Sales And Use Tax

During the second week of Georgia's special session, the generally assembly is expected to discuss laws that could freeze the tax collected on fuel purchases, along with address a proposed transportation tax vote.

Georgia’s fuel tax is a two-part tax. A 4 percent portion of the tax is calculated twice per year and is based on the average price per gallon of fuel in the state at the time. The rate can change every six months on Jan. 1 and July 1.  Gov. Nathan Deal decided in June to freeze the state’s fuel taxes to help consumers avoid more pain at the pump. The tax rates were slated to increase the first of July.

As required by state law, lawmakers must ratify the freeze through passage of a bill – HB2EX.

Also moving through the statehouse is the bill – HB3EX – that addresses regional transportation referendums.

The referendums would add a 1-cent sales tax to pay for transportation projects. The governor wants to push back votes from the 2012 presidential primary ballot on July 31 to the Nov. 6 general election.

The Firm recently became aware of an initiative by the New York State Department of Taxation and Finance whereby civil penalty assessment notices are being issued to New York Highway Use Tax (“HUT”) account holders that previously filed HUT reports during reporting periods in which the carrier’s vehicles lacked 20th Series Certificates of Registration (i.e., per vehicle HUT permits).  Since the 19th Series Certificates expired on or about September 30, 2009, the Department views such non-renewing motor carriers as having operated vehicles in New York without valid HUT permits.  The civil penalty assessment is issued in the amount of $2,000 for each vehicle previously permitted with a 19th Series Certificate.

Any motor carrier in receipt of a civil penalty assessment notice must act quickly in order to contest the assessment.  This can be done by providing a written response to the Department within 30 days of the issuance date of the civil penalty assessment notice in the form of a request for abatement of the civil penalty, e.g. for reasonable cause.  The Department’s audit division will review all requests and it remains to be seen how stringently the Department will enforce the civil penalty provisions related to invalid HUT permits.  Any motor carrier in receipt of a civil penalty assessment notice should also take immediate steps to obtain 20th Series Certificates for all its vehicles subject to the HUT.   

Friday, Feb. 4, the Virginia House endorsed Gov. Bob McDonnell’s $4 billion transportation plan, which now advances to the Senate.

The bill includes borrowing about $3 billion during the next three years. Another $1 billion in available cash would be used to pay for up to 900 projects.

The governor’s proposal represents what could be the largest one-time state infusion of money into transportation since the Virginia fuel tax was increased in 1986.

Nearly $1.8 billion of the proposed debt relies solely on state revenue. About $1.1 billion would be repaid using a portion of federal highway funds the state gets each year.

Critics of the plan say the state should not undertake new debt to get road work done. At the same time, many detractors acknowledge that something needs to be done about the state’s transportation system.

The bill – HB2527 – represents the biggest chunk of the McDonnell’s overall transportation proposals.

One component of the governor’s agenda has already advanced from the House to the Senate. A proposed constitutional amendment is sought to protect the state’s transportation fund.

Sponsored by Delegate Glenn Oder, R-Newport News, the measure – HJ511 – would protect the fund from transfers to the general fund.

A separate component of the governor’s agenda has been rejected. HB2404 called for taking $100 million of sales tax revenue collected in Northern Virginia each year and applying it to road and transit projects. Another $50 million in tax revenue in Hampton Roads would have been added.

The Indiana Department of Revenue updated its Public Transportation Information Bulletin #12 (effective July 1, 2010) with a new section II to clarify the factors necessary for a trucking company to qualify for a sales and use tax exemption on trucking-related purchases, e.g. vehicles, repair parts and fuel.  Although a number of the factors are directed specifically at a trucking company that serves a parent company, any trucking company that claims the exemption should review its operations for compliance with the factors set forth in Information Bulletin #12, which can be accessed at http://www.in.gov/dor/reference/files/sib12.pdf).