1. Presented By: Allen Cummings, California Jay Starling, Alabama IFTA/IRP Audit Workshop Impact of Plan Rewrite on Auditors January 2008

2. Implementation Date of Plan Rewrite July 1, 2008 Note: IRP Board has approved implementation of non-fee related provisions immediately.

3. Concepts for the Plan Rewrite “If it’s not broke, don’t fix it.” Organize Plan into topic areas – it will be easier to understand and administer Determine which audit requirements belong in the Plan and which belong in the Audit Procedures Manual Remove obsolete language Remove unofficial commentary that is not binding Remove all unneeded requirements for registrants and/or jurisdictions

4. Concepts for the Plan Rewrite Prevent registrants from base-jurisdiction shopping to avoid paying delinquent fees, safety requirements or safety sanctions Simplify language and clarify ambiguous definitions to facilitate uniform application of the Plan from jurisdiction to jurisdiction Revise base-jurisdiction requirements to meet needs of both businesses and individuals Allow for new technology Accurate and timely collection of fees Actual distances Require reasonableness in the administration of the Plan

5. Plan Rewrite AUDIT RELATED ARTICLES  APM  Apportionable Vehicle  Reporting Period  Article IV – Fees  Article X – Operational Records and Audits  Article XII – Member Jurisdiction Duties and Cooperation  Audit Procedures Manual

6. APM - Definition New Definition “APM” means the Audit Procedures Manual required to be maintained in Section 1000.

7. Apportionable Vehicle - Definition Official Commentary The intent of the Registrant or Applicant to operate a Vehicle in two or more Member Jurisdictions is to be considered as an objective fact, determined from all the circumstances of the particular case. The fact that a Vehicle is not used in more than one Jurisdiction for the entirety of a Registration Year and for six additional months gives rise to a presumption that the Registrant did not intend to use the Vehicle in more than one Member Jurisdiction. Such a presumption may be overcome, however, by other circumstances presented by the Registrant.

8. Reporting Period - Definition “Reporting Period” means the period of twelve consecutive months immediately prior to July 1 of the calendar year immediately preceding the beginning of the Registration Year for which apportioned registration is sought. If the Registration Year begins on any date in July, August, or September, the Reporting Period shall be the previous such twelve-month period.

9. Reporting Period Chart If the first month of the registration year is: The reporting period is: If the first month of the registration year is: The reporting period is: January 1975 July 1, 1973 – June 30, 1974 July 1975 July 1, 1973 – June 30, 1974 February 1975 July 1, 1973 – June 30, 1974 August 1975 July 1, 1973 – June 30, 1974 March 1975 July 1, 1973 – June 30, 1974 September 1975 July 1, 1973 – June 30, 1974 April 1975 July 1, 1973 – June 30, 1974 October 1975 July 1, 1974 – June 30, 1975 May 1975 July 1, 1973 – June 30, 1974 November 1975 July 1, 1974 – June 30, 1975 June 1975 July 1, 1973 – June 30, 1974 December 1975 July 1, 1974 – June 30, 1975

10. Reporting Period – Implementing New Definition Affects staggered registration jurisdictions not currently requiring Registrants who renew in October, November, and/or December to report actual distance for the most current July – June period. Also affects staggered registration jurisdictions currently requiring Registrants who renew in July, August, and/or September to report actual distance for the previous July – June period. During the transition period, affected registrants will use the same reporting period for two registration years. Jurisdictions may count each registration year audited as an audit, even though the reporting period is the same for both registration years.

11. Reporting Period – Implementing New Definition Example: Jurisdiction A is monthly staggered and has previously required the most immediate July – June distance for renewals effective August 1. They will notify their August and September 2008 renewal registrants that the reporting period of July 1, 2006, through June 30, 2007 is required for this transition year only, which will be the same distance as was used for their renewal in 2007. Again, this is only for the transition year.

12. Example: Jurisdiction B is monthly staggered and has previously required the previous July – June distance for renewals effective October 1. They will notify their October, November and December 2008 renewal registrants that the reporting period of July 1, 2006, through June 30, 2007 is required for this transition year only, which will be the same distance as was used for their renewal in 2007. Again, this is only for the transition year. Reporting Period – Implementing New Definition

13. Transitioning to the New Reporting Period Definition Challenge Suggestion Registrant reported incorrect distance last year Base jurisdiction will require correct distance for the 2008 renewal Registrant estimated distance for some or all jurisdictions last year Estimated distance will be used again, however registrant should review estimates to ensure they are still realistic. Jurisdictions that were second- year estimated last year are calculated as second- year estimates for the transition renewal.

14. Transitioning to the New Reporting Period Definition Challenge Suggestion Registrant submits renewal with distances different from last year and no explanation Base jurisdiction should ensure the registrant followed the renewal instructions and obtain an explanation for the difference Registrant is requesting new jurisdictions or dropping existing jurisdictions The registrant can add or drop jurisdictions, however any jurisdictions that were previously apportioned must use the actual distance for the correct reporting period

15. Section 405 – Calculation of Apportionment Percentage Apportionment percentages for actual and first year estimates are calculated prior to calculating second and subsequent-year estimated distance percentages. Actual distance is required for any vehicle registered during the reporting period unless:  The registrant has neither owned or leased apportioned vehicles for 18 months prior to the application date; or  The fleet was apportioned for no more than the last 90-days of the reporting period.

16. Section 420 – New Fleets A new fleet does not automatically qualify for estimated distance. Actual distance is required if: The new fleet is composed entirely or primarily of vehicles in which the applicant operated or exercised control over during the reporting period and the vehicles accrued actual distance in the jurisdictions for which the applicant seeks apportioned registration. This includes vehicles previously apportioned under long-term lease to a motor carrier (including the driver) if the operation will reflect the operation under the long term Lease.

17. Section 420 – New Fleets Example 1: John owns a vehicle, previously apportioned in his name. John purchases another vehicle and applies for registration under his business name, Trucks R Us, for both vehicles. Actual distance is required for all jurisdictions in which the vehicle registered in his own name accrued.

18. Section 420 – New Fleets Example 2: Sam owns a vehicle, leasing to Truck Express for several years hauling general freight in all 59 jurisdictions. He applies for IRP registration in his own name, still hauling general freight for Truck Express, but only in some of the IRP jurisdictions. Actual distance accrued by his vehicle while operating under Truck Express during the reporting period is required for the jurisdictions he requests.

19. Section 420 – New Fleets Example 3: Ted hauled general freight for the past year, leasing to Truck Express. He applies for IRP registration in his own name, now hauling potatoes in two jurisdictions. He is eligible to estimate.

20. Section 420 – New Fleets Example 4: Tom fully-plated his vehicle for the 2007, 2008 and 2009 registration years, operating interstate occasionally on trip permits. In 2010, he applies for apportioned registration. He is eligible to estimate as the definition of Total Distance specifies all distance operated by a fleet of apportioned vehicles.

21. Section 420 – New Fleets Challenge Suggestion Vehicle owner states that the distance accrued will be reported elsewhere (either under another business name or by a former motor carrier). Actual distance is required to establish the new fleet, and for this reporting period, will be declared under both the motor carrier (or other business) and the owner. Vehicle owner states that the operation is not the same because the vehicle is no longer leased, is based in a different Jurisdiction or is operating in greater than or fewer jurisdictions. If the overall operation of the vehicle is the same, actual distance is required for the jurisdictions in which distance was accrued, even if the registrant name, base jurisdiction or registered jurisdictions change.

22. Section 420 – New Fleets Challenge Suggestion Vehicle owner doesn’t have the actual distance while under lease to the former motor carrier. The vehicle owner must contact the motor carrier to obtain the actual distance. Former motor carrier will not release actual distance to the vehicle owner. Base jurisdiction should contact the motor carrier and in most cases, the information will be released. Former motor carrier refuses to release the distance history to the jurisdiction staff. Base jurisdiction should document the date and name of the person refusing to release the information, then permit the vehicle owner to estimate. This should be only offered as an option if all other efforts fail. Second-year estimate calculations will apply for any jurisdictions previously registered.

23. Section 430 – Fleet Consolidation  A Registrant may combine two or more existing Fleets of its Apportioned Vehicles.  In such a situation, the Apportioned Fees of the Vehicles in the resulting Fleet shall be determined according to the actual distances accrued in the Reporting Period by all the Vehicles in the resulting Fleet.

24. Section 430 – Fleet Consolidation Example 1: John owns two vehicles, one apportioned in John’s personal name in Jurisdiction A, the other apportioned under John’s business name, ABC Trucking, in Jurisdiction B. John will not renew either fleet. Both vehicles are now being apportioned under John’s new business name, Trucks R Us, based in Jurisdiction B. Actual distance is required for all jurisdictions in which either or both vehicles accrued distance during the reporting period.

25. Section 430 – Fleet Consolidation Example 2: Lotsa Trucks Inc had three active Fleets in Jurisdiction X. At renewal, they move all vehicles to one fleet. Actual distance is required for all jurisdictions in which any of the vehicles accrued distance during the reporting period.

26. Section 430 – Fleet Consolidation Example 3: Bigg Trucking had two active Fleets, one based in Jurisdiction Y and the other in Jurisdiction Z. At renewal, all vehicles in the Jurisdiction Z fleet are moved to Jurisdiction Y. Actual distance is required for all jurisdictions in which either or both vehicles accrued distance during the reporting period.

27. NewDescriptionOld 1005Preservation and Availability of Records1500 APM 401Adequacy of Records1501 1010Registrant’s Failure to Maintain or Produce Records 1502 APM 501On Board Recording Devices1505 Article X – Operational Records and Audits

28. NewDescriptionOld 1015Frequency of Audits1600 1020Records Not Maintained in Base Jurisdiction1602 1025Notification of Audit Findings1604 1030Joint Audits1606 1000Audit Procedures Manual1607 1035Audit Appeals1608 1045Reexaminations1610 1050Findings of a Reexamination1612 1055Finality of Audits Findings1614

29. Article X – Operational Records and Audits NewDescriptionOld 1060Post-Audit Assessments – Time Periods1700 1065Jurisdiction Statutory Authority1702 1070Netting of Audit Adjustments1704 1075Audit Transmittals1706

30. Audit Procedures Manual  APM Sections changed to Articles  APM numbering changed to be consistent with the Plan  APM terminology changed to be consistent with the Plan (i.e. Member Jurisdiction)  Adequacy of Records provision moved from the Plan to the APM  Eliminated APM 403 - Computer Summaries, as language was redundant (401b and 402b)  On board recording device language moved from the Plan to the APM

31. Audit Procedures Manual  APM 704.2 was deleted as this language is provided in Article IV of the Plan  APM 704.4 was deleted as this language is provided in Article IV of the Plan  APM 704.5 was deleted as this language is provided in Article IV of the Plan  APM 704.6 was deleted as this language is provided in Article IV of the Plan  APM 803.4 was deleted as this language is provided in Article X of the Plan  APM Appendix A – Annual Report of IRP Audit Activity was renamed to Annual Report of Activity and moved to Section 1220 of the Plan

32. Plan Rewrite Questions?