• Jurisdictions are mandated to annually audit three percent of the carriers registered under IFTA within the jurisdiction to ensure compliance.
• Some of the most common reasons carriers are selected for an audit include delinquent/late filings, frequent amended returns, questionable MPG/KPL rates, and closed accounts.

To ensure that carriers with International Fuel Tax Agreement (IFTA) accounts comply with requirements, the jurisdictions will conduct audits of carriers within their jurisdictions. When conducting an IFTA audit, the auditor is essentially auditing on behalf of all other IFTA jurisdictions, not just the carrier’s base jurisdiction.

A jurisdiction will notify the carrier ahead of time regarding the audit and will communicate to the carrier what the audit will cover.

Jurisdictions are mandated to audit three percent of the carriers registered under IFTA within the jurisdiction annually, but this isn’t always a random selection. Usually, there are reasons why a carrier is picked. Some of the most common reasons carriers are selected for an audit include:

• Delinquent or late filings. Late or delinquent IFTA filings can be taken as a sign that the carrier has a disregard for the requirements, including the requirement to maintain records. If a carrier consistently files late, auditors may want to visit the carrier and ensure that it is keeping necessary records.
• Amended returns. Amended returns are usually filed to make corrections to the IFTA tax returns. The occasional amended return likely wouldn’t be an issue; however, if quarter after quarter the carrier needs to file amended returns, this can indicate that there may be flaws/errors in the carrier’s recordkeeping system or weaknesses in the data entry or trip/fuel data collection processes.
• High/low miles per gallon (MPG)/kilometers per liter (KPL). The jurisdictions may look at a carrier’s International Registration Plan (IRP) registrations and see that it has, for example, registered all 80,000-pound vehicles. Then, the jurisdictions may compare the IRP registration to the IFTA reported MPG/KPL and question the carrier on noticeable improbabilities in milage based on those registered vehicles. The jurisdictions may also compare IFTA reported distances to IRP reported distances and see if they are inconsistent with each other and to determine the validity of the inconsistency.
• Closing IFTA account. Some jurisdictions will perform audits on all carriers that close their IFTA account. Just because an account is closed does not mean that a carrier is no longer subject to an audit.