Jeff McConnell & James Mennella
Attorneys at Law
QUESTION: What’s the latest on the dispute between the International Registration Plan (IRP), the Oklahoma Tax Commission and third party registration agents in Oklahoma?
ANSWER: What a soap opera! It’s been a long battle between all the parties and even though the following information is current to date, there may still be an appeal filed and the Oklahoma State Legislature may also have something to say. We’ll continue to update you as the events unfold and keep you advised as to any new information. Here’s the way we see it.
Basically, the IRP and Oklahoma have been fighting about the use of third party registration agents in Oklahoma. The IRP said that out-of-state trucking companies with no “established place of business” in Oklahoma just can’t use a third party registration agent to get around the law. Oklahoma said there’s nothing wrong with out-of-state trucking companies using in-state, third party registration agents to get cheaper tax rates. The IRP stood firm, imposing sanctions on April 1 and directing IRP member states and provinces to stop paying OTC its pro-rata share of all the IRP monies.
Then, OTC concluded that the IRP money was more important than the livelihood of the third party registration agents. So, the OTC wrote new rules in order to comply. Before the ink was dry on these new rules, the third party registration agents (who didn’t like the idea of being put out of business in a single day) were up in arms. While OTC stressed that the new rules do not prohibit carriers from using registration agents to prepare and file applications and other documents, a big source of revenue was threatened. A big agency, ProCert, and two other companies together obtained a restraining order to force the OTC to continue base-plating out-of-state trucking companies who used third party registration agents.
On April 12, the court decided to lift the restraining order, ruling on the side of the OTC and IRP and against the third party registration agents. So, as it stands right now, the IRP got what it wanted and will keep giving OTC its share of the tax money (which is what OTC wanted) and the OTC will no longer allow out-of-state trucking companies to use registration agents to qualify as their “established place of business” in Oklahoma.
ProCert says they won’t give up the fight and could still file an appeal, which may or may not change the judge’s ruling. The judge also commented that this case wasn’t finished and that the Oklahoma State Legislature should look into the matter. Stay tuned. We’ll let you know more when we know more.
QUESTION: Will the OTC finally get the money withheld by the IRP?
ANSWER: Yes, according to the judge’s recent ruling, the OTC can now comply with the IRP requirements (no third party registration agents allowed) and the sanctions should be removed. But, look out Oklahoma! The state of Illinois has accused OTC of fraud in regard to collecting truck taxes and wants justice. Illinois officials contend licensing practices of service bureaus in Oklahoma deprived Illinois of more than $15 million from the year 1998 through 2001 by dramatically underreporting estimated miles that new applicants would run in Illinois.
After hearing arguments from state officials representing both sides, the Dispute Resolution Committee of the International Registration Plan Inc. (IRP) ruled on April 17 that Oklahoma was out of compliance with IRP rules. The committee concluded that Oklahoma’s failure to comply inflicted economic harm to Illinois. The IRP committee opted not to place a dollar figure on the amount of economic harm.
Oklahoma officials acknowledged that some underreporting of miles took place, but they put the extent of economic harm at closer to $1.3 million. Oklahoma officials repeatedly pointed out that the contested miles are “estimated miles” used only for first time licensing applicants. According to IRP rules, these miles cannot be audited, so Oklahoma has no opportunity to collect from truckers the funds Illinois contends it is owed.
The Dispute Resolution Committee directed both states to get together to negotiate a settlement of disputed amounts. Should those negotiations not resolve the issue, the committee further directed the states to submit to a review by a third party. Both sides were directed to report progress of the settlement at the next IRP meeting in November 2002.
This issue is a thorny one for states as well as the IRP. The committee’s decision opens the door for other states to consider making claims against Oklahoma. In the broader context, any state could make a claim against any other state or jurisdiction.
We hope you can use the information in this column to help with every day, real life problems you face on the road. We invite you to send us any questions or comments you may have regarding transportation law to ROAD LAW, 1330 N. Classen Blvd., Suite 215, Oklahoma City, OK 73106; fax to (405) 272-0558; contact us through our website at www.roadlaw.net. or call us at (405) 272-0555. We look forward to hearing from you.