IFTA and IRPIFTA and IRPA History Lesson!A History Lesson!

Donna Burch – Ryder System, IncDonna Burch – Ryder System, IncJohn Jabas – Frozen Food ExpressJohn Jabas – Frozen Food Express

Tom Klingman – UPSTom Klingman – UPSSandy Johnson & Bill Taylor– Sandy Johnson & Bill Taylor–

Total Trucking MgmtTotal Trucking Mgmt

Your IFTA/IRP Your IFTA/IRP InstructorsInstructors

• Donna Burch - Started with Fuel Tax issues in Donna Burch - Started with Fuel Tax issues in 1974 – 33 Years1974 – 33 Years

• John Jabas – Involved with Registration and tax John Jabas – Involved with Registration and tax issues for over 31 yearsissues for over 31 years

• Tom Klingman – Handled Registration and Fuel Tom Klingman – Handled Registration and Fuel Tax issues for UPS for over 33 yearsTax issues for UPS for over 33 years

• Sandy Johnson – Involved since 1984 – 22 Sandy Johnson – Involved since 1984 – 22 years - from both a Government and Industry years - from both a Government and Industry perspectiveperspective

• Bill Taylor has an extensive background in Bill Taylor has an extensive background in Management and Training in both the public Management and Training in both the public and private sectorsand private sectors

The Lesson PlanThe Lesson Plan• Professor Burch - The Economics of IFTA!Professor Burch - The Economics of IFTA!• Professor Jabas – What could be – Theories Professor Jabas – What could be – Theories

form the Past and for the Future !form the Past and for the Future !• Professor Klingman – The Trucking Professor Klingman – The Trucking

Industry - Today and Yesterday !Industry - Today and Yesterday !• Professors Johnson and Taylor– Professors Johnson and Taylor–

Government and Industry – Alternative Government and Industry – Alternative RelationshipsRelationships

IFTA – The Cost to IFTA – The Cost to the Industry!the Industry!

Donna BurchDonna Burch

First, a little history…First, a little history…

20 Years Ago –20 Years Ago – Fuel Use Taxes Were a CrisisFuel Use Taxes Were a Crisis

For the Trucking Industry:For the Trucking Industry:• Non-uniformNon-uniform• BurdensomeBurdensome• Expensive to Administer & Comply WithExpensive to Administer & Comply With

The Cost to the IndustryThe Cost to the Industry• Administrative CostAdministrative Cost

– Non - UniformityNon - Uniformity– Purchase of Fuel Tax Permits /DecalsPurchase of Fuel Tax Permits /Decals– Bonding ExpenseBonding Expense– Multiple Tax FilingsMultiple Tax Filings– Lack of coordination of RefundsLack of coordination of Refunds– Multiple AuditsMultiple Audits

The Cost to the IndustryThe Cost to the Industry• Operational CostOperational Cost

– Installation of over 25 Decals and Installation of over 25 Decals and License PlatesLicense Plates

– Coordination of Expiration DatesCoordination of Expiration Dates– Cash Out while waiting for refunds – Cash Out while waiting for refunds –

Over Payments vs. Under PaymentsOver Payments vs. Under Payments– Pulling same records for different Pulling same records for different

auditsaudits

Non-UniformityNon-UniformityVehiclesVehicles

RegistrationRegistrationCredentialsCredentials

BondingBondingLeasesLeases

Tax ReportsTax ReportsCredits & RefundsCredits & Refunds

Audit & AdministrationAudit & Administration

Vehicles ReportedVehicles Reported

• > all commercial vehicles> all commercial vehicles• > 2 axles> 2 axles• > 7,000 lbs. empty wt.> 7,000 lbs. empty wt.• > 10,000 lbs. empty wt.> 10,000 lbs. empty wt.• > 18,000 lbs. GVW or 7,500 lbs. empty wt> 18,000 lbs. GVW or 7,500 lbs. empty wt• > 16,000 lbs. GVW> 16,000 lbs. GVW• > 30 gallon fuel tank capacity> 30 gallon fuel tank capacity& & at leastat least 16 other definitions 16 other definitions

Credentials (DECALS!)Credentials (DECALS!)• 1 per vehicle – or 2?1 per vehicle – or 2?• On left side, right side – or front?On left side, right side – or front?• Display dates?Display dates?• Annual, biennial – or permanent?Annual, biennial – or permanent?• Fees?Fees?

Charged by 22 states –Charged by 22 states –TOTAL ANNUAL FEES PER TRUCK:TOTAL ANNUAL FEES PER TRUCK:

$331.70$331.70

Recap: Recap: Fuel Use Taxes in 1986Fuel Use Taxes in 1986

• Non-uniform? DefinitelyNon-uniform? Definitely• Burdensome? For carriers of all sizesBurdensome? For carriers of all sizes• Expensive?Expensive?

US DOT estimated up toUS DOT estimated up to

$1 billion a year in administrative$1 billion a year in administrative costs for motor carrierscosts for motor carriers

AnswerAnswer

IFTA = Uniformity and IFTA = Uniformity and Reduced Administrative Reduced Administrative

CostCost

A Message from A Message from the Pastthe Past

Base State Agreements:Base State Agreements:

From the Perspective of and From the Perspective of and Interstate Motor CarrierInterstate Motor Carrier

FTA Fuel Tax Section Mtg - 1992FTA Fuel Tax Section Mtg - 1992

IRP – Theories that IRP – Theories that will work!will work!

John JabasJohn Jabas

WHY NOT THE DALLAS WHY NOT THE DALLAS PLAN!PLAN!

HISTORICAL REVIEW OF HISTORICAL REVIEW OF ESTIMATED MILES FOR IRPESTIMATED MILES FOR IRP

TEXAS PLAN TEXAS PLAN DALLAS PLANDALLAS PLAN

FULL PRIVILEDGE PLANFULL PRIVILEDGE PLAN

LET’S ATTEMPT A NEW PLAN,LET’S ATTEMPT A NEW PLAN,WHAT COULD BE!!!WHAT COULD BE!!!

IRP MODIFIED PLANIRP MODIFIED PLAN::

• A. UTILIZE THE BASE JURISDICTION’S A. UTILIZE THE BASE JURISDICTION’S ESTIMATED MILEAGE CHART FOR ALL ESTIMATED MILEAGE CHART FOR ALL JURISDICTIONS FOR INITIAL IRP JURISDICTIONS FOR INITIAL IRP APPLICATION.APPLICATION.

IRP MODIFIED PLAN:IRP MODIFIED PLAN:

• B. AT RENEWAL USE THE SCHEDULE (B) B. AT RENEWAL USE THE SCHEDULE (B) MILES AND ADJUST THE FIRST YEAR MILES AND ADJUST THE FIRST YEAR ESTIMATE TO ACTUAL AND NET ESTIMATE TO ACTUAL AND NET ADJUSTMENTS.ADJUSTMENTS.

IRP MODIFIED PLAN:IRP MODIFIED PLAN:

• C. THIS BECOMES AN AUDIT.C. THIS BECOMES AN AUDIT.

IRP MODIFIED PLAN:IRP MODIFIED PLAN:

• D. A POSSIBLE ALTERNATIVE TO D. A POSSIBLE ALTERNATIVE TO SUBSEQUENT YEAR ESTIMATES OVER SUBSEQUENT YEAR ESTIMATES OVER 100%.100%.

The Trucking The Trucking Industry Today and Industry Today and

YesterdayYesterdayTom KlingmanTom Klingman

First, a little history…First, a little history…

20 Years Ago –20 Years Ago – Fuel Use Taxes Were a CrisisFuel Use Taxes Were a Crisis

For the Trucking Industry:For the Trucking Industry:• Non-uniformNon-uniform• BurdensomeBurdensome• Expensive to Administer & Comply WithExpensive to Administer & Comply With

Non-UniformityNon-UniformityVehiclesVehicles

RegistrationRegistrationCredentialsCredentials

BondingBondingLeasesLeases

Tax ReportsTax ReportsCredits & RefundsCredits & Refunds

Audit & AdministrationAudit & Administration

RegistrationRegistration• Annual, biennial, or permanent registration?Annual, biennial, or permanent registration?• Fees – one time or annual?Fees – one time or annual?• Fees per fleet or per vehicle?Fees per fleet or per vehicle?• Licenses for each place of business?Licenses for each place of business?• Renewable in October, December, January, March, Renewable in October, December, January, March,

April, or July?April, or July?• Vehicle-specific cab cards?Vehicle-specific cab cards?• Account numbers on the vehicle?Account numbers on the vehicle?

BondingBonding

• Required by 19 statesRequired by 19 states• Various amounts and limitsVarious amounts and limits• Required for refunds in c. 10 more statesRequired for refunds in c. 10 more states• Alternative security rarely allowedAlternative security rarely allowed

LeasesLeasesWho must report?Who must report?

– Lessee?Lessee?– Lessor?Lessor?– Party buying fuel?Party buying fuel?– Vehicle operator?Vehicle operator?– Up to the parties?Up to the parties?– State permission needed?State permission needed?– Depend on term of the lease?Depend on term of the lease?

Copy of lease required in vehicle?Copy of lease required in vehicle?

Tax ReportsTax Reports• Frequency: monthly, quarterly, annuallyFrequency: monthly, quarterly, annually• Due date: 20Due date: 20thth, 25, 25thth, 30, 30thth, last of month, last of month

Postmark honored?Postmark honored?• FormatFormat• Computation of taxComputation of tax

Vehicles covered? Formula? State MPGs?Vehicles covered? Formula? State MPGs?Individual vehicle MPGs?Individual vehicle MPGs?

• Supporting documentation required?Supporting documentation required?• Payment in certified funds?Payment in certified funds?

Credits & RefundsCredits & Refunds• Credits carry over?Credits carry over?• How long?How long?• Refunds available?Refunds available?• Minimum amount?Minimum amount?• Audit first?Audit first?• Documentation?Documentation?• Other restrictions?Other restrictions?

Audit & Admin.Audit & Admin.• Record requirementsRecord requirements

– Official fuel receiptsOfficial fuel receipts– Original documentsOriginal documents

• Frequent changes in requirementsFrequent changes in requirements• Rules inaccessible to taxpayersRules inaccessible to taxpayers• Multiple audits under different rulesMultiple audits under different rules• LOTS of GotchasLOTS of Gotchas

IFTAIFTA• NAGTC 5-Point Plan 1975NAGTC 5-Point Plan 1975• First implemented 1983First implemented 1983 3 members3 members• Redrafted per NGA 1986Redrafted per NGA 1986 4 members4 members• Required by ISTEA 1991 14 membersRequired by ISTEA 1991 14 members• ISTEA deadline 1996ISTEA deadline 1996• IFTA Recodified 1995-98IFTA Recodified 1995-98• TodayToday 58 members 58 members

Complaints? Complaints? NONO• Uniform?Uniform? YESYES• Burdensome?Burdensome? MinimallyMinimally• Expensive?Expensive? NONO

We’re not going back to We’re not going back to the Good Old Days !!the Good Old Days !!

Today’s Today’s Trucking IndustryTrucking Industry

DeregulatedDeregulatedEfficientEfficient

Continuously changingContinuously changingCritical to the EconomyCritical to the Economy

Size & Scope (U.S. - 2003)Size & Scope (U.S. - 2003)

• $610 Billion gross freight revenue$610 Billion gross freight revenue– 86.9% of the Nation’s freight bill86.9% of the Nation’s freight bill– 66.5% of US-Canada trade by value66.5% of US-Canada trade by value

• 68.9% of all freight tonnage moved68.9% of all freight tonnage moved• 2.6 million heavy commercial trucks2.6 million heavy commercial trucks• 524,309 companies on file with USDOT524,309 companies on file with USDOT

– 95.9% operate 20 or fewer trucks95.9% operate 20 or fewer trucks• 8.6 million trucking-related employment8.6 million trucking-related employment

Bottom Line:Bottom Line:

TRUCKING REPRESENTS TRUCKING REPRESENTS 5%5%

OF THE TOTALOF THE TOTALU.S. GROSS DOMESTIC PRODUCTU.S. GROSS DOMESTIC PRODUCT

- and then some -- and then some -

Good Times for TruckingGood Times for Trucking

• 2004-2005 - Great Years for Trucking2004-2005 - Great Years for Trucking– Booming EconomyBooming Economy– Increases in Manufacturing, ImportsIncreases in Manufacturing, Imports– No Excess CapacityNo Excess Capacity– Rate Increases Stick Rate Increases Stick

• BUT BUT ……

Increasing PressuresIncreasing Pressures

• Driver ShortageDriver Shortage– CDL Hazmat Background ChecksCDL Hazmat Background Checks

• FuelFuel– PricesPrices– ULSD ULSD

• InsuranceInsurance– Tort ReformTort Reform

Pressures, cont’d.Pressures, cont’d.• Clean Air RegulationsClean Air Regulations

– Diesel Engine RequirementsDiesel Engine Requirements– Operational RestrictionsOperational Restrictions

• ProductivityProductivity– Congestion, Bad RoadsCongestion, Bad Roads– Increasing FreightIncreasing Freight– Size & Weight CapsSize & Weight Caps

• TaxesTaxes

A Changing IndustryA Changing Industry• New Styles of Manufacturing & RetailingNew Styles of Manufacturing & Retailing• New Logistics DemandsNew Logistics Demands

– Just-in-Time PlusJust-in-Time Plus– Supply-Chain ManagementSupply-Chain Management– Rolling WarehousesRolling Warehouses

• Economic Regulation & Categories Gone: Economic Regulation & Categories Gone: Competition IntenseCompetition Intense

• Industry Must Be Flexible, AgileIndustry Must Be Flexible, Agile

WITHOUT TRUCKS WITHOUT TRUCKS AMERICA STOPS!AMERICA STOPS!

A SyllogismA Syllogism• Economic Efficiency Benefits EverybodyEconomic Efficiency Benefits Everybody• Trucking Is Key to Economic EfficiencyTrucking Is Key to Economic Efficiency• IFTA Is Key to Motor Carrier EfficiencyIFTA Is Key to Motor Carrier Efficiency• Hence …Hence …• But Only If IFTA But Only If IFTA RemainsRemains Uniform, Uniform, Minimally Burdensome & Inexpensive to Comply Minimally Burdensome & Inexpensive to Comply

withwith

Government and Government and Industry – Alternative Industry – Alternative

RelationshipsRelationshipsSandy JohnsonSandy Johnson

What’s important to What’s important to each?each?

NeedsNeedsGov’Gov’

tt IndIndFairnessFairnessEquityEquityClarityClarityEase of Ease of ImplementationImplementationEfficientEfficientMaximize RevenueMaximize RevenueMinimize TaxesMinimize TaxesStabilityStabilityWhat else???What else???

to both ind & gov’tto both ind & gov’tto all carriers & gov’tto all carriers & gov’tCan’t be confusingCan’t be confusingRelatively Relatively easy/inexpensiveeasy/inexpensive

Must not be Must not be burdensomeburdensome

Not constant changeNot constant change

Key PlayersKey Players• GovernmentGovernment

– Policy makersPolicy makers– AuditorsAuditors– CollectorsCollectors

• IndustryIndustry– CarriersCarriers– AssociationsAssociations

How are the players How are the players involved?involved?

• Could be high Could be high involvement or low involvement or low involvementinvolvement

InvolvementInvolvement

Governm

ent Involvement

Industry Involvement

High

HighLow

Low

1

2 3

4

Possible ScenariosPossible Scenarios

GovernmentDictates Co-operation

Conflict Conflict leadingleading

to Chaosto Chaos

IndustryControls

Governm

ent Involvement

Industry Involvement

High

HighLow

Low

1

2 3

4

Scenario 1Scenario 1Gov’t DictatesGov’t Dictates

• Industry resistsIndustry resists– seeks influence through seeks influence through

Political systemPolitical system– Industry associationIndustry association– LobbyLobby– Personal associationsPersonal associations– Could end up with systems Could end up with systems

that serve special intereststhat serve special interests– Large enforcement Large enforcement

bureaucracybureaucracy

Scenario 2Scenario 2Conflict leading to ChaosConflict leading to Chaos

• Control is unclearControl is unclear• Reduced government revenuesReduced government revenues• Unfair competitionUnfair competition• Unsafe practicesUnsafe practices• Unhappy publicUnhappy public• Unhappy politiciansUnhappy politicians

Scenario 3Scenario 3Industry DictatesIndustry Dictates

• Reduced government revenuesReduced government revenues• Uneven playing field creating Uneven playing field creating

uneven competitionuneven competition• Unsafe roadsUnsafe roads

Scenario 4Scenario 4CO-OPERATION!CO-OPERATION!

• Government retains responsibility and Government retains responsibility and authorityauthority

• Consultation with industry results in Consultation with industry results in legislation and regulation that meets the legislation and regulation that meets the needs of both sidesneeds of both sides

• Both sides cooperate on implementationBoth sides cooperate on implementation

SummarySummary

GovernmentDictates Co-operation

Conflict Conflict leadingleading

To ChaosTo Chaos

IndustryControls

Governm

ent Involvement

Industry Involvement

High

HighLow

Low

1

2 3

4

What’s important to What’s important to each?each?

NeedsNeedsGov’Gov’

tt IndIndFairnessFairnessEquityEquityClarityClarityEase of Ease of ImplementationImplementationEfficientEfficientMaximize RevenueMaximize RevenueMinimize TaxesMinimize TaxesStabilityStabilityWhat else???What else???

to both ind & gov’tto both ind & gov’tto all carriers & gov’tto all carriers & gov’tCan’t be confusingCan’t be confusingRelatively Relatively easy/inexpensiveeasy/inexpensive

Must not be Must not be burdensomeburdensome

Not constant changeNot constant change