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
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 1984 – 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
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
IFTA – The Cost to the
Industry!
Donna Burch
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
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
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
Non-Uniformity
Vehicles
Registration
Credentials
Bonding
Leases
Tax Reports
Credits & Refunds
Audit & Administration
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
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
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
Answer
IFTA = Uniformity and
Reduced Administrative Cost
A Message from the Past
Base State Agreements:
From the Perspective of and Interstate
Motor Carrier
FTA Fuel Tax Section Mtg - 1992
IRP – Theories that will
work!
John Jabas
WHY NOT THE DALLAS
PLAN!
HISTORICAL REVIEW OF
ESTIMATED MILES FOR IRP
TEXAS PLAN
DALLAS PLAN
FULL PRIVILEDGE PLAN
LET’S ATTEMPT A NEW PLAN,
WHAT COULD BE!!!
IRP MODIFIED PLAN:
• A. UTILIZE THE BASE JURISDICTION’S
ESTIMATED MILEAGE CHART FOR ALL
JURISDICTIONS FOR INITIAL IRP
APPLICATION.
IRP MODIFIED PLAN:
• B. AT RENEWAL USE THE SCHEDULE (B)
MILES AND ADJUST THE FIRST YEAR
ESTIMATE TO ACTUAL AND NET
ADJUSTMENTS.
IRP MODIFIED PLAN:
• C. THIS BECOMES AN AUDIT.
IRP MODIFIED PLAN:
• D. A POSSIBLE ALTERNATIVE TO
SUBSEQUENT YEAR ESTIMATES OVER
100%.
The Trucking Industry
Today and Yesterday
Tom Klingman
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
Non-Uniformity
Vehicles
Registration
Credentials
Bonding
Leases
Tax Reports
Credits & Refunds
Audit & Administration
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?
Bonding
•
•
•
•
Required by 19 states
Various amounts and limits
Required for refunds in c. 10 more states
Alternative security rarely allowed
Leases
Who must report?
– 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?
Tax Reports
• 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?
Credits & Refunds
•
•
•
•
•
•
•
Credits carry over?
How long?
Refunds available?
Minimum amount?
Audit first?
Documentation?
Other restrictions?
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
IFTA
•
•
•
•
•
•
•
NAGTC 5-Point Plan 1975
First implemented 1983 3 members
Redrafted per NGA 1986 4 members
Required by ISTEA 1991 14 members
ISTEA deadline 1996
IFTA Recodified 1995-98
Today
58 members
Complaints? NO
• Uniform?
• Burdensome?
• Expensive?
YES
Minimally
NO
We’re not going back to
the Good Old Days !!
Today’s
Trucking Industry
Deregulated
Efficient
Continuously changing
Critical to the Economy
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
Bottom Line:
TRUCKING REPRESENTS
5%
OF THE TOTAL
U.S. GROSS DOMESTIC PRODUCT
- and then some -
Good Times for Trucking
• 2004-2005 - Great Years for Trucking
– Booming Economy
– Increases in Manufacturing, Imports
– No Excess Capacity
– Rate Increases Stick
• BUT …
Increasing Pressures
• Driver Shortage
– CDL Hazmat Background Checks
• Fuel
– Prices
– ULSD
• Insurance
– Tort Reform
Pressures, cont’d.
• Clean Air Regulations
– Diesel Engine Requirements
– Operational Restrictions
• Productivity
– Congestion, Bad Roads
– Increasing Freight
– Size & Weight Caps
• Taxes
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
WITHOUT TRUCKS
AMERICA STOPS!
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
Government and Industry –
Alternative Relationships
Sandy Johnson
What’s important to each?
Needs
Fairness
Equity
Clarity
Ease of Implementation
Efficient
Maximize Revenue
Minimize Taxes
Stability
What else???
Gov’t
Ind








to both ind & gov’t
to all carriers & gov’t
Can’t be confusing
Relatively easy/inexpensive



Must not be burdensome


Not constant change

Key Players
• Government
– Policy makers
– Auditors
– Collectors
• Industry
– Carriers
– Associations
How are the players involved?
• Could be high involvement or
low involvement
Involvement
1
4
High
Government Involvement
2
3
Low
Low
High
Industry Involvement
Possible Scenarios
1
4
High
Government Involvement
Government
Dictates
2
Low
Co-operation
3
Conflict leading
to Chaos
Industry
Controls
Low
High
Industry Involvement
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
Scenario 2
Conflict leading to Chaos
•
•
•
•
•
•
Control is unclear
Reduced government revenues
Unfair competition
Unsafe practices
Unhappy public
Unhappy politicians
Scenario 3
Industry Dictates
• Reduced government revenues
• Uneven playing field creating uneven
competition
• Unsafe roads
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
Summary
1
4
High
Government Involvement
Government
Dictates
2
Low
Co-operation
3
Conflict leading
To Chaos
Industry
Controls
Low
High
Industry Involvement
What’s important to each?
Needs
Fairness
Equity
Clarity
Ease of Implementation
Efficient
Maximize Revenue
Minimize Taxes
Stability
What else???
Gov’t
Ind








to both ind & gov’t
to all carriers & gov’t
Can’t be confusing
Relatively easy/inexpensive



Must not be burdensome


Not constant change
