BALLOT 1-2009BALLOT 1-2009

July 2009

IFTA Annual Business Meeting

Ballot SponsorsBallot Sponsors

Jurisdiction of:

• Alabama

• Connecticut

• Montana

• Oklahoma

• Virginia

Presentation OutlinePresentation Outline

History – Bob Turner (MT)

Richard LaRose (CT)

Ballot Purpose – Rena Hussey (VA)

Hypothetical Scenario – Jay Starling (AL)

IFTA FULL TRACK BALLOT IFTA FULL TRACK BALLOT PROPOSAL 1-2009PROPOSAL 1-2009

A LOOK AT THE HISTORY OF THIS BALLOT

INITIALINITIAL RESEARCHRESEARCH

• Research performed by the PCRC & the IFTA Attorneys’ Section resulted in a report to the IFTA Board of Trustees in 2003.

• Proposal to allow the PCRC to initiate a dispute against a jurisdiction that remains out of compliance following a Program Compliance Review and Reassessment.

PROCESS DEVELOPMENTPROCESS DEVELOPMENT

• Changes proposed (in 2004) to the existing Program Compliance Review Guide and the Dispute Resolution Process - Added a Program Compliance Enforcement Process.

• Discussions at the 2004 ABM. Concern expressed as to whether there should be standards established to determine when and under what circumstances the PCRC could bring forward a dispute.

2004 ABM FOLLOW-UP2004 ABM FOLLOW-UP

• Formed the Compliance Review Requirements Committee. Thorough review of the governing documents. Recommendations made to the Board.

• Formed the Compliance Review Ballots Development Committee. Drafted several ballots for the 2006 year.

BALLOT LANGUAGEBALLOT LANGUAGE

• IFTA Final Ballot Proposal 12-2006– Would allow “Compliance matters from the PCRC” to

be cause for utilizing the IFTA Dispute Resolution Process.

– Comments• Language was very generic; thereby allowing any

compliance matter forwarded by the PCRC to be eligible for dispute.

• Concern over giving the PCRC the same authority as a member of the Agreement.

BALLOT LANGUAGE (CONT’D)BALLOT LANGUAGE (CONT’D)

• Ballot 12-2006 failed narrowly by one vote.

• The IFTA Board revisited the language and re-drafted the proposal (IFTA Ballot Proposal 2-2007) based on jurisdictional feedback and discussion at the 2007 ABM.– Limitation of the articles that would qualify. Only substantive

issues would qualify - R970, R1210, R1230, R1260, R1270, P1040, A310, A320 and A690.

– Required that follow-up, reassessment, and an issuance of a Final Determination Finding of Non-Compliance take place before a dispute could be initiated.

• Ballot 2-2007 failed.– Still concern over allowing a committee to act as a member.

BALLOT 2-2007BALLOT 2-2007

• Here are the sections of the Agreement that Ballot 2-2007 would have focused on:– R970 Late Filing. Any tax return not filed or full

payment not made by the due date shall be considered late & the taxes are delinquent.

– R1210 Assessment. Establishes what the base jurisdiction must do when the licensee fails to act compliantly with filing, records retention, or records presentation requirements.

BALLOT 2-2007 (CONT’D)BALLOT 2-2007 (CONT’D)

– R1230 Interest. Establishes interest rate, basis for calculation, and requirement to remit interest collected to the member jurisdictions.

– R1260 Waiver of Penalties and Interest. Allows for waiver of penalties and interest by the base jurisdiction, requires written permission from a member to waive a member’s interest due, allows licensees the opportunity to appeal a penalty levied.

BALLOT 2-2007 (CONT’D)BALLOT 2-2007 (CONT’D)

– R1270 Revocation of License. Requires revocation of a license when the licensee has not satisfied a tax delinquency or appealed a delinquency notification.

– P1040 Monthly Transmittals. Establishes how and when funds collected are to be transmitted.

– A310 Number of Audits. Establishes what volume of audits must be performed and what minimum scope the audits must contain.

BALLOT 2-2007 (CONT’D)BALLOT 2-2007 (CONT’D)

– A320 Selection of Audits. Establishes the criteria for determining the stratification of the account base for audit purposes and minimum volume.

– A690 Communication of Audit Findings. Establishes when and how completed audits are communicated to the affected member jurisdictions, how audit funds collected may be transmitted, and provides for the member jurisdictions to request audit work papers.

AN ALTERNATIVE METHOD TO AN ALTERNATIVE METHOD TO ADDRESS NON-COMPLIANCEADDRESS NON-COMPLIANCE

• If we agree that Sections R970, R1210, R1230, R1260, R1270, P1040, A310, A320, and A690 are critical to the continuance of the “Cooperative Administration” concept, then we must ensure that no member may ever be allowed to violate those sections, be reviewed by the membership (PCR Process), ignore attempts at remediation (follow-up and reassessment) and not be held accountable.

AN ALTERNATIVE METHOD TO AN ALTERNATIVE METHOD TO ADDRESS NON-COMPLIANCEADDRESS NON-COMPLIANCE

• During late 2007 and early 2008, Rick LaRose (CT) approached the IFTA Board of Trustees with an alternative method based on the provisions of Ballot 2-2007 while at the same time addressing the concerns of the members regarding the permitting of a committee to levy a dispute against a member of the Agreement.

AN ALTERNATIVE METHOD TO AN ALTERNATIVE METHOD TO ADDRESS NON-COMPLIANCEADDRESS NON-COMPLIANCE

• In March 2008, a prototype ballot was drafted for the purpose of giving the Board of Trustees an idea of how the proposed concept might work.

• A subcommittee was developed to analyze the prototype and make changes where appropriate.– Debbie Meise, IFTA, Inc.– Rena Hussey, Virginia, IFTA Board Member– Scott Greenawalt, Oklahoma, IFTA Board Member– Bob Turner, Montana, IFTA Board Member– Jay Starling, Alabama, PCRC Chair– Rick LaRose, Connecticut, DRC Vice-Chair

AN ALTERNATIVE METHOD TO AN ALTERNATIVE METHOD TO ADDRESS NON-COMPLIANCEADDRESS NON-COMPLIANCE

• A presentation was given at the 2008 Annual Business Meeting to brief the Commissioners on the research performed by the subcommittee and to provide an overview of the intent of a potential ballot.

• After several iterations and the completion of a Commissioners’ Survey to address certain elements of the proposal, IFTA Full Track Ballot 1-2009 was drafted and presented to the membership for comment.

Ballot PurposeBallot Purposepresented by Rena Hussey (VA)presented by Rena Hussey (VA)

Authorize the membership collectively Authorize the membership collectively to utilize the Dispute Resolution to utilize the Dispute Resolution Process to resolve critical compliance Process to resolve critical compliance matters arising from the PCR processmatters arising from the PCR process

Ballot PurposeBallot Purpose

Require PCRC to recommend to Require PCRC to recommend to membership that a dispute be initiated membership that a dispute be initiated against a member jurisdiction that:against a member jurisdiction that:

Has been found non-compliant on Has been found non-compliant on certain articles of the governing certain articles of the governing documents following completion of the documents following completion of the PCR process, including follow-up PCR process, including follow-up and/or reassessment; andand/or reassessment; and

Has been issued a FDFNC by the PCRCHas been issued a FDFNC by the PCRC

Ballot PurposeBallot Purpose

Establish process for membership to Establish process for membership to act upon the PCRC’s act upon the PCRC’s recommendation for the initiation of recommendation for the initiation of a disputea dispute

Subject ArticlesSubject Articles

R970 - Late filingR970 - Late filingR1210 - AssessmentR1210 - AssessmentR1230 - InterestR1230 - InterestR1260 - Waiver of penalties & interestR1260 - Waiver of penalties & interestR1270 - Revocation of licenseR1270 - Revocation of licenseP1040 - Monthly transmittalsP1040 - Monthly transmittalsA310 - Number of auditsA310 - Number of auditsA320 - Selection of auditsA320 - Selection of auditsA690 - Communication of audit findingsA690 - Communication of audit findings

Process for Membership to Process for Membership to ActAct

PCRC issues FDFNCPCRC issues FDFNC IFTA, Inc. initiates electronic voting IFTA, Inc. initiates electronic voting

processprocessVoting must be in writing by Voting must be in writing by

Commissioner or specified delegateCommissioner or specified delegateElectronic vote deemed vote in writingElectronic vote deemed vote in writing30 day voting period30 day voting periodAffirmative vote of 2/3 of total votes Affirmative vote of 2/3 of total votes

cast is required to initiate disputecast is required to initiate dispute If approved, PCRC forwards FDFNC to If approved, PCRC forwards FDFNC to

DRCDRC

Hypothetical ScenariosPresented by Jay Starling (AL)

Hypothetical Scenario

PCR teamconducts PCR

PCRdraft report

PCRC panelreview

Compliance?

PCR Final report

Follow Up

Reassessment

Yes

No

No

Hypothetical Scenario

Follow Up

PCRC panel review

Follow Up Plan

Compliance?

Reassessment

Final Report

No

Yes

Hypothetical Scenario

Reassessment

ReassessmentPlan

PCRC review

Compliance?

Final Report

Final Report of Non-Compliance

No

Yes