IFTA and IRP A History Lesson!

1. IFTA and IRPA History Lesson! Donna Burch – Ryder System, Inc John Jabas – Frozen Food Express Tom Klingman – UPS Sandy Johnson & Bill Taylor– Total Trucking Mgmt

2. 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

3. 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

4. IFTA – The Cost to the Industry! Donna Burch

5. 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

6. 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

7. 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

8. Non-Uniformity Vehicles Registration Credentials Bonding Leases Tax Reports Credits & Refunds Audit & Administration

9. 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

10. 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

11. 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

12. IFTA = Uniformity and Reduced Administrative Cost Answer

13. A Message from the Past Base State Agreements: From the Perspective of and Interstate Motor Carrier FTA Fuel Tax Section Mtg - 1992

14. IRP – Theories that will work! John Jabas

15. WHY NOT THE DALLAS PLAN! HISTORICAL REVIEW OF ESTIMATED MILES FOR IRP

16. TEXAS PLAN DALLAS PLANFULL PRIVILEDGE PLAN LET’S ATTEMPT A NEW PLAN, WHAT COULD BE!!!

17. IRP MODIFIED PLAN: • A. UTILIZE THE BASE JURISDICTION’S ESTIMATED MILEAGE CHART FOR ALL JURISDICTIONS FOR INITIAL IRP APPLICATION.

18. IRP MODIFIED PLAN: • B. AT RENEWAL USE THE SCHEDULE (B) MILES AND ADJUST THE FIRST YEAR ESTIMATE TO ACTUAL AND NET ADJUSTMENTS.

19. IRP MODIFIED PLAN: • C. THIS BECOMES AN AUDIT.

20. IRP MODIFIED PLAN: • D. A POSSIBLE ALTERNATIVE TO SUBSEQUENT YEAR ESTIMATES OVER 100%.

21. The Trucking Industry Today and Yesterday Tom Klingman

22. 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

23. Non-Uniformity Vehicles Registration Credentials Bonding Leases Tax Reports Credits & Refunds Audit & Administration

24. 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?

25. Bonding • Required by 19 states • Various amounts and limits • Required for refunds in c. 10 more states • Alternative security rarely allowed

26. 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?

27. 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?

28. Credits & Refunds • Credits carry over? • How long? • Refunds available? • Minimum amount? • Audit first? • Documentation? • Other restrictions?

29. 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

30. 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

31. Complaints? NO • Uniform? YES • Burdensome? Minimally • Expensive? NO We’re not going back to the Good Old Days !!

32. Today’s Trucking Industry Deregulated Efficient Continuously changing Critical to the Economy

33. 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

34. Bottom Line: TRUCKING REPRESENTS 5% OF THE TOTAL U.S. GROSS DOMESTIC PRODUCT - and then some -

35. Good Times for Trucking • 2004-2005 - Great Years for Trucking • Booming Economy • Increases in Manufacturing, Imports • No Excess Capacity • Rate Increases Stick • BUT …

36. Increasing Pressures • Driver Shortage • CDL Hazmat Background Checks • Fuel • Prices • ULSD • Insurance • Tort Reform

37. Pressures, cont’d. • Clean Air Regulations • Diesel Engine Requirements • Operational Restrictions • Productivity • Congestion, Bad Roads • Increasing Freight • Size & Weight Caps • Taxes

38. 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

39. WITHOUT TRUCKS AMERICA STOPS!

40. 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

41. Government and Industry – Alternative Relationships Sandy Johnson

42. What’s important to each?

43. Key Players • Government • Policy makers • Auditors • Collectors • Industry • Carriers • Associations

44. How are the players involved? • Could be high involvement or low involvement

45. Involvement 1 4 High Government Involvement 2 3 Low Low High Industry Involvement

46. Government Dictates Co-operation Possible Scenarios 1 4 High Conflict leading to Chaos Government Involvement 2 3 Industry Controls Low Low High Industry Involvement

47. Scenario 1Gov’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

48. Scenario 2Conflict leading to Chaos • Control is unclear • Reduced government revenues • Unfair competition • Unsafe practices • Unhappy public • Unhappy politicians

49. Scenario 3Industry Dictates • Reduced government revenues • Uneven playing field creating uneven competition • Unsafe roads

50. Scenario 4CO-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