IFTA, Inc. Clearinghouse Funds Netting Update Lonette Turner (IFTA, Inc.) Patricia Platt (KS) September 18, 2008 IFTA Managers and Law Enforcement Seminar

Feedback at the 2007 ABM in St. Louis suggested that changes be made to the proposed funds netting process as follows: Establish and implement a revised funds netting calendar to allow sufficient time to process returns, upload data and make payments. The revisions should be established prior to any related changes to the Clearinghouse Access Agreement. Review the provisions of the IFTA Governing Documents to determine whether any additional changes might be necessary to P1040 or the Clearinghouse provisions in the Articles of Agreement to implement and utilize the funds netting process.

The clearinghouse advisory committee worked on a calendar and before presenting it to the membership opted to test the calendar and the funds netting process with an eye toward reporting back to the membership in While the test was ongoing the CAC reviewed the governing documents to determine any necessary ballot proposals based on the new calendar and the test

Test involved the jurisdictions of Kansas, Maine, Mississippi and Saskatchewan Made up of three phases over a six month period (February – July) 1.Data Upload/Verification 2.Penny test 3.Transfer of Netted Funds

1. Data Upload/Verification ( June example – Funds Netting # ) 1. The test jurisdictions would upload and verify accuracy of data on or before June 27, IFTA, Inc. would process and upload the transmittals to the Clearinghouse on or before June 30, IFTA, Inc. would generates Funds Netting Totals for the test jurisdictions on June 30, The test jurisdictions would review the Net Results and the Final Settlement Report for accuracy.

2. Penny Test 6. Each test jurisdiction would electronically transfer $0.01 to IFTA, Inc.’s funds netting account. 7. IFTA, Inc. would review the account to determine that the funds were deposited into the funds netting account. 8.IFTA, Inc. would transfer $0.01 to each test jurisdiction that successfully transferred into the funds netting account. 9. The applicable test jurisdictions would verify the deposit of $0.01 from IFTA, Inc. and reported the result to IFTA, Inc.

3.Transfer of Netted Funds Each test jurisdiction with an amount showing in the “Due To Fund” column of the Final Settlement Report would electronically transfer the amount due to IFTA, Inc.’s funds netting account on or before the assigned calendar date. IFTA, Inc. would review the account to determine that the funds have been deposited into the funds netting account. IFTA, Inc. would transfer the amount due to each test jurisdiction with an amount showing in the “Due From Fund” column of the Final Settlement Report to each test jurisdiction The applicable test jurisdictions would verify deposit of the amount due from IFTA, Inc. and report the result to IFTA, Inc.

Test Results to Date Jurisdictions had no trouble meeting data submission deadlines as stipulated by the Funds Netting Calendar. Data was transferred accurately and timely The Net Results and Final Settlement reports produced by the Clearinghouse were verified to be accurate by the test jurisdictions. The Penny Test is completed, but did not exactly stay a “penny” test. The penny test was successfully conducted with KS and ME. Because SK’s transfers were done by wire transfer, it became a “Ten penny test” – we had to exchange a dime. MS actually transferred a registration fee for the ABM in the account (thanks, Bill) and we just sent it back as a test.

While the data upload and funds netting tests were being conducted, the test jurisdictions kept track of monies and transmittals received via mail.

Funds Netting v. Snail Mail How quickly are you getting your money?

Kansas April Statistics Postmark Date Received Date # of Mail Days Funds Netting **Incoming Transmittals – Owing Kansas

Maine May Statistics Postmark Date Received Date # of Mail Days Funds Netting **Incoming Transmittals – Owing Maine

Mississippi Transmittal Information Billing Transmittals Payment Received Funds Netting December February January ** Transmittals were billed timely

Saskatchewan Transmittal Information Billing Transmittals Payment Received Funds Netting March January January ** Transmittals were billed timely

IFTA, Inc. Clearinghouse Funds Netting Account JP Morgan Chase

The account is a checking account dedicated to funds netting; sits with a zero balance pending the next funds netting cycle. Allows for ACH Credit and Funds Transfer (Wire) activity only – money in and money out

US and Canada to US: –Once funds netting final totals are completed, jurisdictions owing funds will transmit by ACH Credit (US) or Funds Transfer (Canada) into the funds netting account in US $. –IFTA, Inc. will then transmit funds by ACH Credit (US) and Funds Transfer (Canada) to those jurisdictions due money from the Funds Netting Account in US $.

Canada to Canada –A separate account will be set up with the JP Morgan Chase affiliate in Canada (World Bank). The account has not been set up yet, but will allow the Canadian jurisdictions to transmit Canadian $ to and from the Funds Netting Account via ACH Credit.

Two Test Phases –Penny Test – Each jurisdiction participating in the current funds netting test will transfer $.01 to the Funds Netting Account. –Funds Netting Test – From the Clearinghouse, a Final Funds Netting report will be run from actual transmittal data uploaded by the test jurisdictions. Based on that report, those jurisdictions will transfer money to or receive money from the Funds Netting Account.

Penny Test Status –On July 2, 2008, Kansas successfully transferred $0.01 into the Funds Netting Account. –From JP Morgan Access, IFTA, Inc. was able to verify the details of that transaction and e- mail Kansas a copy of the verification.

Balance and Transaction Detail Report for KS Transaction

–Also on July 2, 2008, IFTA, Inc. sent the return transfer to KS (which is done by batch through JP Morgan Access) –The batch was created with one jurisdiction (KS) and released –The bank sweeps for batches 7 times per day from 5:30 a.m. (PT) through 6:00 p.m. (PT) –IFTA, Inc. released the batch at 8:00 a.m. (PT) and it was in process by the bank at 8:30 a.m. –Within 30 minutes, the batch had been approved by the bank and submitted for payment

–On the morning of July 3, 2008, we received confirmation from Kansas that they had received the penny that morning. ACH Credit Received 0.01 Immediate Funds INTL FUEL TAX,,PAYMENTS, , ,MOTOR FUEL TAX,KS DEPT OF REVENUE ADDENDA: 05IFTA TRANSMITTAL PAYMENT

Funds Netting Test Status –The actual funds netting test was going to take place in late August. There was a minor delay so we will be conduct that test at the end of September with funds being exchanged early October.

Following the presentation at the ABM the CAC began to work on yet another calendar that uses more consistent dates for uploads (i.e. fourth Tuesday of the month), funds transfers, etc. The ballot proposal was revised to reflect the new calendar and was approved by the Board for a second comment period Work continues on rules for the clearinghouse and funds netting that will be presented to the Board in October for review The CAC continues to review information received from jurisdictions regarding concerns of inconsistent transmittals in the Clearinghouse (i.e. jurisdictions uploading data and then sending a second transmittal to send audit information.)