Full Track Ballot #

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1 Full Track Ballot # IFTA / IRP Managers & LE Workshop October 2015 San Antonio, TX Gary Bennion, Con-way FT # Is not a dual fuel issue The same problem exists for any interjurisdictional carrier with a pure LNG vehicle We need a consistent process for LNG reporting and disbursement of taxes between jurisdictions (Like CNG FT#5 2013) 1

2 FT # Is not a dual fuel issue (Cont d) There is no impact to sovereignty (a jurisdiction s tax rates and units of measure are their responsibility) Other standards exist to ensure consistent reporting and distribution of taxes between IFTA members (e.g., distances, volumes, and currency) All we are changing is how to report LNG for IFTA purposes FT # Natural gas is sold in two (2) physical states: 1. Compressed Natural Gas (CNG) A high pressure gas (e.g., 3,000 to 3,600 psi) 2. Liquefied Natural Gas (LNG): A super cooled liquid (e.g., 260 F or 170 C) 2

3 FT # LNG is sold in three (3) different units of measure: 1. Gallons (3.5 lb per G) in 24 jurisdictions 2. Diesel Gallon Equivalents (6.06 lb per DGE) in 24 jurisdictions 3. Kilograms in 10 jurisdictions FT # CDN Jurisdictions US Jurisdictions Fuel Purchases Kilograms DGE - Energy Equivalent (6.06 pounds = 1 DGE) DG - Straight Weight (3.5 lb = 1 gallon) Two Questions: 1. What does a carrier report regarding LNG purchases to their base jurisdiction? 2. How does the carrier convert their purchases accurately and consistently? 3

4 FT # CDN Jurisdictions US Jurisdictions Kilograms DLE - Energy Equivalent (0.73 kg = 1 DLE) DGE Energy Equivalent (6.06 pounds = 1 DGE) DG - Straight Weight (3.5 lb = 1 gallon) FT # P1320 FUELS NOT MEASURED IN LITERS OR GALLONS For reporting tax rates, and audit results and for transmittals between IFTA jurisdictions, liquefied natural gas shall be reported in diesel energy equivalent measures, using the following conversion factors: a diesel gallon equivalent in U.S. jurisdictions weighs 6.06 pounds, and a diesel liter equivalent in Canadian jurisdictions weighs 0.73 kilograms. 4

5 FT # CDN Jurisdictions US Jurisdictions Fuel Reporting Kilograms DLE (Energy Equivalent) (0.73 kg = 1 DLE) DGE (Energy Equivalent) (6.06 pounds = 1 DGE) DG (Straight Weight ) (3.5 lb = 1 gallon) Amount DLE DGE gallons Purchased Tax Rate $0.25 CDN $ CDN $0.59 US $0.34 US Total Tax $25.00 CDN $25.00 CDN $21.50 US $21.50 US FT # Jurisdictional changes: Convert and provide to IFTA their LNG tax rates in energy equivalents (if not already) IFTA converts for volume and currency differences and posts for use by all jurisdictions, as they do now Obtain LNG energy equivalent tax rates from IFTA and then: Share with carriers Instruct carriers to use and how to convert their purchases:» Kilograms to DLE or DGE» Gallons to DLE or DGE 5

6 FT # Jurisdictional Changes: Jurisdiction tax systems process tax returns in energy equivalents Transmit via the Clearinghouse (and non Clearinghouse jurisdictions) in energy equivalents Report audit activities in energy equivalents Questions / Discussion 6

7 Updates Duel Fuel Four (4) new fuel types have been added to the Clearinghouse for dual fuel reporting: For Diesel / LNG vehicles: DL The fuel type to report diesel used in a dual fuel vehicle with LNG; DLG The fuel type to report LNG used in a dual fuel vehicle with diesel For Diesel / CNG vehicles DC The fuel type used to report for diesel used in a dual fuel vehicle with CNG; and DCG The fuel type to used to report CNG used in a dual fuel vehicle with diesel Updates Duel Fuel DL and DC fuel types are: Diesel fuel, taxed at the diesel tax rate shown on the tax rate matrix. Simply used to report diesel fuel used in dual fuel vehicles (where LNG or CNG is the second fuel). DLG and DCG fuel types are: LNG and CNG respectively, taxed at the applicable rates shown on the tax rate matrix. Simply used to report LNG and CNG used in dual fuel vehicles (where diesel is the second fuel). 7

8 DL/ DC DLG DCG Questions / Discussion 8

9 Thanks! FYI Following slides are for reference purposes in case questions come up, and include and example of a complete IFTA Return reporting process for three fleets: Pure diesel DL / DLG DC / DCG 9

10 At a high level: Pure Diesel Dual Fuel Vehicles 101 Diesel Purchased / Dual Fuel Diesel Purchased / LNG Purchased / Dual Fuel Vehicles 101 Think of the dual fuel vehicle as two different trucks (or fleets) DL Purchased / Prorated DLG Purchased / Prorated 10

11 Recommended Reporting Process At a high level: Dual fuel vehicles must be treated and reported separately (e.g., gasoline fleet, diesel fuel fleet, LNG fleet, dual fuel fleet) Duel fuel vehicles must be treated and reported as two vehicles: Separately reporting the distances travelled and fuel purchased Pro rating the distances to avoid double counting Fleet Type Fuel Type IFTA Return or Return Line Actual Travelled s Reported Pure Diesel Diesel D Return # Dual Fuel Diesel DL Return #2 100 (pro rated) 25 LNG DLG Return #3 (pro rated) 75 Recommended Reporting Process Assumptions Total * DL (gallons) DLG (gallons) Total Fuel J1 8, J2 2,000-1,000 1,000 Total 10, ,000 1,500 * No exempt distances were traveled in either jurisdiction. Prorate s by Jurisdiction Between Fuel Types Total Fuel Fuel by Type Ratio DL ,500 DLG 1, Total Ratio Prorated J1 8, DL 2, DLG 5,333 J2 2, DL DLG 1,333 Total 10,000 10,

12 Recommended Reporting Process Pro rating more complicated if a carrier has exempt distances Developed and tested worksheet which can be used to accurately prorate the Total and Taxable between fuel types. Pro Rating Worksheet These fields auto populate and then transferred to the appropriate dd and dl form/return for each jurisdiction TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total DL Portion Exempt Txbl DL Portion Total DLG Portion Exempt Txbl DLG Portion J1 8, , ,667 5, ,333 J2 2, , ,333 Total Miles 10, , ,333 6, ,667 Recommended Reporting Process Dual Fuel Vehicles Diesel Average MPG 6.67 Total Txbl Txbl Tax Paid Net Txbl Fuel Type Jurisdiction Tax Rate Tax Due Volume Volume Volume DL J1 2,667 2, $ DL J $ Sub total 3,333 3, $ Dual Fuel Vehicles LPG Average MPG 6.67 Total Txbl Txbl Tax Paid Net Txbl Fuel Type Jurisdiction Tax Rate Tax Due Volume Volume Volume DLG J1 5,333 5, $ DLG J2 1,333 1, , $ Sub total 6,667 6,667 1,000 1,000 0 $ TOTAL DUAL FUEL VEHICLES 10,000 10,000 1,500 1,500 $

13 Complex Example IFTA Tax Return Reporting Assumptions: 1 Carrier with three (3) IFTA fleets: Pure Diesel; DL/DLG; and DC/DCG No exempt fuel purchases and no exempt distances All fuel purchases and distances have been converted into the base jurisdiction s units of measure and currency Example IFTA Tax Return Reporting Pure Diesel Fuel Fleet Total Exempt D DL DLG DC DCG Diesel Fleet J1 1,600, ,000 J2 400,000 50,000 Total 2,000, ,000 MPG 3.64 DL DLG Fleet Total Exempt D DL DLG DC DCG DL/DLG Fleet J1 50,000 12,000 J2 40,000 8,000 Total 90,000 12,000 8,000 MPG 4.50 DC DCG Fleet Total Exempt D DL DLG DC DCG DC/DCG Fleet J1 16,000 3,000 J2 4,000 1,000 Total 20,000 3,000 1,000 MPG

14 Example For DL/DLG Fleet Prorate the Miles by Jurisdiction Between Fuel Types Total Fuel Fuel by Type Ratio DL 20,000 12, (12,000 / 20,000 = 0.60) DLG 20,000 8, (8,000 / 20,000 = 0.40) Pro-Rating Worksheet ENTER BELOW FOR YOUR DL-DLG VEHICLES: Transfer these to the DL Form These Field Auto-populated Transfer Transfer these to these to the the DL DLG Form Form Transfer these to the DLG Form TOTAL EXEMPT DISTANCE DISTANCE TRAVELLED TRAVELLED Total DL Portion Exempt DL distance Txbl Distanc e - DL Total DLG Portion Portion Exempt DLG distance Txbl - DLG Portion J1 50, , ,000 20, ,000 J2 40, , ,000 16, ,000 Total miles 90, , ,000 36, ,000 Example For DL/DLG Fleet Prorate the Miles by Jurisdiction Between Fuel Types Total Fuel Fuel by Type Ratio DL 20,000 12, (12,000 / 20,000 = 0.60) DLG 20,000 8, (8,000 / 20,000 = 0.40) Pro-Rating Worksheet ENTER BELOW FOR YOUR DL-DLG VEHICLES: Transfer these to the DL Form These Field Auto-populated Transfer Transfer these to these to the the DL DLG Form Form Transfer these to the DLG Form TOTAL EXEMPT DISTANCE DISTANCE TRAVELLED TRAVELLED Total DL Portion Exempt DL distance Txbl Distanc e - DL Total DLG Portion Portion Exempt DLG distance Txbl - DLG Portion J1 50, , ,000 20, ,000 J2 40, , ,000 16, ,000 Total miles 90, , ,000 36, ,000 14

15 Example For DC/DCG Fleet Prorate the Miles by Jurisdiction Between Fuel Types Total Fuel Fuel by Type Ratio DC 4,000 3, DCG 4,000 1, Pro-Rating Worksheet ENTER BELOW FOR YOUR DUAL FUEL VEHICLES: Transfer these to the DC Form These Field Auto-populated Transfer Transfer these to these to the the DC DCG Form Form Transfer these to the DCG Form TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total DC Portion Exempt DC distance Txbl DC Portion Total - DCG Portion Exempt DCG distance Txbl - DCG Portion J1 16, , ,000 4, ,000 J2 4, , ,000 1, ,000 Total miles 20, , ,000 5, ,000 Example For DC/DCG Fleet Prorate the Miles by Jurisdiction Between Fuel Types Total Fuel Fuel by Type Ratio DC 4,000 3, DCG 4,000 1, Pro-Rating Worksheet ENTER BELOW FOR YOUR DUAL FUEL VEHICLES: Transfer these to the DC Form These Field Auto-populated Transfer Transfer these to these to the the DC DCG Form Form Transfer these to the DCG Form TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total DC Portion Exempt DC distance Txbl DC Portion Total - DCG Portion Exempt DCG distance Txbl - DCG Portion J1 16, , ,000 4, ,000 J2 4, , ,000 1, ,000 Total miles 20, , ,000 5, ,000 15

16 Result for the 3 Fleets Final Tax Return A B C D E F G H Fuel Type Jurisdiction Total Taxable Taxable Fuel Volume Tax Paid Volume Net Taxable Volume Tax Rate Tax Due Pure Diesel Fleet D J1 1,600,000 1,600, , ,000 (60000) $ 12, D J2 400, , ,000 50, $ 6, DL J1 30,000 30,000 6,667 12,000 (5333) $ 1, Dual (DL/DLG) Fleet DL J2 24,000 24,000 5, $ DLG J1 20,000 20,000 4, $ DLG J2 16,000 16,000 3,556 8,000 (4444) $ DC J1 12,000 12,000 2,400 3,000 (600) $ Dual (DC/DCG) Fleet DC J2 3,000 3, $ DCG J1 4,000 4, $ DCG J2 1,000 1, ,000 (800) $ Totals (All Fleets) 2,110,000 2,110, , ,000 $ 7, Results for the 3 Fleets (Just a different way to display results) Final Tax Return A B C D E F G H Jurisdiction Fuel Type Total Taxable Taxable Fuel Volume Tax Paid Volume Net Taxable Volume Tax Rate Tax Due J1 D 1,600,000 1,600, , ,000 (60000) $ 12, All Activity in J1 DL 30,000 30,000 6,667 12,000 (5333) $ 1, DLG 20,000 20,000 4, $ DC 12,000 12,000 2,400 3,000 (600) $ DCG 4,000 4, $ J2 D 400, , ,000 50, $ 6, All Activity in J2 DL 24,000 24,000 5, $ DLG 16,000 16,000 3,556 8,000 (4444) $ DC 3,000 3, $ DCG 1,000 1, ,000 (800) $ Total 2,110,000 2,110, , ,000 $ 7,

17 Questions / Discussion Thanks! 17

18 IFTA: Hugh Hughson (BC) Paul Bernander (WI) Tim Ford (CA) Industry: Robert Pitcher (ATA) FTA: Cindy Anders Robb Dual Fuel Working Group Dawn Lietz (NV) Garry Hinkley (MI) Chuck Ulm (MD) IFTA, Inc. Advisors: Lonette Turner Amanda Koeller Gary Bennion (Con way) 18