any record-keeping requirement may be cause for TRA to revoke the Alberta IFTA fuel tax license.
    
    
36. The licensee’s records are to be maintained in Alberta, unless written permission has been provided by TRA to keep the records elsewhere. Permission to maintain records outside of Canada will only be provided on the condition that the records are shipped at the licensee's expense to Alberta for inspection or audit when requested, or the carrier agrees to pay the travel costs of auditors to audit or inspect the records where they are kept.