Form Mf 04-8 - Recommendation Form For Disposition Page 6
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11base jurisdiction of any errors found during the review of the audit and of its intention to
conduct the re-examination. Ex. 4, Article XIII, ¶R1360.100. The re-audit or re-
examination by a member jurisdiction must be performed in cooperation with the base
jurisdiction. Ex. 4, Article XIII, ¶R1360.300. An adjustment must be reconciled with the
original audit findings, and new audit findings must be issued by the base jurisdiction.
Id. A member jurisdiction conducting a re-audit or re-examination must pay its own
expenses. Id.
Shortly after the initial audit was complete, various member jurisdictions objected
to the initial audit, and the Department conducted a re-audit, which took 11 months.
Because the taxpayer underpaid its motor fuel use tax liability in several jurisdictions,
this resulted in an interest assessment in an amount of $97,544.63 at the conclusion of the
second audit.
The taxpayer had raised two arguments. First, the taxpayer contends that the
Department should bear the cost of the $31,049.65 of interim interest and refund this
amount to the taxpayer. In the alternative, the taxpayer argues that the Department
should pay the taxpayer interest at the rate of 1% per month on the $69,090.26 that was
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overpaid to Illinois as determined by the second audit.
The taxpayer believes that the Department should pay the interim interest because
it is the cost associated with the Department’s failure to follow proper IFTA audit
procedures in the first audit. The taxpayer asserts that the Articles of Agreement do not
preclude this result. The taxpayer states that nothing in the Articles of Agreement
addresses who should bear the cost of the Department’s failure to conduct a proper audit
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At the time that the taxpayer’s brief was submitted, the interest on the overpaid amount totaled
approximately $31,593.57, which coincidentally is approximately the same as the amount of the interim
interest.
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