July Newsletter – Glostone News
posted in Newsletter by Brian Gray
July Newsletter – Glostone News
Alternative Fuel Trucks Present Fuel Tax Reporting Challenges
Carriers are quickly discovering that new fuel technologies, supply and price are making alternatively fueled trucks something worth serious consideration. Compressed natural gas (CNG) and Liquefied Natural Gas (LNG) are becoming strong challengers to diesel as the fuel of choice.
Alternative fuels present a problem to government when it comes to fuel taxes. Taxes for fuel paid at the pump are based on gallons. International Fuel Tax Agreement (IFTA) fuel tax calculations are based on gallons consumed in a state with the miles per gallon the truck achieves as a key component. CNG and LNG are gases. Unit of measure for a gas is expressed in cubic feet not gallons. How will this fuel be taxed? And, when it comes to IFTA, how will a truck using both diesel and CNG fuels be taxed?
If your first thought is that this is too complicated and the government should just forget about taxing the new fuel, you would be wrong. Proposals are being offered on the proper taxation methods for determining tax per cubic foot of natural gas. The leading proposal has been offered by an IFTA working group and will be presented at the IFTA annual business meeting being held this August in Reno, Nevada.
The primary step in the IFTA proposal is to equate a cubic foot of natural gas to a gallon of diesel. This was done through studies to determine how much natural gas it takes to produce the same amount of energy produced by one gallon of diesel. From that study and contained within the IFTA proposal is that one gallon equals 126.67 cubic feet of natural gas at 60 degrees and 1 atmosphere of pressure.
If accepted by the State and Canadian membership, expect state established gallon tax rates on CNG and LNG to be applied using this conversion.
During the IFTA annual meeting, members will also consider the proposal for calculating IFTA tax on dual fuel use vehicles. The proposal is an 8 step process that includes:
- using the conversion factor to determine miles per gallon;
- prorating distance traveled by calculating proportions of the two fuels used;
- entering distances in each state by fuel type using the calculated proportions;
- entering the taxes paid in each state by fuel type;
- applying the calculated MPG rate to the distance entries for each fuel type;
- calculating the net taxable volume by fuel type;
- applying the fuel tax rates for each state;
- determining the final net amount owed or credit due.
Carriers using dual fuel vehicles will be expected to track and report these vehicles separately from all other qualified trucks. In addition, if a carrier uses multiple types of dual fuel vehicles, each type must be reported separately as two distinct fleets or reports.
Both the conversion rate proposal and the duel fuel tax proposal are expected to pass as the states are scrambling to catch up and collect the tax revenue. Comments will be accepted through the IFTA Dual Fuel Working Group. They can
IRS Heavy Vehicle Use Tax Deadline Approaches
Someone once said that the only things certain in life were death and taxes. One of life’s certainties is quickly approaching in the form of the IRS required Heavy Vehicle Use Tax (HVUT). Based on the findings of the American Association of State Highway Officials (AASHO) road test, damage caused by heavy trucks was 160,000 times more damaging to a road surface than a 0.5 ton car. The heavy vehicle use tax is a fee assessed annually on heavy vehicles operating on public highways at registered gross weights equal to or exceeding 55,000 pounds. The funds collected through the Heavy Vehicle Use Tax are invested back into our nation’s transportation infrastructure to help repair the damage.
Each HVUT tax year runs from July 1st through June 30th of the following year. The deadline to file and pay the tax to the IRS without penalty is August 31. The form for filing the tax is form 2290, making sure to use the correct year version. The correct 2290 form should read for the tax year 2012-2013. The forms are generally made available each July by the IRS.
The IRS is responsible for HVUT collections and taxpayer audits. States are required to obtain proof of HVUT payments when registering heavy trucks subject to the tax. Some State’s will not renew truck registrations without proof at the time of registration. Some Sate’s will allow a short grace period in which to fax the State a copy of the proof. However, if the deadline is not met, license plates can be suspended.
Carriers trying to evade paying HVUT fees have been a significant problem, costing millions in lost road repair revenue. HVUT evasion penalties are significant, resulting in fines and incarceration, as illustrated in one 2001 HVUT evasion case. An owner of a small trucking company was found guilty of HVUT evasion by periodically re-titling his heavy vehicles into different names specifically to avoid paying the fees. The owner of the trucking company was sentenced to serve four months in prison with an additional four months of electronically monitored home confinement and a $2,000 fine.
For more information you can go to the IRS website at www.irs.gov and search for form 2290. If you have questions or would like help filing your 2290, give Glostone Trucking Solutions a call at 503-607-1088. be reached through the IFTA website at www.iftach.org.
NATSA to Host DOT Compliance Workshop
Glostone Trucking Solutions is a proud member of the North American Transportation Services Association (NATSA). NATSA will be hosting a two day DOT compliance workshop in Albuquerque, New Mexico, on September 18th and 19th, 2013. This unique workshop will not only focus on the essentials of an effective DOT safety program under the Federal Motor Carrier Safety Regulations but will also cover properly licensing trucks under the International Registration Plan, fuel/mileage tax reporting under the International Fuel Tax Agreement, audit preparation using paper or GPS data along with record keeping requirements. The workshop is ideal for Fleet Managers, HR Professionals, Admin Staff, and Owner Operators. To learn more and for registration information, visit the NATSA website at www.natsa.info.
CVSA Issues Guidance on Out-of-Service Criteria for Hours of Service Changes Taking Effect July 1st
On June 27, 2013, the Commercial Vehicle Safety Alliance issued a memo to its members clarifying how the out-of-service criteria would be impacted by the changes to the hours of service rules that take effect on July 1. The memo confirms that drivers may be placed out-of-service for 60 or 70 hour violations when such violations result from a non-qualifying restart (e.g., did not include two nighttime periods from 1 – 5 a.m. or began within 168 hours of the beginning of the prior restart). However, drivers will not be placed out-of-service when discovered to have violated the new 30-minute rest break requirement. Such violations may be noted on the roadside inspection report, but will not result in the driver being placed out-of-service. [Note: Although not a uniform approach, CVSA has indicated that drivers found in violation may be required by some States to cease operating and immediately take a 30 minute break. However, this scenario will not result in an official out-of-service order affecting the carrier’s safety records.] Also, CVSA’s position on rest break violations is subject to change as the organization is due to revisit the issue at its upcoming Annual Conference in September.
