The History ofIFTA and IRP

An awe inspiring look at how we got here…and the importance of keeping what we’ve got.

Who is our audience? New auditors

Experienced auditors

Industry (see above)

History of IFTA

IFTA – What is it?

The IFTA Articles of Agreement states the purpose of the Agreement: to promote and encourage the fullest and most efficient possible use of the highway system by making uniform the administration of motor fuels use taxation laws with respect to motor vehicles operated in multiple member jurisdictions.

What happened before IFTA? Prior to IFTA each state had its own licensing and

fuel use tax reporting system. A carrier needed tax licenses for each jurisdiction in

which it operated. Many jurisdictions required indicia be displayed in and on the commercial motor vehicles.

Industry maintained licenses and reported to as many as 58 jurisdictions

The “each jurisdiction” system was burdensome to both the industry and the jurisdictions.

Resulting in too much…

What about audit BI (before IFTA)? Jurisdictions audited any carrier with a license

in that jurisdiction Industry was subject to having the same data

audited by multiple jurisdictions

What to do…what to do? Some very smart people got a great idea…

And started thinking about an easier way…

The result…What about a base state agreement that we’ll call….

Early Interjurisdictional taxing efforts

While the jurisdictions were progressive in their efforts, there was no agreement on standards for the Biofuels that powered the units. And the decals constantly fell off

The Hard Work Begins… In 1983 a group of people from Government

and Industry collaborated to come up with a tax collection process based “loosely” on the IRP (International Registration Plan) idea of a base state agreement to collect and distribute fuel use taxes.

There was a lot of give and take from everyone to make this work.

How would it work? The jurisdictions would work together to

collect taxes from motor carriers based in their jurisdictions.

Each jurisdiction would be responsible for their own carriers for: The licensing Renewals Tax Reporting Audits

How would Government & Industry both benefit? One license One decal One audit One jurisdiction to handle it all!

Making it happen… Three states AZ, IA and WA were the initial jurisdictions to

join. Over the next 3 years, a working group modified the

Agreement which, in 1986, was adopted by the current membership as the IFTA.

Over the next 15 (or so) years all of the lower 48 states and 10 Canadian provinces became members. (some kicking & screaming)

Keeping it going… Even though IFTA is an excellent program, it is still

a work in progress. Important to remember why IFTA started in the first

place. Cooperation among jurisdictions critical Keep lines of communication open

Jurisdiction to Jurisdiction Jurisdiction to Industry

Embrace technology

Tips for Success… Always some give and take Don’t regress…keep moving forward.

History of IRP

IRP – What is it?

The International Registration Plan (Plan) is an agreement among the 48 contiguous United States, the District of Columbia, and the 10 Canadian provinces providing for registration reciprocity of commercial motor vehicles based on distance travelled in each jurisdiction.

What Happened Before IRP?

The beginning of a highway system to accommodate the increased production of motor vehicles.

Jurisdictions began collecting motor vehicle license fees dedicated to the constructionand maintenance of the highway system.

Early-Mid 1900’s

Three structured taxes were introduced:

1st structure tax – license fees

2nd structure tax – taxes on motor fuel

3rd structure tax – taxes charged by jurisdiction based on the distance traveled plus the weight carried, or taxes assessed on the number of axles (precursor to IRP).

Early-Mid 1900’s (continued)

Early-Mid 1900’s (continued)

Automobiles were granted full reciprocity from the outset (a benefit still enjoyed today).

Reciprocity did not extend to commercial vehicles, resulting in a maze of conflicting regulations that created complex problems for the motor carrier industry.

Years Following WWI

Jurisdictions started levying taxes that ranged from having to buy license plates in each jurisdiction to purchasing a special permit just to enter a jurisdiction.

Years Following WWII

Interstate barriers were removed during WWII and war goods and other commodities flowed freely.

After the war ended, however, the spirit of cooperation began to disappear…….

Years Following WWII (continued)

Numerous bilateral agreements started being negotiated between jurisdictions .

A number of jurisdictions decided to become signatories to single compact agreements.

Early Compact Agreements

Two reciprocity plans were established, which encompassed a majority of the United States:

The Multi State Reciprocal Agreement: Covering Southeast states, extended interstate reciprocity, requiring only one license plate, BUT limiting carriers to strictly interstate movement. Uniform (or Western) Vehicle Registration Proration and Reciprocity Agreement: Paying registration fees based on percentages of use. Carriers were required to file applications with all jurisdictions in the agreement.

The Beginning of IRP

Designing a Plan

1968AAMVA formed a subcommittee to develop a plan to incorporate all existing theories of reciprocity, one that would attract all jurisdictions in the U.S. and Canada.

The two compacts were examined and portions of both used as a foundation for designing a new plan.

1972A proposed plan titled “Standard Reciprocal Agreement Governing Operation of Vehicles Between Jurisdictions” was presented.

A National Proportional Registration Committee was formed to develop the proposed plan into an agreement that would be acceptable to jurisdictions and industry.

IRP Pilot Agreement

1973A pilot agreement was made between Kentucky, Missouri and Tennessee.

The name was changed from “National Proportional Registration” to “International Registration Plan (IRP).”

AAMVA members passed a resolution to make IRP a reality, thus creating the first uniform interjurisdictional registration plan.

IRP Pilot Agreement

By the end of 1973 the following nine jurisdictions signed on as members of the IRP agreement:

• Colorado• Minnesota• Nebraska• Tennessee• Utah

• Kentucky• Missouri• Oregon• Texas

In 1974 Alberta becomes first Canadian IRP member

IRP and IRP, Inc.

In 1991 the Intermodal Surface Transportation Efficiency Act took effect.

In 1994 the IRP membership agreed to incorporate IRP, Inc., the repository for all IRP jurisdictions.

In 2001 Nova Scotia became the last of the 59 jurisdictions to join the IRP.

Keeping it going… Even though IFTA & IRP are an excellent

programs, they are still a work in progress. Important to remember why IFTA & IRP

started in the first place. Cooperation between jurisdictions critical Keep lines of communication open

Jurisdiction to Jurisdiction Jurisdiction to Industry

Embrace technology

Tips for Success… Always some give and take Don’t regress…keep moving forward.

The History ofIFTA and IRP

An awe inspiring look at how we got here…and the importance of keeping what we’ve got.