News
Washington Insider
Congress, DOT and the IRS

Paul Cullen Jr.
The Cullen Law Firm, PLLC

Congress restores highway funding in budget
The March/April 2002 “Washington Insider” reported the Bush administration proposed cutting $8.6 billion from highway spending in its 2003 budget. The administration’s rationale for this cut was a reduction in revenue into the highway trust fund over the last year (attributed to dramatically lower truck sales, and therefore lower excise tax revenue). In response, there has been an overwhelming bipartisan effort in Congress to restore $4.7 billion in highway funds to the federal budget. This additional amount will allow full use of highway trust fund revenues for transportation projects.

More than 315 of the 435 members of the House of Representatives and 69 of the 100 senators sponsored this legislation to restore full highway funding to the budget. The budget is not the legislation that spends money (those are the appropriations bills that come later in the year). The budget is a kind of planning tool that sets yearly or annual spending limits for the appropriators.

Why was restoring highway funding so popular? Each member of Congress gets great political mileage from bringing home federal dollars to improve local roads. On one hand, these are the types of projects some would call nothing but pork. On the other hand, a survey of road conditions and congestion around the country would tell you there is a great need for improved roads and this is money well spent. As they say in the end, though, one man’s pork is another man’s stimulus and jobs. Fortunately for highway spending, most lawmakers in Washington are on one side of that judgment.

DOT transportation worker ID card moves forward 
New details have emerged regarding the Department of Transportation’s plan for a “Transportation Worker ID Card.” This proposal calls for a national, uniform ID card for workers in all modes of transportation who need unescorted access into secure areas of our nation’s transportation infrastructure. A major priority for Transportation Secretary Norm Mineta, the card is being designed with the goals of improved national security and improved convenience to individual cardholders.

The card would have two functions. The first would be to verify a person’s identity. This verification may be done using a variety of information, including, possibly, the person’s thumbprint. Secondly, the card would verify electronically that the individual has been granted access to a particular secure area.

Secure areas would be defined as those “deemed by the government” to be secure — for example, airport tarmacs, baggage areas, air traffic control areas, seaports and military facilities. The need or use of the card for access to private business facilities is not being contemplated. 

Planners say one ID card could be coded to grant an individual access to one or several secure facilities without the individual having to obtain multiple ID cards or having to undergo multiple background checks. It has been reported that truckdrivers who haul to and from the ports already have been required to obtain multiple ID cards. 

OOIDA continues monitoring this proposal to ensure that driver privacy is not compromised and that background check standards only screen out potential terrorists, not law-abiding drivers.

Momentum on fuel surcharge legislation
During the month of March, as tensions rose in the Middle East, the price of crude oil skyrocketed. It was then no surprise the national average price of diesel fuel rose by 15 cents per gallon, and even higher in many local areas. At the same time, the Truckload Carriers Association (TCA) voted to join OOIDA’s two and a half year-old effort to establish a mandatory fuel surcharge in the law. The Motor Carrier Fuel Cost Equity Act would help motor carriers get a fuel surcharge, and if they use owner-operators, require the full surcharge be passed on to the owner-operators.

OOIDA is undertaking a grassroots campaign to show Congress the continued need for this bill. OOIDA members, and anyone else who may benefit from a fuel surcharge, are encouraged to telephone and write their representative to ask that he or she become a co-sponsor of HR2161 and their senators to be a co-sponsor of S1914. More than 1,400 persons signed such letters at the Mid-America Trucking Show. A copy of the letter that you can use is posted on OOIDA’s web site at www.ooida.com. 

The TCA has begun a similar grassroots effort with its members. Although OOIDA and TCA do not always see eye to eye on issues affecting the relationship between carriers and owner-operators, this legislation would help members of both organizations better survive another stretch of high fuel prices.

Commercial Drivers Fair Wage Act?
Despite several reports in the trucking press at press time, no legislation has been introduced into Congress to guarantee truckers a “fair wage.” Although motor carriers, shippers and receivers have adopted practices that prevent many drivers from being able to earn a decent income (long waiting times to load and unload, etc.), these problems may be difficult to address through federal wage law. The problems are that, while federal law guarantees a minimum wage for employees, it does not for independent contractors, such as owner-operators.

Federal law dealing with wages only applies to employees. Although federal overtime law does not apply to truckers, the minimum wage does apply to employee truckers, even if they are paid by the mile. Technically, all employees are required by the law to receive an income that works out to a minimum $5.15 per hour. An employee trucker can figure out if he/she is being paid the minimum wage by dividing the total hours they spend on the job in a pay period (both driving and non-driving on-duty time) by what he/she was paid for that pay period. If the resulting amount is less than $5.15 per hour, the motor carrier is not paying enough and may owe back wages. Employees have a private right of action in federal law to sue for back wages. 

The minimum wage may not be very much, but efforts to raise the minimum wage are bitterly fought and debated in Congress. Certainly many jobs such as driving a truck deserve higher compensation than the minimum wage provides. If employees are not satisfied with the minimum wage, and believe they should be paid more, the law provides them the right to organize as a union and bargain collectively for higher compensation. 

Owner-operators, like all independent contractors, are assumed able to control their own work environment and pick and choose which contracts they sign. With this freedom, it is assumed they have the power to refuse to sign a lease that pays less than they think they deserve. Inequities in the bargaining position between motor carriers and owner-operators are addressed by the federal truth-in-leasing regulations. Those regulations do not guarantee a minimum wage, but they do guarantee certain information be disclosed to the owner-operator so he/she can make an informed decision on the contracts and leases they sign. Among other things, they also require motor carriers to follow a number of rules related to compensation and chargebacks to compensation. Owner-operators are given a private right of action to enforce these rules.

Obviously the mere existence of these rules does not guarantee their compliance by employers and motor carriers. For the law to be effective, employers and carriers who do not obey the law must be challenged and face legal suits and penalties for their illegal behavior. Such efforts are difficult in any industry and take courageous individuals to stand up and fight for their rights. In the past several years, OOIDA and several courageous owner-operators have stepped up to the plate and sued motor carriers to assert owner-operator rights and to stop certain abuses. These efforts have begun to produce changes in the motor carrier industry that benefit drivers and make it easier for motor carriers who respect their owner-operators to remain competitive in the industry. 

Many problems remain, however, and the inordinate amount of time drivers are forced to wait at loading docks is one of the most pressing. Congress needs to see that employee truckers and owner-operators have tried to use the existing laws, and that those laws are insufficient to stop employers and carriers from treating their drivers unfairly. The next step is to identify where those laws fail in their mission to protect drivers. OOIDA continues to pursue legal, legislative and regulatory action to address the problem of uncompensated on-duty time and the many other issues raised by its members.

Internal Revenue Service issues opinion on truck tire depreciation
On a really dry, but important subject, the IRS has published a new “revenue procedure” to clarify how truck tires may be treated for tax depreciation purposes. The clarification became necessary when it was noticed that truck owners were treating their tires two different ways for tax purposes. 

Some truck owners considered tires a part of the entire vehicle asset. Under this view, the cost of the original tires would be depreciated over the life of the entire vehicle. Replacement tires could then be expensed in the year they were purchased, no matter how long they actually lasted.

Other truck owners treated tires as an asset separate from their truck and expensed the original tires that came with the truck. Under this treatment they could only expense the cost of replacement tires if they could prove those tires lasted only one year. If they couldn’t prove the tire was used and discarded within a year, they would be required to depreciate them. The accounting challenge for keeping track of the actual life of each tire under this method seemed a daunting challenge to the IRS and many truck owners.

The IRS has decided that the first scenario is the proper treatment of trucks tires: the original set of tires that came with the truck is considered a part of the truck, and should be depreciated with the truck. All replacement tires will be expensed in the year they are purchased.

For those who have been expensing their tires from the original set, the IRS has set up a “safe harbor” to allow those truck owners to change their accounting method retroactively without risking IRS penalties. The safe harbor procedures are quite detailed, and the entire revenue opinion is available on the OOIDA web site at www.ooida.com. If you think this revenue ruling will affect your accounting methods, you may want to seek professional tax guidance to ensure your proper compliance with the rule.