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Newsletter: June 29, 2006 Issue
Inside OTS:
Have you heard the news? OTS has a brand new look. OTS now has a bigger, more powerful website (http://www.ots.net), designed to provide a full service informational spectrum outlining all we have to offer each and every client. Check it out. You may be surprised at what we can do for you! We offer over 60 canned reports on the web (roadtax.net) -that means real time information when you need it. Need customized reports? - NO PROBLEM - we recognize each and every clients unique operational environment and will accommodate any request. From services to what we have to offer on the web, the testimonials speak for themselves. Just give us a call or drop an e-mail (otsinfo@ots.net) so we can discuss your most urgent transportation needs!
Come See Us At The PeopleNet 2006 User Conference:
OTS didn't get to be the best in the business by going it alone. Through key strategic partnerships, we are continually expanding our knowledge base and available resources, bringing enhanced value to our clients in a wide variety of transportation and tax specialty areas.
OTS will be exhibiting at the PeopleNet 2006 User Conference in beautiful Chaska, Minnesota on July 31 to August 3, 2006. Be sure to drop by our booth and check out our latest full service tax solutions. Check out all of our upcoming events!
Inside This Issue:
- NY Court Sets Cure for Invalid Tax
- NJ Tax Increase Proposal Blessed
- Study Details State & Local Business Taxes
- GA Consolidates IRP and IFTA
- IRP Rewrite Progressing
- ON Toll Road Agreement Reached
- NE Directs More Sales Tax to Roads
- OK Bill Would Create Tax Appeal Agency
- SBT Repeal Bill Vetoed
- MO Sales Tax Bill Advances
- AL Enacts Permanent Trailer Plate
- CT Court Upholds Agency Discretion
- Fuel Export Tax Proposed Again in IL
- New Board Members for IFTA, IRP
- New Members in IRP Clearinghouse
- Some States Face Budget Trouble
- KY May Still Revise AMT
- AK Considering Amended Oil Co. Taxation
NY Court Sets Cure for Invalid Tax
NY Court Sets Cure for Invalid Tax
The New York Court of Appeals, the state’s highest court, has ruled that the proper remedy for a tax of which a part had been found unconstitutional was to invalidate the tax altogether. The tax in question was levied on the disposal of hazardous waste, and had been found improper under the Commerce Clause of the U.S. Constitution in decisions reported here earlier. The legislature had intended to tax all those handling hazardous waste in the state, and had chosen to do so through a pair of taxes, one on in-state generators of such waste, and the other, the one challenged, on those disposing of the waste in New York, so long as they were not also subject to the first tax. The argument now was about how to fix the unconstitutionality. One lower court had extended the exemption from New York’s disposal tax to offset generator taxes paid to another state, while another court had ruled that the exemption should be removed altogether, so that New York generators who were also disposers of waste would be subject to both state taxes. Faced with this, the Court of Appeals chose to sever the disposal tax from the generator tax and get rid of the former altogether. CWM Chemical Services, LLC v. Roth, docket no. 3, decided March 23, 2006.
NJ Tax Increase Proposal Blessed
We recently reported that Governor Corzine of New Jersey has
begun his administration by proposing a large tax increase for the
state. The press now reports that three bond-rating services have
raised New Jersey’s rating, assuming that the increased revenue will
cure the state’s “structural deficit.” But will it – assuming it is
enacted? For Corzine expects to increase state spending by a good
10%.
Study Details State & Local Business Taxes
A new study put out by a branch of Ernst & Young and the Council
on State Taxation (COST) says that all U.S. business combined paid
nearly half a trillion dollars last year in state and local taxes,
some 44% of all state and local tax collections. The transportation
industry paid some $19 billion, about 4% of the total. The study
tracks trends in the various types of taxes, concentrating on recent
years but including data as far back as 1980, and includes details
on each state. The study is Robert Cline, et al., Total State and
Local Business Taxes, Ernst & Young, March 2006, and it may be found
on Ernst & Young’s website at:
http://www.ey.com/global/download.nsf/US/Total_State_and_Local_Business_Taxes_-_March_2006/$file/50_State_Tax_Study_03-2006.pdf.
GA Consolidates IRP and IFTA
The Georgia Department of Revenue announces that it is now
managing both its International Registration Plan and International
Fuel Tax Agreement programs solely at its drive-in site at 1200
Tradeport Boulevard in Hapeville, Georgia, just north of the Atlanta
Airport. Personnel at this site previously dealt with IRP only. The
office is open from 8:00 to 4:30 on weekdays. The Department’s
customer service number is 404-417-4480.
IRP Rewrite Progressing
We know some readers are deeply involved in the current project to rewrite the International Registration Plan. All of you should be aware of the importance of the project, since it deals with the provisions and administration of the program under which practically all heavy commercial vehicles in the United States and Canada are registered, and without which interstate motor carrier operations would be extremely difficult or well-nigh impossible. A second public draft of the rewritten Plan has now been posted on the IRP, Inc. website at www.aamva.org/IRP. Although more changes will be made before the rewrite is finally discussed by the IRP member jurisdictions and voted on, presumably late this year, it is by no means too early for industry representatives to read the current draft, submit comments to IRP that reflect their views, and generally to become involved in the process.
ON Toll Road Agreement Reached
Stories have several times appeared here about Route 407, a tollroad around Toronto, Ontario. Those articles centered mostly on the effort of the province to regain some control over the manner in which the company that operates the road is enforcing toll payment – namely, by requiring the province to refuse to register the vehicles of those parties the company asserts owe them toll money. Provincial courts have sided with the company. Now the province and company have made an agreement with respect to heavy vehicles using 407: Those vehicles that use transponders will receive very large discounts on tolls; tolls will not go up while a program to reward frequent users of the road is in effect; the company will add a lane of traffic for a portion of the length of 407; and public advocates will be appointed to represent highway users. Although 407 is a major route for commercial traffic in the area, these events may mean even more for the U.S. than meets the eye. The company involved is majority-owned by Cintra, the Spanish firm that now controls both the Chicago Skyway and the Indiana Toll Road.
NE Directs More Sales Tax to Roads
The Nebraska Legislature has passed and Governor Heineman has signed a bill (SB 904) that puts all sales and use tax collected from sales of motor vehicles into the state’s highway fund. Revenue from the sales tax on motor vehicles has for years gone to roads in Nebraska, but the last time the rate of Nebraska’s sales tax was raised, from 5 to 5.5%, the extra half a percent from motor vehicle sales was sent to the general fund. The new law, effective in October 2006, reverses that. The bill also requires local governments to use motor vehicle sales and use tax collections for their roads, unless those revenues have already been pledged to support bond issues.
OK Bill Would Create Tax Appeal Agency
The Oklahoma House of Representatives has by a wide margin passed a bill (HB 1499) that would set up an independent agency to hear appeals from decisions of the Oklahoma Tax Commission. The bill is currently in the appropriations committee of the state senate. If it passes, Oklahoma would join the states that have decided it’s best not to leave the tax agency the sole arbiter of the laws it administers.
SBT Repeal Bill Vetoed
A couple of
weeks ago, we reported that a bill in the Michigan legislature (HB
5743) would move up to the end of 2007 the date of the final,
phased-out repeal of the Michigan Single Business Tax. The bill
passed, but Governor Granholm vetoed it because the legislature
neglected to replace the revenue the state will lose from SBT
repeal. There appears to be at least some possibility the veto may
be overridden.
MO Sales Tax Bill Advances
Legislation (SB 629) that would expand Missouri’s sales tax
exemption for motor carrier rolling stock and exempt road
construction materials purchased by highway contractors has passed
out of the Missouri house rules committee and now goes to the floor.
The bill passed the state senate earlier. The exemption for highway
contractors, which would not be effective until fiscal 2008, would
allow the Missouri Department of Transportation to stretch its
budget a little farther. Missouri’s rolling stock exemption has been
limited to common carrier equipment over 24,000 pounds gross weight,
so long as it is used solely interstate. The bill would remove this
restriction, to extend the tax break to intrastate rolling stock as
well.
AL Enacts Permanent Trailer Plate
Alabama is one of the last – if not in fact the very last – of the states to require carriers to affix a new plate to their trailing equipment every year. Legislation (HB 154) signed March 15 and effective October 1, 2006, changes that. Under the bill, the owner of a trailer or semitrailer may buy a permanent license plate for such equipment, good for the life of the vehicle (as long as it remains titled in Alabama, that is), for a one-time fee of $60. (The annual fee for a trailer plate remains $20.) In addition, the Department of Revenue is authorized to issue multiyear plates – up to at least five years – for power units registered under the International Registration Plan. To compensate the state for the expected loss of trailer-fee revenue Alabama has raised its vehicle registration fees on the highest two categories of gross weights, from $780 to $815 for trucks weighing from 73,281 to 80,000 pounds, and from $845 to $890 for vehicles over 80,000 pounds gross weight. Alabama property tax requirements for trailing equipment as well as power units remain unchanged.
CT Court Upholds Agency Discretion
The Connecticut Supreme Court has ruled that the state’s Department of Revenue Services, Connecticut’s tax agency, had sole discretion whether or not to issue a refund that had not be claimed timely. The taxpayers here maintained dwellings in both Connecticut and New York City. For several years, they filed income taxes as Connecticut residents, but, following a New York tax audit, which evidently found them to be New York residents, they filed the claims in question with Connecticut, on the ground that they had in fact been New York residents. The department granted the refunds that had been filed within the three-year statute of limitations but denied those for earlier tax years. A lower court had sent the matter back to the department, ordering it to examine the merits of the earlier claims, but the supreme court ruled this improper, finding that under the statute the granting of untimely claims was at the complete discretion of the tax agency. Chatterjee, et al. v. Commissioner of Revenue Services, docket no. SC 17354, decided April 11, 2006.
Fuel Export Tax Proposed Again in IL
Last year, Governor Blagojevich of Illinois proposed an unusual fuel tax in his budget message. It would have put a tax of 1.5 cents a gallon on fuel refined or stored in Illinois but later shipped outside the state. It didn’t pass last year, but the governor is proposing it again this year. The tax would apply to gasoline, diesel, jet fuel, ethanol blended gasoline, and biodiesel. Proceeds of the tax would go to the general fund rather than to transportation.
New Board Members for IFTA, IRP
The repositories of the International Fuel Tax Agreement and the
International Registration Plan each have a new board member. For
IFTA, Inc. the new trustee is Scott Greenawalt of the Oklahoma State
Corporation Commission, who succeeds Rollie Marr of Illinois,
recently resigned from the board. For IRP, Inc. the new director is
Kirk Forbes of the Michigan Secretary of State’s Office. Forbes
succeeds Al Gerstner of Kansas, who retired last month. IFTA’s board
held its second quarter meeting April 20-21 at IFTA headquarters in
Chandler, Arizona; IRP’s board meets May 3-4 in Arlington, Virginia.
New Members in IRP Clearinghouse
After a delay of several years, the jurisdiction with the most
vehicles registered under IRP – Indiana – will finally be joining
the IRP clearinghouse next month. Over the summer, it is expected
that both Rhode Island and Pennsylvania will also join, making 48
clearinghouse participants out of the 59 IRP members. The
nonparticipants remaining are: Alberta, California, Illinois,
Manitoba, Michigan, New Brunswick, North Dakota, Oklahoma, Quebec,
South Carolina, and the District of Columbia. The efficiency of the
clearinghouse has already exceeded most expectations. With full
participation, the system should become both an even more valuable
means of administering and enforcing the Plan and a powerful source
of reliable information about the motor carrier industry as a whole.
Some States Face Budget Trouble
Over the last couple of fiscal years, according to a report issued recently by the National Conference of State Legislatures, the states have made up a collective budget deficit of more than $265 billion. For fiscal 2006, 42 states report budget surpluses. However, NCSL also says that several states will go back into the red next year, with increasing costs, mainly in the areas of health, education, and jails. If, that is, they don’t raise taxes. The states alone are not responsible for their overspending, since the federal government continues to push many costs down onto state governments. NCSL, State Budget Actions FY 2005 and FY 2006, 2006. The executive summary of the report is available on-line at www.ncsl.org.
KY May Still Revise AMT
The Kentucky legislature ended its regular
session early in April without responding adequately to Governor
Fletcher’s request that it relieve small businesses in the state
from some of the problems associated with the alternative minimum
tax, the enactment of which the governor himself pushed so hard in
2005. The AMT is a gross receipts tax that parallels the corporate
net income tax. A business is required to calculate its taxes both
ways and pay the one with the higher liability. The budget the
legislature passed does exempt from the AMT businesses with gross
receipts under $2 million, and lowers the tax for those with
revenues up to $10 million, but the governor is talking about
calling a special session of the legislature to (1) change these
amounts to gross profits rather than gross receipts and (2) make the
relief retroactive to the beginning of the 2006. A gross receipts
tax like the AMT is particularly damaging for companies, like motor
carriers, that have low profit margins.
AK Considering Amended Oil Co. Taxation
Both houses of the Alaska legislature are considering a change to
the state’s most important form of taxation, that of oil and gas
companies. The state has long derived the largest share of its
revenues from the oil and gas production severance tax. The
proposals (SB 305 and HB 488) would change the basis of the tax to
net profits, at a rate of either 25% (Senate version) or 20% (in the
House), with a 20% credit for costs of development and exploration.
The legislature is scheduled to adjourn May 9.
