Trucking Advice on Fuel / Sales Tax News

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WASHINGTON - In November, Initiative 695 was approved by the voters, which eliminated the 2.2% excise tax that applied to all vehicles, including heavy trucks. However, the reprieve may be short lived due to the budgetary impact, as the tax was a major funding mechanism for road construction. Also, as the excise tax was in lieu of the property tax, there is the possibility that all vehicles will now be subject to the property tax, but at a (possibly) lower rate.

CALIFORNIA - Earlier in 1999, AB 852 was enacted that extended to IRP vehicles the 25% reduction in the state's vehicle license fee that had previously been granted to all other vehicles registered within the State. An additional vehicle license fee reduction of 10% is scheduled for 2000, but again, the law change left out IRP vehicles. Corrective legislation was proposed, passed by the legislature, but ultimately vetoed by the Governor in October. The Governor cited the revenue loss and administrative effort in issuing refunds. IRP units will be accorded the additional 10% break, but not until 2001.

PENNSYLVANIA - In an appeal decided in September, the Commonwealth Court decided that an independent contractor is an employee for worker's compensation benefits purposes. The Court went as far as to reject the traditional tests to determine employment status under Federal law and rule, and instead focused on "other degrees of control" such as payment of operating costs; routing requirements; restrictions on the use of equipment outside the agreement; and termination provisions within the contract, as determinative.

INDIANA - The State Tax Court ruled in favor of a carrier challenging a limitation to the fuel tax credit availed for fuel consumed by power-take-of units. State rules which restricted the credit calculation to the use of PTO equipment in Indiana. The Court ruled that this 'in-Indiana' limitation created a disparity in the tax treatment of equal taxpayers, and therefore violated the Commerce Clause because it discriminated against interstate commerce.

MAINE - In a 2/28/00 decision, the Maine Supreme Judicial Court ruled that sales tax was due on the lease of trucks to a Maine company (lessee) by an out-of-state leasing company (lessor). The lessee argued that the lessor assumed liability when it originally purchased the trucks. The Court opined that that would be the case had the lease contract been a traditional lease. However, since the instrument as issue was a TRAC lease, which Maine treats such leases as 'sales' for sales tax purposes, the lessor has neither a sales or use tax liability, since the trucks were purchased outside of Maine. Therefore, the liability rests with the 'buyer' or lessee.

FEDERAL TAXES

In an August decision, the US Tax Court ruled that a terminal rental adjustment clause (TRAC) in a lease does not, for tax purposes, transform the lease into a sale of the vehicle. The court found that the TRAC provisions were not a significant tax issue, as the leases could stand on their own economically.

In another US Tax Court decision, a carrier was required to capitalize prepaid expenses that provided benefits into a subsequent tax period. The carrier, US Freightways, paid and deducted license fees and insurance payments in 1993 that provided coverage for a period that included part of 1994. Surprisingly, the Court gave little regard to the 'one-year rule' cited in other cases, which implies that expenses may be currently deducted if the benefits do not exceed one year. Here, the Court diverted and said that since the greater percentage of the costs were allocable to 1994; a significant enough asset was created that extended beyond the '93 tax year.

WHAT'S NEW AT OTS

Rand McNally and Operating Tax Specialists Join Forces to Offer Fuel-Tax Software RoadTax relies on Rand McNally's IntelliRoutetm System for Mileage and Routing Data

Rand McNally-TDM, publishers of industry leading MileMaker® and IntelliRoute™ Routing and Mileage Systems, has teamed up with Operating Tax Specialists, Inc. (OTS), a leading tax consultant group for the transportation industry, to create an advanced fuel-tax compliance reporting system. RoadTax™ is designed to meet the transportation industry's need for an easy to use, affordable software application to streamline the complex IFTA, IRP and Mileage reporting requirements faced by carriers. Interfacing with Rand McNally's IntelliRoute system was ideal for this purpose. The IntelliRoute system's ability to create routes for specific trailer types and to make use of GPS latitude/longitude data allows RoadTax™ to calculate a carriers tax liability with a high degree of accuracy.

RoadTax™ effortlessly and efficiently calculates the various Fuel, Mileage and Registration taxes imposed on interstate trucking companies. Fuel and Dispatch data can either be imported directly into the application or entered manually, and with the IntelliRoute™ interface, state mileage distances can be calculated automatically, eliminating the need for manual entry of driver trip reports. The IntelliRoute™ system mileage information can also be used to verify the accuracy of driver submitted trip reports. The RoadTax™ trip management features allow you to easily audit your trip records and find discrepancies, such as missing route segments, before filing your returns, thereby reducing audit risk.

RoadTax™ utilizes Rand McNally's State-of-the-art IntelliRoute™ Route Management System to generate mileage and routing data for IFTA, IRP and state mileage reports. IntelliRoute's GPS accurate database allows users to create routes for 53' trailers, doubles, triples and other common trailer types, specify HazMat loads by commodity class, utilize lat/long information from a carriers GPS system and much more. This ability to customize routes allows RoadTax™ to generate IFTA, IRP and other reports with a high degree of accuracy, minimizing the amount of residual miles and reducing audit risks.