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TRANSTRENDS MONTHLY NEWSLETTER- January 2006
01/04/2006
A PUBLICATION OF THE TRANSLAW GROUP, INC.
EDITOR: JAMES M. BURNS
48 ROBBINS ROAD, SPRINGFIELD, MA 01104
TOLL FREE 800 637 0754
TEL 413 732 8588
FAX 413 732 8553
EMAIL: informatioverett-associates.com
TRANSTRENDS is published monthly for friends and clients of the Translaw Group, Inc. The information provided in this newsletter is not intended as specific advice on a particular subject. Rather, the information is for general edification. Further, this information is time sensitive and may need to be revised and updated from time to time. Please feel free to call this office with your specific questions at 413 781 8205, or you may e-mail the office at jburnransregs.com
IN THIS ISSUE
1 Fuel Line
2 Tod II Turns 2
3 No Skid Zone
3 ST-10 Excise and the Pike
3 IFTA Audit Time
8 Carrier Official to Jail
8 Big Brother is Listening
9 Lumpers
NEWS ALERT - Have you secured
all of the permits needed for 2006
FUEL LINE
Each issue we will feature as the first item the FUEL LINE which will alert you to those states that are planning tax increases, toll hikes and other fees.
DIESEL PRICES DROP FOR SIXTH STRAIGHT WEEK
The national average price for diesel fell for the sixth week in a row for the week ending Dec. 5, according to the Energy Information Administration. The average dropped 5.4 cents to $2.425 per gallon, the lowest price since mid-August. The lowest prices were found in the Lower Atlantic region, at an average of $2.354 per gallon. The Central Atlantic and New England regions were significantly higher, at $2.569 and $2.591 per gallon, respectively. The East Coast as a whole had an average of $2.428 per gallon.
All of those prices are down from the week before. The Rocky Mountain region saw the biggest drop, falling 12 cents to $2.471 per gallon. California also saw a significant plunge, dipping more than 7 cents to $2.486 per gallon. The rest of the West Coast posted an average price of $2.538 per gallon, while the Gulf Coast region came in at $2.411 per gallon. The Midwest, meanwhile, saw an average price of $2.39 per gallon.
GROUP FILES SUIT TO STOP TEXAS TOLL ROAD
An environmental group is suing the Texas Department of Transportation in a bid to stop a toll road project in the San Antonio area. The group Aquifer Guardians in Urban Areas, or AGUA, filed the lawsuit Friday, Dec. 2. charges that the state did not conduct a necessary environmental impact study before it began the project the week of Nov. 27.
Part of the planned toll road would run over the Edwards Aquifer recharge zone located north of the city. While the state did perform an environmental assessment of the project in 1984 as well as re-evaluations of the assessment in 2000 and 2004, the environmental group said that is not enough.
We can only imagine what the toll will be after all of the studies are completed and paid for.
MICHIGAN’S FUEL TAX MAY PAY FOR CLEANUP
A state commission wants Michigan to increase the state per-gallon tax on fuel by at least 1.1 cents a gallon. That would bring in $77 million for cleaning up leaks from underground fuel storage tanks. An estimated 7,000 underground storage tank sites contaminate the ground and water sources throughout the state, despite a nearly 20-year-old federal mandate to clean them up.
Doesn’t it always seem that the trucker pays for the clean up when all of the money goes to non-transportation projects.
TOD C. BURNS II TURNS THE BIG TWO
His parents are in for a tough year! The little guy visits the office on a regular basis and goes to “school” a few days per week.
He enjoys playing with his trucks, watching videos and we don’t want to hear any criticism about watching TV and its affect on small children. That propaganda comes from people who don’t have children or grandchildren.
He has been known to pull the wires out of the computer bank and play on key-boards when he certainly knows he shouldn’t. But, how can you chastise such a cute little guy! Happy Birthday, Tod II.
NO SKID ZONE
Bill O’Reilly may have the “No Spin Zone” but the Translaw Group has the “No skid Zone”. Each issue will highlight the absurdity of a particular rule, regulation, law or government action that just doesn’t make common sense.
CONFUSED DRIVER STOPPED WITH LOAD OF MISSILE LAUNCHERS
This is not a good thing
Authorities say the driver of a truck carrying two armored vehicles and anti-tank missile launchers was pre-occupied with personal issues and missed a shipment deadline. The Canadian Press reported that authorities followed with concern when the truck was spotted on westbound Highway 407 in Toronto, particularly after the intended recipient in Montreal reported the shipment stolen.
The driver told authorities he missed the shipment date because of personal and family issues. The precious cargo of two M113 armored personnel carriers bearing ground-to-ground missile launchers were not harmed.
Ontario Provincial Police along with Peel and York Region police stayed back at first as a precaution until they had sufficiently mobilized. Taking further precautions, they made the stop and the driver cooperated without incident.
ST-10 EXCISE TAX FILING WILL BE DUE FOR 2005 TAX YEAR
The MA DOR will be expecting your ST-10 excise tax filing covering the cost of fuel consumed on the MA Pike for which miles were backed off of the IFTA in order to compensate for the fact that tolls were paid in lieu of fuel tax. However, the MA DOR is still legally able to extract 5% of the value of the cost of the fuel consumed on the Pike from your pocket.
The reports are due April 15 of each year for the previous year.
Carriers that use our TAXTRAKtm fuel tax reporting service will automatically receive the filing; however, other carriers must make sure they file the required return. This procedure affects non-MA based IFTA registrants as well as MA based IFTA registrants and the MA DOR is going back to the year 2001. All of the IFTA member states are cooperating in getting this information to the MA DOR.
Obviously, I must advise all tax payers that they must file the return.
ARE YOUR READY FOR AN IFTA AUDIT?
The various state tax agencies are very active conducting IFTA audits. How often have you thought what would happen if you company was selected for an audit and what are the chances of being selected for that dubious distinction. The Translaw Group, contrary to popular belief, cannot perform miracles at audit time. Each carrier must make sure that all miles are accounted for and that all fuel can be identified as to which vehicle(s) it went into.
The following guidelines should be reviewed and any changes that you deem necessary for your operations should be made particularly in view of the beginning of the New Year. Please feel free to call the office with your questions and comments concerning the following guidelines.
IFTA AUDITING STANDARDS
WHAT ARE YOUR CHANCES OF BEING SUBJECTED TO AN AUDIT
Base jurisdictions will be held accountable for audits and will be required to complete audits of an average of 3 percent per year of the IFTA accounts reported by that jurisdiction on the annual reports filed pursuant to the IFTA Procedures for each year of the program compliance review period. Such audits may cover the corresponding quarters of the three registration years with a minimum of one registration year. This does not preclude audits of individual licensees several times during the three-year period. However, it would be unusual to be audited more than once during a 3 year period.
SELECTION OF AUDITS
The following guidelines are being used in selecting audits to fulfill the IFTA auditing requirements:
LOW-DISTANCE/HIGH-DISTANCE ACCOUNTS EQUIPMENT
At least 15 percent of each member jurisdiction's audit requirement shall involve low-distance accounts. (Low-distance accounts are considered to be the 25 percent of the previous year's licensees who had the lowest number of miles/kilometers reported in all member jurisdictions). At least 25 percent of each member jurisdiction's audit requirement shall involve high-distance accounts. High-distance accounts are considered to be the 25 percent of the previous year's licensees who had the highest number of miles/kilometers reported in all member jurisdictions.)
LOW-DISTANCE/HIGH-DISTANCE COMPUTATIONS
Low-distance computations and high-distance computations shall be based on total miles/kilometers reported by all IFTA licensees included on the annual report filed by the jurisdiction on annual reports filed pursuant to the IFTA Procedures Manual, including licensees who report no operations during a quarter, for the first three quarters of each calendar year.
SAMPLING
Unless a specific situation dictates, all audits will be conducted on a sampling basis. Sample period(s) must be representative of the licensee's operations. Sample period(s) may be different for member jurisdictions due to seasonal operations. The licensee should be allowed input into sample selection if legitimate reasons exist. An agreement that the sampling methodology is appropriate should be signed by the licensee and the auditor.
Make sure you mention any unusual circumstances that you are aware of that would make the sampling period improper. Such things would include seasonal operations. Lost or damaged records for a specific period, computer crashes and so forth. Such information will assist you and the auditor to make sure a good sampling period is selected.
TAX PAID FUEL CREDITS
When tax paid fuel documentation is unavailable, all claims for tax paid fuel will be disallowed. This frequently happens and it is important that the registrant keep accurate records and be able to show which vehicles actually had fuel delivered into the fuel tanks.
HOW TO AVOID THE BIG BUCKS ASSESSMENTS
TAXTRAKtm TIPS
Make sure you keep the following records without fail.
DRIVER LOGS
Although the US DOT regulations state you only need to keep the logs for six months, it is suggested that the taxpayer keep all driver logs for fuel tax auditing purposes. The log will document where the vehicles traveled and can be compared to the trip sheet for verification of the miles reported.
DISPATCH SHEETS/RECORDS
These documents should be kept and provided to the auditor for use in the audit review. If your records are kept with integrity these documents will only assist you and the auditor in concluding the audit quickly and smoothly. The dispatch sheets should coincide with the driver logs and the trip sheets.
TOLL RECEIPTS
Whether you keep individual receipts or have charge accounts/transponders make sure these records are made available to the auditor. This is particularly true during a New York Highway Use Tax audit.
FUEL RECEIPTS
Make sure you keep and maintain all fuel purchase receipts. This includes individual receipts, as well as the computer generated accounting that you may receive from credit card companies and fuel purchase management companies. Often, the auditor will take these receipts and verify the integrity of your trip sheets, driver log and the miles generated.
TRIP SHEETS
Many clients still refuse to use a trip sheet document to record miles. This is the one document that will assist you in keeping and maintaining proper records of miles traveled and fuel used.
There are many trip sheet styles in use and some are better than others. However, if you do not use a trip sheet or want an opinion on the integrity of your trip sheet simply ask this office to review your current record without obligation.
The basic trip sheet should include…
The beginning and ending hub reading...This will set the pace for the total and accurate number of miles to be accounted.
Miles generated in each state...The driver must compute the actual number of miles for each state and insert it on the trip sheet.
Fuel purchases in each state...The driver should list the fuel purchase on the trip sheet on the appropriate line indicating the state the fuel was purchased. The receipt should be stapled to the trip sheet or kept in a safe place for future audit purposes.
Routes of travel in general terms...The actual routes traveled by the driver should be listed on the trip sheet. This information gives the auditor a means by which to determine if the total miles reported were actually generated by the route of travel of the vehicle.
Toll and non toll mile accounting...This information will verify any deductions taken for the Massachusetts turn pike and will also verify your New York Thruway travel.
Loaded and unloaded miles for New York state...This information is important to those carriers that report under the loaded and unloaded method.
Origin, destination and all intermediate stops...The listing of the origin, destination and intermediate stops will assist the auditor in verifying the exact travel route and the total miles to be attributed to each state.
Dead head miles...All dead head miles must be accounted for and tax must be paid on such miles. Make sure that all drivers are aware of this fact in order to avoid the “gap mile” assessment. Failure to account for these miles will result in tax, penalty and interest.
GAP MILES
Auditors love to assess gap miles which can be best described as miles that cannot be accounted for or that do not fall into sequence with the beginning and ending hub readings and are not accounted for on a trip sheet. GAP miles result from short trips that are not captured on a trip sheet and include trips to maintenance facilities, test runs, yard jockeying and other such non-revenue mileage generating activity.
ESTIMATED MILES
Do not take a chance on estimating miles. Use this procedure only when you have no other way to determine mileage. Such an incident would include computer crashes, lost records and such. Most auditors will not be very tolerant of estimated miles without specific backup records.
In the absence of good fuel/mileage records the auditor may look at the following items.
· Prior experience
· Licensees with similar operations
· Industry averages
· Other independent records the carrier may have
If the auditor cannot find some basis to start from you may be given a 4.00 miles per gallon factor which is very low and will cost you more tax dollars.
FILE RETURNS ON TIME
A late filed return will result in a 10% penalty. The penalty goes against the entire tax bill for the quarter and not just on the portion that you owe. For example, if your total bill was $25,000.00 for the quarter and you had already paid $18,500.00 on fuel purchased at the pump your assessment for a late filed report is on the $25,000.00 and not on the $6,500.00 that you still owe. The assessment would be 10% of $25,000.00 or $2,500.00 plus interest. Avoid this situation.
REPORT YOUR TRIP SHEETS ON TIME
Make sure you include every trip sheet for all travel during the quarter in the quarter that the travel was generated. This will ensure that each quarter contains all travel that actually took place. You should avoid reporting trips from one quarter in the next quarter. Reporting trips from one quarter into the next quarter will occur from time to time; however, that practice should be avoided when possible.
AND LASTLY, DECAL ACCOUNTING
The various jurisdictions are now assessing tax, penalty and interest against carriers who do not keep accurate records with respect to decal management. You must keep an accurate record of the decals ordered and to which vehicles the decals are assigned. If a unit leaves the fleet due to an owner operator lease cancellation you must formally notify the owner operator and demand return of the decal. If possible, you should remove such decals and return them to the base jurisdiction under certified return receipt mail.
If a vehicle is in an accident and you repaint a door you must salvage the old decal and return it to the base jurisdiction. Jurisdictions that find decal mismanagement will assess tax, penalty and interest commensurate with the error rate for each decal that can not be accounted. Such penalties can mount very quickly. If you order an excessive amount of decals please make sure you know where the decals are at all times.
SMART VA. GOVERNOR
Virginia Governor elect Timothy Kaine (D) has stated that he is against truck-only toll lanes on Interstate 81 and does not support placing new tolls on existing roads, although he does support tolling new roads. “I do not support placing tolls on Interstate 81 because, as a general rule, I don’t believe in tolling existing roads,” Kaine said. “I also am opposed to truck-only toll lanes because I don’t believe they necessarily reduce congestion.”
While motorists may “feel good about zipping through lanes that don’t carry trucks, we have to consider the effect that would have on jobs in the Shenandoah Valley if vehicles aren’t exiting the freeway and generating revenue in the area,” he added.
NEW HAMPSHIRE TRUCKING COMPANY OWNER PLEADS GUILTY
The owner of a trucking company in Hudson, NH, has pleaded guilty to charges of conspiring to defraud the Internal Revenue Service, the Department of Transportation and his workers compensation insurance carriers. The Associated Press reported Robert Stalker, the owner of Robert’s Dismantling and Recycling Corp., admitted that he paid his workers in cash, under the table, for their overtime and never reported it to the IRS.
In addition, Stalker admitted businesses that owed his company paid him in checks made out to false names. He cashed more than $1.3 million worth of those checks at a Massachusetts check-cashing company and kept the cash off of his company’s books.
The U.S. Attorney’s office charged that Stalker also wrote more than $750,000 in checks from his company bank account to both real and fictitious companies for expenses his company never incurred. Stalker is scheduled for sentencing March 16, 2006.
It would appear to us that Mr. Stalker will have excellent job opportunities on Wall Street after his release.
MISSOURI GRANTS CONTRACT FOR STATEWIDE CELL PHONE-TRACKING PROGRAM
Big Brother continues his march
Beginning next week, cell phone-toting motorists in Missouri will have the government keeping an eye on them, whether they like it – or not.
On Friday, Dec. 2, the Missouri Department of Transportation approved a statewide contract with National Engineering Technology Corp., which will begin tracking and monitoring the signals sent from drivers’ cell phones to nearby towers to monitor vehicles’ positions and speeds. Drivers will have no way to opt out of the tracking – except to turn off the power to their cell phones.
Alone, a single car provides very little information, but when combined with data from other cars, researchers will be able to determine traffic slowdowns remotely. The information will also be available to the motorists themselves. Within six months, a Web site will be set up to allow drivers to check on traffic flow using the cell phone data, The Associated Press reported.
MoDOT officials told The AP that user information will remain anonymous, and that the data from the $3 million project will only be used to predict traffic patterns. “There is absolutely no privacy threat whatsoever,” said MoDOT Director Pete Rahn. However, since the system would use cell phone users’ signals – each of which can be traced back to the phone’s owner – privacy advocates worry about the potential use of the program for the tracking of private citizens.
“Even though it’s anonymous, it’s still ominous,” Daniel Solove, a privacy law professor at George Washington University, told The Kansas City Star. “It troubles me, because it does show this movement toward using a technology to track people.”
Missouri isn’t the only state to consider using cell phone-tracking technology. The Maryland State Highway Administration – with financial support from Delcan National Engineering Corp. and a number of federal grants – has been testing a $5.7 million traffic-monitoring system on more than 1,000 miles of roadway. However, according to The AP, MoDOT’s plan will cover 5,500 miles of roadways across the state, making it the largest project of its kind to date.
Remember, there is no such thing as privacy anymore. We are photographed, videoed, tracked and subject to electronic surveillance by big brother each day. Just make sure you are not cheating on your spouse or you will land on some reality TV show on cable.
LUMPS OF COAL TO SUPERVALU
Seeking an end to what it contends are illegal lumping requirements, OOIDA has filed a lawsuit against the grocery chain Supervalu Inc. in federal court in St. Paul, MN. The suit, filed Tuesday, Dec. 6, challenges the grocer’s policies for truckers who make deliveries to its docks. If certified as a class action, the case could involve thousands of truckers who have made deliveries to Supervalu docks since March this year and could result in Supervalu having to reimburse those truckers for what OOIDA contends were illegal lumping fees.
According to two OOIDA members who are named as plaintiffs in the suit along with the Association, the grocery retailer, Supervalu, in the case adopted new policies in March this year that violate the federal laws regarding lumping. Truckers Joseph Rajkovacz of Edgar, WI, and Carl Schaefer of Alpha, OH, had both made deliveries to the grocer prior to March without difficulties. Then Supervalu instituted new policies requiring insurance coverage in excess of federal requirements and requiring truckers without that insurance to accept assistance from and pay for lumpers.
“In terms of practicalities in the workplace and operations, we expect it will have some precedential value in the sense that retailers and businesses will sit up and take notice if they are going to be tagged for improper coercion of drivers,” an OOIDA attorney stated. “So, in a very practical way we expect this litigation will have some beneficial effect in the marketplace beyond this specific case.”
In the mean time, Herrick-Stare had some practical advice for truckers who believe they are being illegally required to accept and pay for lumping services.
We know several New England warehouse operations that should be very concerned about this pending law suit. The theory behind the law suit will work in many, many instances with warehouses that have become more demanding each year.
The regulations…
§ 14103. Loading and unloading motor vehicles
(a) Shipper Responsible for Assisting.— Whenever a shipper or receiver of property requires that any person who owns or operates a motor vehicle transporting property in interstate commerce (whether or not such transportation is subject to jurisdiction under subchapter I of chapter 135) be assisted in the loading or unloading of such vehicle, the shipper or receiver shall be responsible for providing such assistance or shall compensate the owner or operator for all costs associated with securing and compensating the person or persons providing such assistance.
(b) Coercion Prohibited.— It shall be unlawful to coerce or attempt to coerce any person providing transportation of property by motor vehicle for compensation in interstate commerce (whether or not such transportation is subject to jurisdiction under subchapter I of chapter 135) to load or unload any part of such property onto or from such vehicle or to employ or pay one or more persons to load or unload any part of such property onto or from such vehicle; except that this subsection shall not be construed as making unlawful any activity which is not unlawful under the National Labor Relations Act or the Act of March 23, 1932 (47 Stat. 70; 29 U.S.C. 101 et seq.), commonly known as the Norris-LaGuardia Act.
§ 14905. Penalties for violations of rules relating to loading and unloading motor vehicles
(a) Civil Penalties.— Whoever knowingly authorizes, consents to, or permits a violation of subsection (a) or (b) of section 14103 or who knowingly violates subsection (a) of such section is liable to the United States for a civil penalty of not more than $10,000 for each violation.
(b) Criminal Penalties.— Whoever knowingly violates section 14103 (b) of this title shall be fined under title 18 or imprisoned not more than 2 years, or both.
OHIO LOOKING FOR TAX DOLLARS AT YOUR EXPENSE
Less than 30 percent of businesses anticipated to register for Ohio’s new corporate activity tax program had actually registered for the tax a week after the registration deadline passed. When Ohio rolled out its new Commercial Activity Tax – dubbed CAT – as part of a tax package to simplify the state’s tax code July 1, a Nov. 15 registration deadline was set.
The Akron Beacon Journal reported state officials had estimated that between 350,000 and 400,000 businesses would register by the Nov. 15 deadline. Only about 93,000 had actually registered as of the deadline. “We are not panicking at this point,” Gary Gudmundson, communications director for the department of taxation told the Beacon Journal. “Our experience with other taxes is that people wait until the last minute. Clearly that is a factor here.”
Delinquent registrations face a $100 per month penalty for each month after the deadline that passes. The penalty tops out at $1,000.
The Commercial Activity Tax is being phased in during the next five years while two other business taxes – the corporation franchise and tangible personal property taxes – are being phased out for most businesses, according to an Ohio Department of Taxation press release on the tax.
Ohio-based companies with more than $150,000 in taxable gross receipts in a calendar year and out-of-state companies doing business in Ohio must register for the tax under provisions of the state’s most recent two-year budget bill that took effect July 1.
An Ohio Department of Taxation spokesman confirmed that gross receipts will be determined based off Ohio IFTA miles. So, whatever percentage a trucker or company runs in Ohio will be calculated against the total gross receipts. For example, if a trucker grosses $300,000 in a year and runs half of his or her miles in Ohio, the tax will be levied against $150,000 – which be a minimum fee of $75 this year and $150 a year starting in 2006. The first return is due Feb.10, 2006.
Add Ohio to the list of states that require tax filings, among them, NY, NJ, PA and CT.
THIS WORKS BETTER THAN A FUEL SURCHARGE
A former employee of a fuel depot near Seattle is believed to have stolen more than a million gallons of fuel, according to The Seattle Times. The employee, who has not been formally charged, is under investigation by agents from the Internal Revenue Service. The Times reported that the IRS recently obtained a warrant and seized items from the man’s home as part of an ongoing investigation into the theft of about $3 million worth of fuel from the depot, which is owned by Texas-based Kinder Morgan Energy Partners.
The employee, along with five other people, is suspected of using his knowledge of a special pump code and his connections with people still employed by the company to steal the fuel, sell it to gas stations in Washington and launder the money through bank accounts. The thefts occurred from 1999 to 2004, according to The Times, and investigators believe that about 1.14 million gallons of fuel worth at least $2.9 million was stolen during that time.
Kinder Morgan reported the thefts to police in 2004 after noticing a correlation between the production of certain error reports and visits to the pump by a certain driver. The Times reported that the error report in question is generated when a code is entered and the pumps are placed in maintenance mode. In that mode, any amount of fuel can be dispensed without being recorded by the inventory-control system.
Investigators say they believe the former employee gave his old code to a driver friend, who then stole the fuel.
How stupid is the fuel depot for taking so long to find out they were losing fuel. We can only imagine that they thought the fuel was leaking into the ground and did not want to bring it to the attention of the environmentalists. Lesson to be learned: change your codes frequently!
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