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IFTA and IRP A History Lesson!
Donna Burch – Ryder System, Inc John Jabas – Frozen Food Express Tom Klingman – UPS Sandy Johnson & Bill Taylor– Total Trucking Mgmt
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Your IFTA/IRP Instructors
Donna Burch - Started with Fuel Tax issues in 1974 – 33 Years John Jabas – Involved with Registration and tax issues for over 31 years Tom Klingman – Handled Registration and Fuel Tax issues for UPS for over 33 years Sandy Johnson – Involved since – 22 years - from both a Government and Industry perspective Bill Taylor has an extensive background in Management and Training in both the public and private sectors
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The Lesson Plan Professor Burch - The Economics of IFTA!
Professor Jabas – What could be – Theories form the Past and for the Future ! Professor Klingman – The Trucking Industry - Today and Yesterday ! Professors Johnson and Taylor– Government and Industry – Alternative Relationships
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IFTA – The Cost to the Industry!
Donna Burch
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First, a little history…
20 Years Ago – Fuel Use Taxes Were a Crisis For the Trucking Industry: Non-uniform Burdensome Expensive to Administer & Comply With
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The Cost to the Industry
Administrative Cost Non - Uniformity Purchase of Fuel Tax Permits /Decals Bonding Expense Multiple Tax Filings Lack of coordination of Refunds Multiple Audits
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The Cost to the Industry
Operational Cost Installation of over 25 Decals and License Plates Coordination of Expiration Dates Cash Out while waiting for refunds – Over Payments vs. Under Payments Pulling same records for different audits
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Audit & Administration
Non-Uniformity Vehicles Registration Credentials Bonding Leases Tax Reports Credits & Refunds Audit & Administration
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Vehicles Reported > all commercial vehicles > 2 axles
> 7,000 lbs. empty wt. > 10,000 lbs. empty wt. > 18,000 lbs. GVW or 7,500 lbs. empty wt > 16,000 lbs. GVW > 30 gallon fuel tank capacity & at least 16 other definitions
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Credentials (DECALS!) 1 per vehicle – or 2?
On left side, right side – or front? Display dates? Annual, biennial – or permanent? Fees? Charged by 22 states – TOTAL ANNUAL FEES PER TRUCK: $331.70
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Recap: Fuel Use Taxes in 1986
Non-uniform? Definitely Burdensome? For carriers of all sizes Expensive? US DOT estimated up to $1 billion a year in administrative costs for motor carriers
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Reduced Administrative Cost
Answer IFTA = Uniformity and Reduced Administrative Cost
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A Message from the Past Base State Agreements:
From the Perspective of and Interstate Motor Carrier FTA Fuel Tax Section Mtg
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IRP – Theories that will work!
John Jabas
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HISTORICAL REVIEW OF ESTIMATED MILES FOR IRP
WHY NOT THE DALLAS PLAN! HISTORICAL REVIEW OF ESTIMATED MILES FOR IRP
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TEXAS PLAN DALLAS PLAN FULL PRIVILEDGE PLAN
LET’S ATTEMPT A NEW PLAN, WHAT COULD BE!!!
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IRP MODIFIED PLAN: A. UTILIZE THE BASE JURISDICTION’S ESTIMATED MILEAGE CHART FOR ALL JURISDICTIONS FOR INITIAL IRP APPLICATION.
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IRP MODIFIED PLAN: B. AT RENEWAL USE THE SCHEDULE (B) MILES AND ADJUST THE FIRST YEAR ESTIMATE TO ACTUAL AND NET ADJUSTMENTS.
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IRP MODIFIED PLAN: C. THIS BECOMES AN AUDIT.
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IRP MODIFIED PLAN: D. A POSSIBLE ALTERNATIVE TO SUBSEQUENT YEAR ESTIMATES OVER 100%.
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The Trucking Industry Today and Yesterday
Tom Klingman
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First, a little history…
20 Years Ago – Fuel Use Taxes Were a Crisis For the Trucking Industry: Non-uniform Burdensome Expensive to Administer & Comply With
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Audit & Administration
Non-Uniformity Vehicles Registration Credentials Bonding Leases Tax Reports Credits & Refunds Audit & Administration
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Registration Annual, biennial, or permanent registration?
Fees – one time or annual? Fees per fleet or per vehicle? Licenses for each place of business? Renewable in October, December, January, March, April, or July? Vehicle-specific cab cards? Account numbers on the vehicle?
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Bonding Required by 19 states Various amounts and limits
Required for refunds in c. 10 more states Alternative security rarely allowed
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Leases Who must report? Copy of lease required in vehicle? Lessee?
Lessor? Party buying fuel? Vehicle operator? Up to the parties? State permission needed? Depend on term of the lease? Copy of lease required in vehicle?
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Tax Reports Postmark honored? Vehicles covered? Formula? State MPGs?
Frequency: monthly, quarterly, annually Due date: 20th, 25th, 30th, last of month Postmark honored? Format Computation of tax Vehicles covered? Formula? State MPGs? Individual vehicle MPGs? Supporting documentation required? Payment in certified funds?
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Credits & Refunds Credits carry over? How long? Refunds available?
Minimum amount? Audit first? Documentation? Other restrictions?
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Audit & Admin. Record requirements Official fuel receipts
Original documents Frequent changes in requirements Rules inaccessible to taxpayers Multiple audits under different rules LOTS of Gotchas
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IFTA NAGTC 5-Point Plan 1975 First implemented 1983 3 members
Redrafted per NGA members Required by ISTEA members ISTEA deadline 1996 IFTA Recodified Today members
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Complaints? NO We’re not going back to the Good Old Days !!
Uniform? YES Burdensome? Minimally Expensive? NO We’re not going back to the Good Old Days !!
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Today’s Trucking Industry
Deregulated Efficient Continuously changing Critical to the Economy
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Size & Scope (U.S. - 2003) $610 Billion gross freight revenue
86.9% of the Nation’s freight bill 66.5% of US-Canada trade by value 68.9% of all freight tonnage moved 2.6 million heavy commercial trucks 524,309 companies on file with USDOT 95.9% operate 20 or fewer trucks 8.6 million trucking-related employment
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U.S. GROSS DOMESTIC PRODUCT
Bottom Line: TRUCKING REPRESENTS 5% OF THE TOTAL U.S. GROSS DOMESTIC PRODUCT - and then some -
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Good Times for Trucking
Great Years for Trucking Booming Economy Increases in Manufacturing, Imports No Excess Capacity Rate Increases Stick BUT …
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Increasing Pressures Driver Shortage Fuel Insurance
CDL Hazmat Background Checks Fuel Prices ULSD Insurance Tort Reform
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Pressures, cont’d. Clean Air Regulations Productivity Taxes
Diesel Engine Requirements Operational Restrictions Productivity Congestion, Bad Roads Increasing Freight Size & Weight Caps Taxes
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A Changing Industry New Styles of Manufacturing & Retailing
New Logistics Demands Just-in-Time Plus Supply-Chain Management Rolling Warehouses Economic Regulation & Categories Gone: Competition Intense Industry Must Be Flexible, Agile
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WITHOUT TRUCKS AMERICA STOPS!
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A Syllogism Economic Efficiency Benefits Everybody
Trucking Is Key to Economic Efficiency IFTA Is Key to Motor Carrier Efficiency Hence … But Only If IFTA Remains Uniform, Minimally Burdensome & Inexpensive to Comply with
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Government and Industry – Alternative Relationships
Sandy Johnson
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What’s important to each?
Needs Gov’t Ind Fairness Equity Clarity Ease of Implementation Efficient Maximize Revenue Minimize Taxes Stability What else??? to both ind & gov’t to all carriers & gov’t Can’t be confusing Relatively easy/inexpensive Must not be burdensome Not constant change Each group has it’s own self interest. Government wants to maximize revenues & industry wants to minimize costs. That has to be worked out and this is a point of potential conflict.
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Key Players Government Industry Policy makers Auditors Collectors
Carriers Associations
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How are the players involved?
Could be high involvement or low involvement
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Involvement 1 4 High Government Involvement 2 3 Low Low High
Industry Involvement
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Possible Scenarios Government Dictates Co-operation Industry
1 4 High Government Involvement 2 3 Industry Controls Conflict leading to Chaos Explain the slides. POSSIBILITIES… Low Low High Industry Involvement
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Scenario 1 Gov’t Dictates
Industry resists seeks influence through Political system Industry association Lobby Personal associations Could end up with systems that serve special interests Large enforcement bureaucracy
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Scenario 2 Conflict leading to Chaos
Control is unclear Reduced government revenues Unfair competition Unsafe practices Unhappy public Unhappy politicians These are not absolutes. These are possible outcomes.
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Scenario 3 Industry Dictates
Reduced government revenues Uneven playing field creating uneven competition Unsafe roads
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Scenario 4 CO-OPERATION!
Government retains responsibility and authority Consultation with industry results in legislation and regulation that meets the needs of both sides Both sides cooperate on implementation
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Summary Government Dictates Co-operation Industry Conflict leading
1 4 High Government Involvement 2 3 Industry Controls Conflict leading To Chaos Low Low High Industry Involvement
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What’s important to each?
Needs Gov’t Ind Fairness Equity Clarity Ease of Implementation Efficient Maximize Revenue Minimize Taxes Stability What else??? to both ind & gov’t to all carriers & gov’t Can’t be confusing Relatively easy/inexpensive Must not be burdensome Not constant change Each group has it’s own self interest. Government wants to maximize revenues & industry wants to minimize costs. That has to be worked out and this is a point of potential conflict.
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