Issues affecting o/o’s discussed at IRP meeting
It's important for owner-operators to understand the process by which the states collect taxes from them, to assure they don't pay more taxes than required

Joe Black of the Cullen Law Firm says this was the primary reason he was in Tampa last month represent- ing OOIDA at the annual managers’ meeting of the International Registration Plan (IRP).

In conjunction with the meeting, the Industry Advisory Committee (IAC) convened, discussing more issues Black says are sure to impact owner-operators.

“From OOIDA’s perspective, perhaps the most important issue discussed was the question of how the states would tax Mexican trucks once the North American Free Trade Agreement (NAFTA) is implemented,” Black reported.

The topic was discussed by a panel consisting of Henry Hevares of the Texas Department of Transportation, Major Coy Clanton of the Texas Law Enforcement Division (State Troopers), Bill Webb, president of the Texas Motor Transportation Association, Thom Rubel of the National Governors Association and Marco Traslosheros from the Mexican government. Black reported that the Texas and Mexican contingent of the panel focused on the problems of regulating and inspecting Mexican trucks. The Mexican panelist made the point that the process of issuing CDLs in Mexico has been computerized and that information about Mexican drivers is now available electronically to U.S. law enforcement agencies.

Thom Rubel discussed the need to bring Mexico into the IRP and IFTA for tax purposes. Most of the state delegates were interested in the last issue since they expect to have to be collecting taxes on Mexican trucks by the end of the year.

Rubel stated that there are no means currently available for the IRP and IFTA to negotiate with Mexico to bring it into the two agreements. While the states can reach agreements with each other and with the provinces of Canada, they cannot negotiate with a national government like Mexico. (The Mexican states do not tax fuel and motor carriers separately from the central government, so there would be no reason to negotiate with the Mexican states.) However, the National Governors Conference is seeking ways to expand its ability to negotiate with the Mexican government. Rubel indicated that the short-term solution to the tax collection problem is to require trip permits of Mexican trucks to travel in the United States.

Black addressed the panel and pointed out that since NAFTA only allows Mexican trucks to carry international loads from a point in Mexico to a point in the United States there is no need to expand the IRP and IFTA to include Mexico. He suggested that trip permits may be an effective way of limiting the ability of Mexican trucks to travel freely in the United States once they enter with an international shipment. Rubel rejected this suggestion by saying that as a matter of “equity” Mexico should be included in the agreements. Bill Webb of the Texas Trucking Association also objected to Black’s suggestion. He indicated that the term “international shipment” may be expansive enough to allow Mexican trucks to travel widely in the United States.

“One of the most startling aspects about the IRP is the lack of uniformity among the states and provinces of Canada in the way they administer their registration programs,” Black said. “The reason for this is probably that the jurisdictions are not required to follow all of the IRP provisions. There is a separate agreement among the Canadian jurisdictions that attempts to make their procedures uniform.”

One area where there seems to be significant differences is the treatment of refunds. Some states grant full refunds while others grant none at all. A problem arises when a state seeking to grant a refund is prohibited from granting a refund of that part of the payment that was apportioned to the states that prohibit refunds. Also, not all states allow plates to be transferred between vehicles in the same fleet. To overcome these and similar problems, Black reported there is a movement by the National Governors Conference to make all of the provisions of the IRP mandatory on the member jurisdictions.

One of the areas in which the states are not uniform is the purpose to which the states use the taxes collected by the IRP. Many of the states’ IRP taxes incorporate a property tax element, which is used to fund non-road functions. “Thus, a part of the IRP tax is not a user fee for the use of the roads and highways of the state,” said Black, “but instead a way of funding other governmental activities by assessing taxes on interstate trucks.”

Other states collect property taxes on trucks separately from the IRP, based on a proportion of the miles they travel in the state. Thus, truckers who travel in states such as Kentucky and Kansas have to file separate property tax returns. Black says that collecting taxes in this way defeats one of the purposes for which the IRP was intended – the elimination of the requirement to file multiple tax returns in different jurisdictions.”

In listening to the state representatives discuss their problems at the IRP meeting and similar IFTA meetings, Black said he found it “striking” that most of their issues and problems involve small carriers or individual owner-operators. “At the IFTA meetings most of the issues seem to center around the record keeping problems of small-business truckers,” he said. “At the IRP meeting the issues focused on new registrants and refund problems associated with owner-operators.”