Could an Illinois-based IFTA carrier destroy original fuel receipts after creating electronic images for tax records?

Plain-English summary

An interstate motor carrier was told during an audit that it needed original paper fuel receipts and could not rely on electronic storage. It asked IDOR whether scanned records were acceptable.

IDOR said electronic imaging was generally acceptable if the records were complete, contained the information reported on the quarterly return, and remained accessible. During an audit, the carrier had to produce a hard copy of an imaged document. If the original was destroyed, the image had to be legible.

The letter also restated the IFTA retention period: four years from the return due date or filing date, whichever was later, plus additional time covered by waivers or jeopardy assessments.

Common questions

Did the carrier have to keep every original paper receipt? Not if it maintained an acceptable, complete, accessible, and legible electronic image.

What had to be produced during an audit? A hard copy of the imaged document.

How long were the underlying return records retained? Four years from the later of the due date or filing date, plus applicable extensions.

Citations and references

• IFTA Procedures Manual § P510
• 86 Ill. Adm. Code 500.335(g)-(h), 500.340, and 500.345

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2013.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2013/st-13-0013.pdf

Original ruling text

ST 13-0013-GIL 03/29/2013 MOTOR FUEL TAX
This letter describes documentation requirements under the Motor Fuel Tax Law. See
86 Ill. Adm. Code 500.335, 500.340 and 500.345. (This is a GIL.)
March 29, 2013
Dear:
This letter is in response to your letter dated January 10, 2013, in which you request information. The
Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with a GIL.
In your letter you have stated and made inquiry as follows:
My name is Mr. Z, CDS, I am the Director of Safety & Compliance, with COMPANY, the
purpose of my letter is that of clarification and guidance as it relates to the storage of
documents related to Illinois Fuel Tax, reviews and audits under the guidelines set forth
in the (IFTA) International Fuel Tax Agreement-Procedures Manual (Revised July
2011).
The section of clarification regarding Section P510 Preservation of Records that is
covered in the International Fuel Tax Agreement-Procedures Manual, in the section
P510
“.100 The licensee is required to preserve the records upon which the
quarterly tax return or annual tax return is based for four years for the tax
return due date or filing date, whichever is later, plus any time period
included as a result of waivers or jeopardy assessments.”
“.300 Records may be kept on microfilm, microfiche, or other
computerized or condensed record storage system acceptable to the base
jurisdiction.”
As a former federal worker familiar with the Federal Paper Reduction Act I have been
working on reducing our in-house storage of documents for preservation and
compliance with all the different regulatory agencies that affect us & we have been
increasing the use of today’s technology for storage of these documents. In
accordance, with the Title 49 CFR, a motor carrier can use electronic capture and
storage of a drivers qualification files, etc. and supporting documents for Federal DOT
audits, providing they have captured the signature of the driver.

ST 13-0013-GIL
March 29, 2013
Page 2
My question is more directly related to the interpretation for the State of Illinois Fuel Tax.
When I took over in [sic] as the Director of Safety & Compliance in June 2011 I have
been trying to increase the reduction of paperwork and using today’s tools to do so.
Our team that handles all the fuel tax related matters dealing with IFTA’s, fuel audits
and such is doing a great job. They were told that during their last audit that they must
be able to produce the original fuel tax receipt for each transaction unless it is recorded
on a master record but, they still have to have the original receipt and that we cannot
have a copy of it for the audit & that no records can be stored electronically since we
have to produce the original receipt. This has created a serious issue with the
paperwork storage.
I am looking for guidance related to this matter and in the event of our next audit related
to Illinois base jurisdiction what is the acceptable manners that you will allow for
preservation of each transaction. It is difficult to believe that in today’s technology that
we have to keep and [sic] original receipt and we cannot electronically store such
records, trip sheets, receipts, etc., as long [sic] we can produce or recall during a fuel
tax audit.
As a Safety Director, I have been through more than 8 Federal Audits in my 13 years
both for companies I work for and those I consult with. The availability to preserve all
documents and records via electronic methods has been acceptable and allowed for
over 7 years and I have never had a issue on the Federal Level during a FMCSA DOT
Compliance Audit.
In closing, I am truly looking for guidance of the acceptable process or procedures that
we can incorporate into our business model for both paperwork reduction and full
compliance with Illinois IFTA and fuel tax program. Document preservation is required
for compliance in transportation and with your guidance we want to streamline our
process to ensure full compliance & store our records is conducted. I will await you [sic]
guidance, instructions or interpretations, in which we can review and see how best to
implement them into our business model to create a true Win-Win solutions for
compliance and reduction of paper storage.
DEPARTMENT’S RESPONSE:
The IFTA Procedures Manual provides that licensees are required to preserve the records upon
which the quarterly tax return is based for four years from the return due date or filing date, whichever
is later, plus any time period included as a result of waivers or jeopardy assessments. Records may
be kept on microfilm, microfiche, or other computerized or condensed record storage system
acceptable to the base jurisdiction. See the IFTA Procedures Manual, section P510. The Department
of Revenue’s Motor Fuel Tax Law regulations also provide that records may be kept on microfilm,
microfiche, or other computerized or condensed record storage system. See 86 Ill. Adm. Code
500.345 for further details.
For your further information, we also refer you to Sections 500.335(g), (h) and 500.340 of the
Department’s Motor Fuel Tax regulations regarding Quarterly Payment and Reporting, and Credits
and Refunds which can be found on the Department’s website. See also the Illinois Motor Fuel Use
Tax Carrier Compliance Manual (which can also be found on the Department’s website) which sets

ST 13-0013-GIL
March 29, 2013
Page 3
forth alternative recording devices which may be used in place of, or in addition to, handwritten trip
reports for recordkeeping purposes. As you will see, electronic imaging of original records is generally
acceptable as long as your records are complete and contain the information you put on your
quarterly report and the records are accessible. If the imaging system is similar to any of the methods
mentioned in this response, then it appears that it would be an acceptable record storage system.
Our Audit Department advises, however, that during an audit you would be expected to produce a
hard copy of any imaged document. Specifically, if you are going to destroy the original document,
you must be able to produce a legible image of that original.
For additional information on alternative recording devices, you may want to contact the Department’s
Motor Fuel Use Tax Section at 217-785-1397 between the hours of 8:00 a.m. and 4:30 p.m.
I hope this information is helpful. If you require additional information, please visit our website at
www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel