International Fuel Tax Agreement (IFTA) Records Review Program – Frequently Asked Questions (FAQs)

The primary purpose of the Records Review program is to reduce potential record keeping compliance issues and to educate licensees of the International Fuel Tax Agreement (IFTA) requirements. It is a program used to evaluate a licensee's distance and fuel accounting system and internal controls to assess the licensee's compliance with the IFTA requirements. Additional information on Records Review Program is available in the IFTA Audit Manual, Sections A500 to A510 on the IFTA, Inc. website.

The Records Review Program will focus on new IFTA carriers that began operating within the last 12 months. Also, any licensee regardless of the months of operation may voluntarily request to have their records reviewed.

Going through a records review will help licensees make sure their records are in compliance with the IFTA recordkeeping requirements listed in the IFTA Procedures Manual, Sections P500 to P560. The education licensees receive during a records review will help the licensees file accurate IFTA tax returns avoiding additional assessments of tax, interest, and penalties in future audits.

You will only be selected once.

The California Department of Tax and Fee Administration (CDTFA) will be sending licensees notification letters to select carriers informing them they have been selected for the Records Review Program. A CDTFA team member will be contacting carriers to set up appointments for the records review within 60 days of the notification letter. Carriers may also reach out to the Motor Carrier Office (MCO) to set up the appointment once they receive the notification letter. Carriers who were not selected may voluntarily request to have their records reviewed.

During the meeting, our team member will discuss with you your distance and fuel accounting system and internal controls. Also, the team member will review your actual fuel and trip source documents and summaries used to prepare the IFTA quarterly returns. Upon completion of the review, the team member will discuss their findings and provide you with a written recommendation. The team member may also recommend that you file an amended return, if warranted.

The records review should generally take no more than 4 hours of your time, provided the requested records are ready for review on the day of the appointment.

We offer this tax education and assistance to new licensees during their first year of business. During the review the reviewer will be discussing your business operations, record maintenance, and reviews a few sample transactions in your records. The reviewer also explains any potential problem areas that may affect the proper reporting of the taxes. The primary purpose of this program is to provide licensees an educational opportunity. Therefore, it is encouraged that licensees participate in the records reviews process instead of their representatives.

Several differences include the followings:

• The main purpose of a records review main purpose is to educate the licensee, whereas an audit is focused on determining the correct measure of tax.
• A records review will not result in any tax assessment, whereas an audit may.
• A records review is limited in scope and covers less than one full reporting period (one quarter), whereas an audit generally covers multiple reporting periods.

Yes, the reviewer will provide you with a letter that has two parts. The first part of the letter will summarize the areas where your records were deemed adequate, and areas where improvement is needed. The second part of the letter is a report that will include the detail supporting or summary, including what we reviewed, what we found, and our recommendations, if any.

The records review does not compare your records to your quarterly tax return to determine adjustments and cannot result in a tax assessment. Therefore, a period that was included in a records review may be included in a future audit. However, licensees will not be scheduled for an audit for at least six months following their records review.