On July 7 more than 100,000 tax refund checks were mailed to truckers who are members of a class action lawsuit brought by the Owner-Operator Independent Drivers Association against the state of New York for unconstitutionally discriminatory registration and decal taxes.
The state of New York issued a check on May 17 for $44.4 million under a settlement it reached with OOIDA in September 2016 regarding its imposition of the unconstitutional registration and decal taxes. OOIDA had previously obtained a court ruling that the taxes violated the U.S. Constitution, and an injunction prohibiting New York from collecting the taxes in the future.
“We fought against a number of similar taxes back in the 1980s and 1990s and the states lost in every one of those cases,” said OOIDA President Jim Johnston. “We were shocked that New York even thought they could get away with this. The amount for the New York HUT decal is $19, which may seem insignificant, but if other states were to do the same thing, it would be huge – collectively and in administrative costs.”
The Association had challenged the taxes as unconstitutionally discriminatory against out-of-state truckers who drive their trucks mostly in other states – in contrast to New York-based truckers, who drive a disproportionately higher number of miles in New York. OOIDA established that the challenged taxes resulted in a higher per-mile tax rate being imposed on out-of-state trucks, and therefore violated the Commerce Clause.
The class action lawsuit challenged the constitutionality of taxes that imposed $15 for a certificate of registration and a $4 decal charge on all trucks using New York state highways. The taxes were imposed not only on New York-based trucks, which log proportionately higher miles in New York but were also charged on trucks based outside of New York, which are driven mostly in states other than New York.
“If there are other states that think tacking on flat fees to their state truck taxes won’t be noticed as an economic burden to interstate commerce, they need to understand this is not a good idea,” said OOIDA’s Johnston. “We will take them to court in a heartbeat.”
The Association’s successful lawsuit against New York’s Department of Taxation and Finance was concluded on April 19, when the court issued its final order and judgment, paving the way for the refund phase to proceed.
According to OOIDA’s counsel, Daniel Cohen of the Cullen Law Firm in Washington, D.C., carriers in the class are entitled to keep refunds for taxes paid exclusively by them. However, Cohen stated that the court further ordered that carriers who charged back any registration or decal payments to owner-operators are required to pass through or reimburse the full amount of the tax refunds they receive for such tax payments to those owner-operators, without regard to any claims or setoffs. Any such refunds that are not passed through must be returned to the Cullen Law Firm’s office in Washington, D.C., (address below) within six months after the date the refund payment was sent to the class member.
According to the law firm, all checks will expire after 90 days, so class members must take particular care to deposit their checks promptly after they receive them.
Cohen further advised that the court’s order provides that all disputes regarding the reimbursement of owner-operators will be referred to a mediator designated by the court. Any disputes must be received in writing by the Cullen Law Firm, PLLC, 1101 30th Street NW, Suite 300, Washington, DC 20007 within six months after the date the refund payment was sent to the class member.
For further details, visit the website at NYTruckTaxRefunds.com.
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