Could an Illinois IFTA licensee destroy original paper fuel receipts and retain electronic images for audit records?

Plain-English summary

Electronic images of original fuel records were generally acceptable if the records were complete, accessible, and capable of producing legible hard copies for audit. If the original paper was destroyed, the licensee had to be able to produce a legible image of it.

The GIL said IFTA records supporting quarterly returns generally had to be preserved for four years from the due date or filing date, whichever was later, plus periods added by waivers or jeopardy assessments. Microfilm, microfiche, and other computerized or condensed systems could be acceptable to the base jurisdiction.

The Department declined the requested PLR and did not certify the requester's particular software. It said a system similar to the described accepted methods appeared acceptable if it met the record requirements.

What this means for you

Test retrieval and print quality before destroying paper fuel receipts. An electronic archive must preserve every fact used on the return and be usable during an audit.

Common questions

Q: Could the carrier keep only electronic images?
A: Generally yes, if it could produce complete, accessible, legible records and hard copies.

Q: Did this GIL bind every IFTA member jurisdiction?
A: No. It gave Illinois base-jurisdiction guidance and was nonbinding.

Citations and references

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

Subject

Motor Fuel Tax

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2010.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2010/st-10-0022.pdf

Original ruling text

ST 10-0022-GIL 03/30/2010 MOTOR FUEL TAX
This letter describes documentation requirements under the Motor Fuel Tax Law.
Adm. Code 500.335, 500.340 and 500.345. (This is a GIL.)

See 86 Ill.

March 30, 2010

Dear Xxxxx:
This letter is in response to your letter dated September 1, 2009, 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:
On behalf of BUSINESS, this letter serves to request a formal Private Letter Ruling on
BUSINESS’ use of document imaging fuel receipts, in lieu of the original paper
document for IFTA audit purposes. As a result, BUSINESS respectfully requests a
Ruling on the use of document imaging to store its paper fuel receipts.
Statement of Facts
Since 2003 BUSINESS has been utilizing document imaging in its daily operations by
scanning proof of delivery, bulls of lading, and other supporting transportation
documents.
Currently BUSINESS is storing the original paper fuel receipts in the event of IFTA
audit. BUSINESS has been providing images of original paperwork with freight invoices
to its customers for the past six years. Customers include those who have required
original paperwork in the past, however are now assured that imaged documents are a
picture of the actual document.
Maintaining documents in electronic format has distinct advantages over paper-based
record keeping. These include the ability to quickly retrieve and share documents, to
easily create and store backup copies of vital documents for disaster recovery, and to
distribute document-based information quickly and inexpensively. BUSINESS’ imaging

system provides a picture of the actual document. Attached are examples of said fuel
tickets dated 2005 and 2006 imaged via BUSINESS’ system.
This request for a Private Letter Ruling is to clarify Illinois Department of Revenue
Regulations Title 86 Part 500 Section 500.345 Records Requirements Motor Fuel Tax
a) Each licensee shall maintain records to substantiate information reported on the
quarterly tax report. Records shall be preserved for a period of four years from the due
date of the return or the date filed, whichever is later. Records may be kept on
microfilm, microfiche, or other computerized or condensed record storage system.
Such records, for IFTA licensees, shall be made available upon request of any member
jurisdiction.
Further, it is to the best of BUSINESS’ knowledge that the Department has not
previously ruled on this issue, and BUSINESS has not previously submitted this issue to
the Department previously.
BUSINESS uses ABC’s trucking industry specific document imaging solution.
Should you have any questions or concerns about our request, please do not hesitate
contact [sic] me.

DEPARTMENT’S RESPONSE:
The Department’s regulation “Public Information, Rulemaking and Organization” provides that
“[w]hether to issue a private letter ruling in response to a letter ruling request is within the discretion of
the Department. The Department will respond to all requests for private letter rulings either by
issuance of a ruling or by a letter explaining that the request for ruling will not be honored.” 2 Ill. Adm.
Code 1200.110(a)(4). The Department has decided to respond with a GIL.
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
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 217-782-2291.
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
DMB:msk