State Laws Newsletter, September 18, 2015

Written and edited by Robert C. Pitcher, American Trucking Associations

Check Your VINs for KY – Kentucky is one of the four remaining states that impose a weight-distance tax.  In Kentucky’s case, the tax applies only to commercial vehicles weighing 60,000 pounds or more.  The state keeps track of vehicles subject to the tax by their vehicle identification numbers.  This fall, Kentucky will transfer its weight-distance tax data to a new computer system, and will be cleaning its files of bad VINs.  For this reason, Kentucky is asking all motor carriers subject to the tax to verify the VINs they have on file with the state before October 1, 2015.  The state will begin to review its information after that, and following the purge of bad data, vehicles whose VINs do not appear on the state’s cleaned-up lists are liable to be held at Kentucky ports of entry until the problem is fixed.  If you’re subject to the Kentucky weight-distance tax, you can check on-line here:  https://apps.transportation.ky.gov/MCI/Home.aspx, for the VINs that the state has on file for your fleet, and make any corrections you need to.  If you have questions, call the state at 502.564.1257, and ask for the Motor Carrier Credentials Section.

NH Court Rules in Fuel Tax Case – The New Hampshire Supreme Court has held that a purchaser of fuel, unlicensed as a distributor, was nonetheless liable for the state’s fuel tax in an interstate transaction.  The taxpayer here, presumably a motor carrier of some description, was located in New Hampshire but bought the diesel fuel for its vehicles in Massachusetts.  It paid its supplier the Massachusetts fuel tax, and engaged a third party to deliver the fuel to it in New Hampshire.  After several years and an audit, New Hampshire assessed the taxpayer for its own fuel tax.  The state argued that the taxpayer had been acting as a “distributor” under the fuel tax law, since it had arranged for the import of the fuel into New Hampshire.  As a distributor, it was liable for the state’s tax on the fuel it either sold or used.  There was no getting around this, and the taxpayer owed New Hampshire tax.  It argued it would be unfair for it to have to pay, when it had already paid Massachusetts for the same fuel.  The court remarked that if the taxpayer had filed a timely refund claim with Massachusetts, it might have got its money back.  It also suggested that a remedy for the taxpayer’s predicament might have been found through the International Fuel Tax Agreement.  It was unclear whether the taxpayer had in fact used all the fuel at issue in New Hampshire.  At some point in the proceedings, it had admitted to having “an IFTA issue.”  (We could conjecture just what that IFTA issue was.)  Marco Petroleum Indus. v. Commissioner, docket no. 2014-117, decided May 12, 2015.

Study Issued on States’ Fiscal Condition – The Mercatus Institute of George Mason University has published a study ranking the states’ fiscal condition.  The study (which is based on data from fiscal 2013) acknowledges that state budgets have improved over the last couple of fiscal years, but points out that this is only one indicator of a jurisdiction’s condition, especially in a view longer than a single year.  Mercatus uses five factors to rank the states here:  cash solvency (is there enough money to pay the next two months’ bills?), budget solvency (will the state end the year in the black?), long-run solvency, service-level solvency (does the state have enough extra to increase service levels on demand?), and trust-fund solvency.  Amalgamating all these, the top five states are:  Alaska (much the best), North Dakota, South Dakota, Nebraska, and Florida.  And the bottom five:  Illinois, Massachusetts, New Jersey, Connecticut, and New York.  In general, Mercatus finds that all the Northeast is in trouble, with the exception of New Hampshire, and that the rest of the states, with some exceptions — especially Illinois, Kentucky, and California – are doing rather better.  The big long-term dangers, however, are increasing costs of health-care, especially Medicaid, and, for many states, pensions and other retirement benefits.  Eileen Norcross, “Ranking the States by Fiscal Condition,” Mercatus Inst., Arlington, VA, July 7, 2015, available here:  http://mercatus.org/statefiscalrankings.