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On April 8, Sherri Alston, Director, Transportation Policy Studies, Federal Highway Administration (FHWA) welcomed everyone to the 22nd Steering Committee Meeting of the Joint Federal/State Motor Fuel Tax Compliance Project. The Attendees List is Attachment 1, and the Agenda is Attachment 2.
The meeting began with introduction of all present and then a presentation by Susan Binder, Acting Director of the Office of Policy, FHWA. Ms. Binder talked about the reauthorization of the Transportation Equity Act of the 21st Century (TEA-21) which expires September 30, 2003. Ms. Binder mentioned that the new legislation will build on the successes of TEA-21, the National Highway System Act, and the Intermodal Surface Transportation Efficiency Act of 1991 and will address a variety of issues. The new legislation will be based on core principles that assure adequate and predictable funding; build on intermodal approaches; encourage innovative finance; ensure the safety and security of the national transportation system; and further promote the efficient movement of goods.
With regard to the fuel tax evasion project, Ms. Binder did mention that anything dealing with finance would likely get some attention because of the negative impacts from the Revenue Aligned Budget Authority (RABA) affecting FY 2003. She also mentioned that transportation has strong advocates on the Senate Finance Committee and that hearings have been scheduled on tax evasion issues. Ms. Binder ended by encouraging those attending to work with FHWA to float their concerns. She then asked for questions.
Dave Breidenbach, Marathon Ashland Petroleum, commented that there are several things that have affected trust fund revenues with the economy only being one part. He suggested there needs to be a new way of looking at how revenues are collected.
Chris Poston, Defense Energy Support Center (DESC), Defense Logistics Agency, said that they are interested in being involved in security related matters and asked that DESC be kept in the loop.
Wayne Rhoads, Mississippi Department of Transportation (DOT), suggested including funding for enforcement activities and Carol Player, South Carolina Department of Revenue (DOR), agreed.
Joe O'Gorman, New Jersey Division of Taxation, asked about easing access to the ¼ of 1 percent of the Surface Transportation Program (STP) funds available for motor fuel tax compliance projects. Ms. Binder's response was that these funds are flexible and a lot of programs want a slice.
Linda Morris talked about tax compliance funds and the ¼ of 1 percent of STP funds available for FY 2002. Thirty-nine States received tax compliance funds in FY 2002. Funding amounts were $8,146 for task force member States and $16,292 for lead States. In FY 2002, 13 States obligated STP funds for a total of almost $4 million.
Ms. Morris also mentioned two research projects of interest. The first project, New Approach to Assessing Road User Charges, is a pooled fund study that is looking into using a global positioning system (GPS) to assess road user fees. Technical components of the system are currently available, however, the institutional issues related to privacy and civil rights have not been addressed. The second project, Projections of Federal Highway Administration Trust Fund Revenues, is looking into using economic indicators to provide a short-term forecast for trust fund revenues. This project was recently awarded although the work had not yet started.
Barna Juhasz, Director, Office of Highway Policy Information (HPPI), talked about the motor fuel reporting process and highway statistics. He emphasized that gallons equal dollars.
The role of HPPI is to ensure motor fuel reporting data is reliable and accurate. The data they collect is used to provide apportionment factors, and to ensure each State receives its fair share of Highway Trust Funds dollars. Apportionment factors for the largest transportation programs rely heavily on the data submitted by the States through their motor fuel reports. In addition, under the Minimum Guarantee program, no State will receive less than 90.5 percent of its estimated percentage of estimated tax payments attributable to highway users in each State.
The motor fuel attribution process, which estimates tax receipts for each State, was recently reassessed, both in-house and by the Government Accounting Office (GAO). The purpose of the reassessment was to identify needed changes to assure fair and equitable treatment of all States.
The GAO request called for by Congress, reported identified weaknesses and provided recommendations. The report included an action plan with short and long-term suggestions for improvements in the process, and recommendations for risk reduction such as improved oversight and verification of the data by the Division/State. The report stressed the importance of States providing quality data. GAO also suggested the possibility of using data from the Excise Summary Terminal Activity Reporting System (ExSTARS), under development by the Internal Revenue Service (IRS), as a way to check the data received from the States, however the use may be limited because not all States require destination State information.
As a result of the reassessment, HPPI has begun oversight training and outreach. Starting this year, electronic submittal of State reports will begin and a highway community exchange website has been established.
The California Task Force report was given by Ed King, California State Board of Equalization (BOE). The California Task Force held its last meeting February 7-8, 2002, in San Antonio, Texas. The meeting was held in conjunction with the Texas Task Force, and was hosted by the State of Texas. Forty-three attended. Six out of seven of the California Task Force States were present along with representatives from FHWA, Navajo Tax Commission, and the IRS. The next meeting is scheduled for April 14, 2002 in Portland, Oregon.
Linda Morris gave a presentation on current funding prospects from FHWA. Included were handouts related to the current status of tax compliance funds, STP funds, possible changes as a result of the Federal 2003 budget forecast, sample information developed from the FHWA imports project, dyed fuel sampling statistics and State points of taxation.
Amy Alderman gave a presentation on the work of the Navajo Tax Commission. The Commission established a Retail Sales Tax and a Fuel Tax on October 1, 1999. Tribal members who live and work in reservations are sales tax exempt. The fuel tax rate is 18 cents per gallon and is imposed at the distributor level. Fuel taxes collected beginning October 1, 2002, will be fully dedicated to roads. The Commission has information disclosure agreements with the States of Arizona, California, New Mexico, Texas and Utah.
Arizona - No fuel related bills were introduced in this legislative session. Last session's bills signed into law combined the separate statutes on gasoline and diesel into a single motor fuels law; added criminal evasion provisions; increased bonding requirements to a maximum of $1 million; and authorized Arizona DOT to require electronic filing. The new legislation went into effect August 2001. Arizona is seeing biodiesel use in some school districts and the fuel is being taxed at the full diesel rate. Arizona recently received their ExTOLE password. There is no indication of when they will require electronic filing.
California - Effective January 1, 2002, the point of taxation for gasoline was moved to the terminal rack. Suppliers, terminals and bulk carriers are required to file reports. Reporting is in detailed transactions, similar to ExSTARS. Electronic filing of motor vehicle fuel and diesel fuel tax returns is set to begin in 2002. Initially, suppliers, terminal operators and bulk carriers can report electronically using Federation of Tax Administrators (FTA) X12 v4030 electronic data interchange (EDI) map. Future enhancements will include other tax returns, claim forms, and other filing options, such as extensible markup language (XML). California implemented the Automated Fuels Schedules Process (AFSP) to receive, store and analyze the detailed transactions reported on the returns and report schedules. The system will match common transactions between entities and identify possible reporting discrepancies. California followed the FTA Uniformity Committee guidelines in developing the return schedules and electronic filing. They worked closely with industry representatives to ensure that industry could meet the State's requirements.
The BOE is unsure how the State budget deficit will affect their operations. The Fuel Taxes Division has not been directed to cut any positions, but the deficit may affect future travel plans.
A new "diesel" product has entered the California market. A company called Lubrizol manufactures the product, which is marketed under the name Purinox. This is a blend of diesel fuel, water and an emulsifier. Lubrizol is marketing the emulsifier and the batch plant technology to blend the Purinox. The blend is 80 percent diesel, 17 percent water and 3 percent emulsifier. "Clear" Purinox is a milky white and dyed Purinox is pink. The California Air Resources Board (CARB) has certified the product as a clean air fuel. There was a change in the California diesel fuel tax law last year that exempts the blending components. A jobber installed the first application which we have seen at a bulk plant. Chevron has recently installed a batch plant at their Montebello terminal and will produce Purinox, which they will sell under the trade name Performix.
Colorado - Legislation was passed that allows for industry based allowable percentage for off-road refunds. Off-road claimants can claim higher than allowable percentages if the taxpayer can provide support for the claim.
Colorado will use STP funds to build a bridge between ExSTARS and Colorado Fuel Tracking System. However, the contractor for the Colorado system will not sign a disclosure agreement with the IRS so the project is currently stalled. They plan on waiting for the bridge program to get terminal reports rather than require the terminals to report directly to them.
The Criminal Investigations Division has accumulated excise tax information on a large western fuel distributor. No fuel excise investigations are planned for the upcoming year. The field audit section has audited some of the fixed base operators (FBO) at airports for both aviation excise and sales tax where applicable. The field audit section plans to continue auditing FBOs at airports for both excise and sales taxes.
Nevada - Civil penalties assessed for dyed fuel violations total $206,000 during FY 2000-01. Gasoline tax administration has shifted from the Department of Taxation to the Department of Motor Vehicles, Motor Carrier. They are working on an MOU with Tribes in the State and have adopted a rule for "Incidental Use" by farmers of dyed diesel on the highway. The rule allows farm equipment or special mobile equipment to travel between owned properties without violating the State's dyed fuel statutes.
Utah - The State dyed fuel enforcement program has been authorized, but not implemented. The State had to revise their refund form because the previous form did not provide correct refund information which resulted in overpayments. Utah has a manual cross-referencing program.
Utah has an agreement with the Ute Indian Tribe that allows the Tribe to receive a refund of State motor fuel and diesel fuel excise taxes based on: 1) the purchase of the motor fuel from a licensed motor fuel distributor, 2) payment of the State excise tax to the distributor, and 3) the Tribe must purchase the fuel for its own use, or a Tribal member may purchase the fuel from a retail station wholly owned by the Ute Indian Tribe and the station must be located on Ute Indian Tribe trust land. The agreement also allows the Tax Commission to audit their records on a yearly basis.
Utah has an agreement with the Navajo Nation that allows those who deliver motor fuel and special fuels to the Navajo Nation in Utah to have their tax liability reduced. The Navajo Nation's tax rate for motor fuel and diesel fuel is 18 cents per gallon and the Utah tax rate is 24.5 cents per gallon. This was effective April 1, 2001.
The tax rate on aviation fuel increased from 8 cents per gallon to 9 cents per gallon on July 1, 2001. The tax increase applies to aviation fuel that is not purchased for use by a Federally certified air carrier. Federally certified air carriers that purchase aviation fuel at Salt Lake International Airport may apply for a refund of aviation fuel tax of 1.5 cents per gallon. Refunds may be filed no more than once a month.
A Clean Fuel Certificate must be purchased for all vehicles that run on clean fuels such as propane, compressed natural gas, or electricity. The certificate is required to be purchased for each vehicle in a fleet.
The Florida Task Force report was presented by Dave Skinner from the Florida Department of Revenue. The Florida Task Force held two meetings, August 2001 in Nashville and February 2002 in Gulfport, Mississippi. Both were joint meetings with the North Carolina Task Force. The next meeting will be held in August 2002, in Fort Lauderdale. Dave reported on the Gulfport meeting. Fifty-six attended the meeting that focused on active discussion and member participation on a number of topics.
The group talked about the sharing of export information in the region. Each State reported on who they share information with, how they share it, and what they do with the information they receive from other States. After listening to each State report, it was determined that the States are inconsistent with the collection and sharing of export information. Most States do not capture enough detail, some collect and share in paper format. Tennessee will share data in electronic format, an Excel spreadsheet based on FTA Uniform schedules.
Several guests were invited to the task force meeting to talk about specific topics. Don Fancher, from Equiva Services, talked about terminal operations. Dave Breidenbach, from Marathon Ashland Petroleum, talked about jet fuel consumption and Federal shortfalls as well as the proposed Federal tax law changes to simplify and consolidate Federal fuel excise tax. Dave Schimmel described Arkansas' results with their new Lockheed-Martin (ACS) automated fuel tracking system, and Eddie McCormack described Tennessee's new system developed by Zy-Tax.
Beth Petty, IRS, led a roundtable discussion on dyed diesel and invited participation in a regional enforcement crackdown called Operation Red Alert to take place the end of April. She noted that there has been a small drop in on-road enforcement, but there have been increased violations found at the State level.
Linda Morris talked about the foreign imports project. Dave Skinner talked about the criminal investigations training course under development by FTA. Dave, along with Peter Steffens gave an update on ExSTARS and Excise Tax On-Line Exchange (ExTOLE).
State updates noted that Louisiana is moving toward tax at the rack. Arkansas said their tracking system does work and does find violations, however, they are collecting the same amount of money. Florida is working toward getting 100 percent compliance with electronic filing requirements by fuel wholesaler licensees within the next 6 months. They are also considering a "benefits funded" fuel tracking system. Additional State reports are included in the North Carolina Task Force report.
The NETASK Task Force report was presented by Linda Morris. Janet Lake, Nebraska Department of Revenue, was unable to attend. The last task force meeting was held in Oklahoma City, on October 11 and 12. There were 23 persons, representing States and IRS. The next meeting is scheduled for May 2 and 3, in Cheyenne, Wyoming, and will focus on best practices in each of the member States.
The group talked about IRS and State fuel concerns on soydiesel including the difference between soydiesel and biodiesel. The group was told that the Uniformity Committee is looking into how to track and tax both items.
Vance McSpadden, Executive Director of the Oklahoma Petroleum Marketers Association, shared information on Oklahoma's legislation and resulting agreements with the Native Americans. The legislation was passed in 1996, and they believe it has solved most of the problems for their members. Each Tribe receives two annual payments if they participate, plus those in the fuel retail business receive a third payment based on the number of Tribal members.
Colorado - The DOR discovered six distributors selling kerosene for home heating/off-road use. They have designed new procedures and forms for any person making a sale of undyed kerosene of 800 gallons or less, limited to dispensing in quantities of 50 gallon or less at a time.
Relating to Native American issues, DOR is involved in a case with numerous western States with records showing fuel going into the Navajo Nation, but the paper trail ends there. The Ute Mountain Tribe approached the State regarding signing a treaty allowing them to purchase fuel free of the State tax and impose their own tax. The Tribe agreed that sales on the reservation to Tribe members are not taxable, but sales to non-members are taxable. The Tribe will file refund claims on behalf of all members.
Kansas - The injunction against the State collecting tax on the reservation was lifted on August 21, 2001. The State has developed criteria to allow a refund for idle time. Idle time cannot be claimed if on a public highway or turnpike. They are working to move the point of taxation to the rack, and are discussing float, bad debt, and handling allowance. They hope to get legislation passed with an effective date of January 1, 2003.
Minnesota - Inspection fees, shrink changes and minimum price laws took effect. Williams is one of the companies that passed the ExSTARS testing phase and the State is seeing some of that effect. All auditors are certified to pull diesel samples.
The State is having severe budget problems and has cut their budget by 10 percent. They are hoping to get funds to do fuel inspections this year. Travel has been restricted.
Missouri - See the PUBLICUS Task Force report.
North Dakota - North Dakota held no legislative session. They reported on the biodiesel provisions that were passed last year. North Dakota has four reservations and five Tribes. One Tribe has a blending plan and distributes fuel with its own tax of 4 cents per gallon. The Tribe has agreed to pay the State a percentage, but will no longer honor the State fuel tax. A different Tribe has an agreement that works while the remaining three Tribes are working on agreements. The State believes there is a potential loss of $1.5 million annually. The State is struggling with their cross-matching program, finding it does not produce useful information. They are also having problems with EDI.
Oklahoma - See the Texas Task Force report.
Nebraska - Nebraska proposed no new legislation this year. By January 2002, the State will require everyone to file EDI, and companies making payments of $100,000 annually must pay via electronic funds transfer (EFT).
Iowa - No report.
The New England Task Force was presented by Allan Ferullo, from the Massachusetts Department of Revenue. The last task force meeting was held in Boxborough, Massachusetts, in May 2001. The next meeting will be held with the New Jersey Task Force in Toronto on May 1.
Massachusetts - Massachusetts reported no new fuel legislation. The DOR utilizes seven field auditors to cover special fuels, gasoline, alcohol and tobacco. During the last fiscal year, they completed 139 cases with assessments of $821,415. Three auditors were sent to advanced auditor training last year. Representatives were unable to attend the FTA Annual Meeting held in Rapid City, South Dakota in September because of the events of September 11. They hope to be able to send someone to the FTA Northeast Regional Conference to be held in Toronto in late April.
Rhode Island - Rhode Island reported no new legislation. The DOR has four agents, working in teams of two, performing motor fuel and sales tax audits at the same time. The team audit approach has been successful. A licensed distributor sold gasoline and diesel Massachusetts tax paid to a Rhode Island fuel oil company, which then sold the fuel to customers in Rhode Island. Audits of two distributors disclosed that they acquired Rhode Island accounts when they bought out other companies. Both failed to report sales to these accounts on their distributor returns even though they collected the Rhode Island tax. An audit of a licensed exporter that acquired a large number of Rhode Island accounts shows that a substantial amount of fuel was purchased tax-exempt. Estimated assessment is $150,000.
One audit has been referred to the adjunct general for criminal charges. The case involves a taxpayer who has been using #2 fuel for use in both on- and off-road vehicles. Assessments for the reporting period were $383,000.
Connecticut - Two hundred and twenty-four motor fuel-related audits were completed between October 2001 and March 2002. Assessments totaled $2,229,079.21. Two auditors will be attending the advanced auditor training in June. Excise field auditors and Special Investigations Section have been working on two cases involving sales of untaxed fuel. Criminal charges are pending for one company and are likely to be filed in the second case. The DOR received $35,000 from Connecticut DOT to supplement the FHWA tax compliance project funds. Some of the funds will be used for enforcement efforts. ExTOLE passwords have been issued to two staff members. The staffers have developed a contacts list that will be posted along with a list of licensed fuel distributors.
Vermont - Reported diesel tax revenues increased by 19 percent from the previous fiscal year due to a change in the law moving the point of taxation to the distributor level. The law took effect July 1, 2000. A bill has been proposed in this legislative session to increase the gasoline and diesel taxes by 6 cents per gallon. The desk audit position has been filled. The DOR hopes the tax compliance program will continue to be funded by Congress, saying it has been very beneficial to the State.
Maine - The legislation introduced a fuel tax indexing bill that would increase/decrease fuel tax based on inflation factors, and a second bill that would increase fuel tax by 2 cents per gallon.
The Special Enforcement Unit performed 968 dyed fuel checks between October 2000 and September 2001. Twelve samples were sent for testing, and ten summonses were issued. Forty-eight special fuel supplier and gasoline distributor field audits were completed. Assessments were $970,914.93. One hundred sixty-three special fuel supplier and gasoline distributor desk audits were completed. Assessments were $103,292.09. Four special fuel user or off-highway audits were completed. Assessments were $10,548.69.
New Hampshire - The Department of Safety is looking into rule changes for the next legislative session so that Uniformity can be addressed. Reporting of kerosene as a taxable product is an issue with some distributors. Audits of large distributors are being scheduled. Auditors are checking refunds to retail stations before they are processed.
The New Jersey Task Force report was presented by Joe O'Gorman, from the New Jersey Division of Taxation. The last meeting was held October 17 and 18 in Princeton, New Jersey. All member States were represented including Virginia, which was recently invited to join. The next meeting will be a joint meeting with the New England Task Force and is scheduled for May 1 following the FTA Northeast Regional meeting in Toronto.
The meeting included updates from FHWA and IRS as well as reports on ExSTARS, ExTOLE and several special projects related to motor fuel imports, Virginia destination State issues, Pennsylvania retail survey and IRS terminal survey.
FHWA reported on funding issues, dyed fuel statistics, reauthorization process and the motor fuel imports project. The IRS reported in New Jersey that they have been receiving calls from the State Division of Weights and Measures about dyed fuel violations. In addition, there has been some question regarding terminals in the State that do not currently fit under the IRS definition of a terminal. They are looking into terminals that are listed as inactive to verify that no activity is taking place. The IRS also reported on a case involving a company taking credit for fuel purchased, but not paying the tax. In Philadelphia, IRS is looking into tax-free sales and a large trucking company. It was also reported that the IRS Compliance Revenue Assessment Team is trying to determine why fuel tax revenue is going down, but consumption is going up.
Delaware - Delaware reported that their website is up and running to allow taxpayers to access forms. The website includes a list of license holders. They are working on enhancing the system to allow taxpayers to file reports over the Internet. The State is working on developing a legislative proposal to address below cost sales. Inquiries have been made regarding moving the point of taxation from the distributor level to the terminal rack.
District of Columbia - The District is continuing its audits of major wholesalers and distributors. They reported refund requests have increased since Virginia adopted a destination State tax. Several completed audits have resulted in assessments of over $1,000,000.
Connecticut - See the New England Task Force report.
Maryland - In 2002, 11,440 samples have been taken at the retail level with 126 stop sales issued. Most of these are related to octane problems. Currently, there is an investigation of an unregistered distributor bringing E-80 (ethanol/gasoline) blend into the State. They have conducted over 1,500 dyed fuel inspections in the State and have found 11 violations. They anticipate dyed fuel legislation will be enacted that will allow for penalties for use of dyed fuel.
New Jersey - The State is working on an aggressive carrier project to get all carriers filing reports to track who is purchasing fuel. All license holders are listed on the Internet. A tax amnesty period has been announced for a 60-day period. Amnesty pertains to all taxes owed from January 1, 1996 through the present.
Pennsylvania - Pennsylvania has decided to scrap EDI filing program because of problems installing software. To replace this, they are implementing Internet-based filing in July 2002.
The State implemented a tax rate change in January 2002. Gasoline/gasohol was 26 cents per gallon and now is 26.6 cents per gallon. Undyed diesel and kerosene was 30.9 cents per gallon and now is 31.8 cents per gallon. Aviation gasoline was reduced from 4.3 cents per gallon to 4.1 cents per gallon. Jet fuel was reduced from 2 cents per gallon to 1.8 cents per gallon.
New York - The Department of Taxation and Finance is in the process of getting license information prepared and uploaded into ExTOLE. The Department is not mandating electronic filing, but it is being done without a mandate. Meetings were held with IRS officials in New York City on several related cases.
The North Carolina Task Force report was presented by Julian Fitzgerald, from the North Carolina Department of Revenue. The North Carolina Task Force met twice in the past year, Nashville in August and Gulfport in February. Both meetings were held with the Florida Task Force. Julian reported on the Nashville meeting. Fifty-one representatives from nine States and six IRS districts attended.
The meeting included several invited guests that talked about topics of interest to the States. Joe O'Gorman provided an update on organized crime activities in New Jersey. Al Howard talked about a proposal to simplify the Federal motor fuel excise taxes. Linda Morris, Al Howard, Joe O'Gorman, Dave Skinner, and Steve Annis talked about imports of finished motor fuel products. Mike Mueller talked about the IRS below the rack (BTR) project and other initiatives.
Member State representatives provided reports on specific projects in their States. Carol Player and Steve Annis talked about diversions as they relate to tax at the rack. Eddie McCormack, Rodney Pendley and Rosie McClurkan talked about Tennessee's electronic auditing program. Tom Dixon talked about North Carolina criminal cases. Marcel Tart gave an IFTA law enforcement update.
South Carolina - Proposed legislation includes the addition of civil penalties throughout the motor fuel tax code. Between March 2001 and March 2002, 248 retail inspections were performed. These inspections focus on inventory reconciliation of all taxable fuel types, and destination State designation. Each purchase is traced to the respective monthly supplier return for verification of tax payments. Unresolved diversions are forwarded to the field for further investigation. Resolved diversions have resulted in collections of $131,678. The average number of diversions per month is 140, with approximately 40 percent being forwarded to the field for resolution. There were 2,580 dyed fuel inspections performed between March 2001 and March 2002. 124 violations were issued resulting in $239,460 in penalties.
Tennessee - The State is requiring all distributors to file returns electronically. This is mandated and penalties will be assessed to all that do not comply. Tennessee will be adding exporters, transporters and terminal operators to their EDI program later in the year. There were 3,308 dyed fuel inspections performed. 54 violations were found, mostly from personal vehicles used on farms and construction sites. Dyed fuel inspections have been temporarily halted due to a court ruling on roadside inspections. Roadside inspections are expected to start up again after procedures are modified.
In 2001, 1,352 retail inspections took place. Retail inspections are used to track fuel. In the first 8 months of the current fiscal year, Tennessee has issued audit assessments of $4.6 million. They are conducting audits electronically which appears to be working very well.
They are working on two criminal cases. The first one involves fuel imported from Virginia. The case will be presented to the district attorney for criminal prosecution. The second case involves sales of dyed fuel by an unlicensed wholesaler and the use of dyed fuel on-road. The person was indicted and awaits trial.
The IRS in Nashville is working with the State on biodiesel and waste oil issues as well as with the dyed fuel program.
Virginia - The State is continuing with implementation of its tax at the rack legislation. They report that collections are up as well as refunds. There were 4,539 dyed fuel inspections that took place in calendar year 2001. There were 49 penalties assessed and 10 criminal charges were pressed.
West Virginia - As of March 7, the tax department had completed 14 IFTA audits and 9 IRP audits. Dyed fuel inspections were expected to start up in late spring. The West Virginia Department of Highways and Tax Department are meeting and preparing information for development of a tax at the rack legislative proposal.
Georgia - The State has requested additional STP funds from the Georgia DOT. The Georgia DOT and Department of Motor Vehicle Safety had been conducting approximately 1,000 dyed fuel inspections each week. They have processed over 50 dyed fuel assessments. As a result of the dyed fuel sampling, they noticed a number of trucks had dark diesel fuel. Lab inspections indicated no red dye in the fuel, however vehicle drivers reported that it was company policy to place used oil in the fuel supply tanks. Georgia is requesting a joint audit with the carriers' base States to determine if any additional tax liabilities exist. In February 2002, the DOR and the IRS conducted a dyed fuel sweep at the Valdosta Weigh Station. Over a 3-day period, 568 trucks were inspected resulting on only one dyed fuel hit.
Kentucky - On March 18, the Kentucky Revenue and Transportation Cabinets began a joint audit effort that will run for 18 months. Each Cabinet contributed four auditors. Review of the audit findings will assist Kentucky in better determining the audit presence needed to assure compliance. The effort was generated in part by the first downturn in road fund receipts in recent years. Travel has been restricted due to budget constraints.
North Carolina - The Red Alert monthly fuel inspection program is continuing. Violations have been on the rise, particularly in construction and personal use vehicles. The State will monitor this situation. The revenue department is in the early stages of developing an EDI system for both motor fuels and motor carriers. The DOR will be sending people to the basic and advanced training being offered by FTA.
The North Carolina Fuel Tax Steering Committee has been reactivated. This committee is made up of representatives from the DOR, DOT, IRS and other agencies. The ultimate goal is to increase motor fuel tax collections.
On the legislative front, there is a push to get police certification for the State's motor fuel inspectors. They are also pursuing legislation to levy penalties on retail outlets that do not maintain proper records.
The Northwest Task Force report was presented by Quintin Hess, from the Oregon Department of Transportation. The last meeting of the Northwest Task Force was held in Rapid City, South Dakota, on September 23, 2001. April 14 is the scheduled date for the next meeting.
Oregon - Several Tribes have inquired about the State's motor fuel tax structure and are exploring business opportunities there. One Tribe is in the process of preparing a draft agreement with the State. Legislation was enacted that extends the exemption from the use fuel tax to special districts, State agencies and counties. A task force was established to explore alternatives to fuel taxes as a means of funding highways. The State's authority to enter into agreements with Native American Tribes was extended to include use fuel. Oregon offers a limited EFT program and is exploring the use of e-commerce for tax reporting. Evasion found in the State centers around the unlicensed use and sale of use fuel.
There are four proposals for the 2003 legislative session which include increasing the bond authority; giving the department the authority to suspend licenses; requiring licenses for exports; and, treating cardlocks as sellers.
Relating to ExSTARS, Oregon DOT notes that the IRS allows related companies to share the same Federal Employer Identification Number (FEIN) in some instances. Under Oregon law, the companies are separate entities that must be separately bonded and licensed, and they must report separately. If ExSTARS reporting is done based on one FEIN, then the number of gallons reported could represent more than one entity. Fuel volumes must be reported by each entity to be of any use to Oregon DOT.
The American Trucking Association challenged Oregon's weight/mile tax program. The suit focuses on the way commodity haulers (flat fee option) and farmers are treated.
Portland is the site for the 2002 FTA Pacific Region Fuel Tax Conference.
Idaho - The 2002 legislature passed a law that overturns the 2001 Idaho Supreme Court decision regarding sales of tax-exempt fuel to Tribe-owned retail outlets on a reservation. The new law puts the incidence of the State fuel tax back on the fuel distributor and eliminates tax-exempt sales to the Tribes. The State expects to be back in court on this matter.
Border issues are the primary form of evasion in the State. The difference in tax rates between Idaho and Wyoming, and the lack of diesel tax in Oregon contribute to evasion in Idaho. Increases in dyed diesel violations and referrals are being found, and may be related to the higher cost of diesel at the pump and the elimination of IRS on-road enforcement. Dyed fuel is being found in vehicles used by farmers/ranchers, loggers and construction companies.
Idaho offers its fuel tax return software free to fuel distributors that want to file electronically. The State offers a one-time credit of $2500 for distributors that file electronically.
Idaho's, as well as other Northwest task force member States, fuel load information requirements are not addressed by ExSTARS. If ExSTARS required the reporting of the owner of the fuel (distributor name) when it leaves the terminal, then ExSTARS information would be of more value to these States.
The reduction in FHWA funding for tax compliance projects will likely cause Idaho representatives to miss upcoming Northwest task force meetings as well as the FTA regional and annual meetings.
Washington - The Department of Licensing has developed a new State-Tribe Tax Agreement that refunds the State fuel tax to the Tribe based upon estimated Tribal membership, Tribal government and Tribal business usage. There are four agreements in place and four more in process. The State offers EFT and is considering a web-based electronic tax return.
It is estimated that 3 to 4 million gallons of fuel is bootlegged into Washington onto four reservations. All of this fuel comes from Oregon. The dyed diesel program was strengthened by legislation that was passed in 2002. Washington statutes have specific provisions for what is lawful and unlawful use. The program mirrors the IRS program. The Tax Evasion Unit is staffed with three State Patrol detectives. The focus is on dyed fuel issues and unlawful importation. Unusual blending activities are also being examined.
Montana - There are seven Native American reservations in Montana. Six of the seven Tribes have entered into a revenue sharing agreement with the State to share gasoline taxes. The seventh has not because it is against the Tribe's constitution to tax Tribal members. The Motor Fuels Advisory Council and DOT are looking at evasion issues, particularly relating to dyed diesel. The easy access to dyed fuel along with the increased number of diesel pickup trucks and the rising cost of fuel has resulted in more vehicles using dyed fuel on-road.
Approximately 92 percent of Montana's motor fuel taxes are collected via EFT and about 33 percent of the licensed distributors are filing electronically with the State. Licensed distributors are encouraged to file electronically.
Montana was the lead State responsible for the organization of a border project involving five northwestern States and four southwestern Canadian Provinces. The project, which took place in the summer of 2001, included both State and Federal agencies. The general scope and objectives of the project were:
In addition, the project also involved public safety checks of cargo, vehicle safety, driver logs, licensing of drivers and registration requirements. This joint effort allowed a check of several compliance factors with one stop and streamlined the process to ensure minimal disruption for the commercial transporter.
Participants in the project felt the results were beneficial and laid the groundwork for future projects with State, Federal and International partners.
Alaska - Legislation has been proposed to raise the motor fuel taxes, but it is not expected to pass.
The PUBLICUS Task Force report was presented by Roger Bair, from the Indiana Department of Revenue. The last PUBLICUS meeting was held in Indianapolis on July 18, 2001. There were 39 in attendance representing 9 States, FHWA and IRS.
Indiana - In late 2001, an additional 35 Indiana State Troopers and 102 State Police Motor Carrier Enforcement Officers were trained and issued equipment to take fuel samples. All samples are turned over to Revenue Criminal Investigations Division (CID) for testing and investigation. In 2001, 5,307 vehicles were tested for dyed fuel and 84 violations were found. During a dyed fuel project in northern Indiana, several trucks hauling steel from mills were found to be without overweight permits. Eight Midwest trucking companies were found to have violated overweight hauling permit procedures for an amount totaling $899,000. A company found in violation of the dyed fuel statute was also investigated for withholding tax violations. The defendant pled guilty to seven felony counts and was sentenced to 545 days in jail. Restitution to the DOR has been paid in full.
Minnesota - See the NETASK Task Force report.
Missouri - The DOR and the IRS signed an agreement to work together on dyed fuel sampling. Ten DOR agents have been trained and are working with the Fuel Compliance Officers (FCO) on compliance checks. They have found violations in construction companies. One criminal case is being worked where a taxpayer filed returns but did not remit the tax. Electronic reporting is in the testing stage. The State is reporting budget problems.
Ohio - Dyed fuel inspections started in July 2001 and several violations have been discovered. The Criminal Division is working on a few cases involving suppliers of dyed fuel. Ohio is having severe budget problems and has laid off some employees.
West Virginia - See the North Carolina Task Force report.
Illinois - The State is drastically reducing its staff. There is one person conducting fuel inspections in the State. Travel is restricted due to budget constraints.
Kentucky - See the North Carolina Task Force report.
Wisconsin - No report
Michigan - No report.
The Texas Task Force report was presented by Jimmy Archer, from the Texas Comptroller of Public Accounts. The last Texas Task Force meeting was held in San Antonio, on February 7 and 8. Forty-three people attended the meeting, representing 11 States, FHWA, IRS and the Navajo Tax Commission. The next meeting will be held in Albuquerque on July 30.
IRS Update - As part of the BTR program, fuel samples have been collected from all terminals and sent to the lab for fingerprinting. Samples from retailers and wholesalers were also submitted to determine if any fuel had been adulterated. The BTR program will conduct about 20 projects this year in Territory 4 (MN, ND, SD, NE, IA, KS, MO, OK, TX). A compliance area will be identified, reference samples will be taken from terminals and compliance samples from retailers, wholesalers and end-users. Samples will be submitted daily, so there will be a faster turnaround on the results and any actions that may need to be taken.
The IRS in Arkansas continues to conduct on-road inspections and is finding 10 to 15 penalties each month. A Red Alert operation, involving IRS and State fuel compliance officers, checked trucks and handed out information concurrently in the States in IRS Territory 2 (AR, TN, LA, MS, AL, GA, FL, NC, SC, VA, MD).
Navajo Tax Commission - An 18 cent per gallon fuel excise tax went into effect on October 1, 1999, in the Navajo Nation. The Tribal tax replaces the State tax for gasoline and diesel fuel sales within the Nation. Beginning October 1, 2002, all of the net revenue from the tax will be deposited into a road fund. The Navajo Nation has intergovernmental agreements with Texas, New Mexico, Arizona, Utah and California, which allow information sharing and joint enforcement and compliance activities.
Arizona - See the California Task Force report.
Arkansas - A legislative change, effective August 13, 2001, allows refunds on gasoline and tax-paid highway diesel fuel purchased for fire trucks. Refunds will be issued once a year to registered municipal and volunteer fire departments. Additional changes in legislation included removing leaded gasoline from the definition of motor fuel, which will allow racetracks to purchase fuel with an octane rating of 110 or higher tax-free. This became effective July 1, 2001. Effective August 13, 2001, the requirement for suppliers to list detailed load sales of off-road dyed diesel made to end users has been eliminated. The State will lose access to detailed monthly off-road customer listing, however, suppliers will have to maintain invoices for audit or investigative personnel. Effective July 1, 2001 the gasoline tax rate was increase to 21.5 cents per gallon.
The Highway Patrol and motor fuel tax investigators are finding between 10 and 15 violations per month from dyed fuel inspections. Some repeat offenders and more out of State vehicles are being caught.
The problem of insufficient electronic funds transfers made by gasoline and diesel jobbers is being treated like "hot checks." Two jobbers are being referred to the local prosecutor. Revenue and Finance hopes the prosecutor will treat the primary EFT contact in the same manner as a person who has signed a hot check.
Colorado - See the California and NETASK Task Force reports.
Louisiana - The Department of Revenue and Taxation has relocated to a new office facility. The new address is: 617 N. Third Street, Baton Rouge, Louisiana. The new excise tax assistance telephone number is (225) 219-7656. The organization recently completed an extensive reorganization. Boyd Winn is Assistant Director of the Taxpayer Services Division and is the primary contact for fuel excise taxes. His number is (225) 219-2200.
The Louisiana Departments of Public Safety and Revenue and Taxation cooperatively operate the dyed fuel enforcement program. The program is in its third year of operation and continues to be very successful.
Missouri - See the Publicus Task Force report.
Nevada - The Compliance Enforcement Division, Motor Carrier Section has several supplier cases in progress or recently completed. In addition, a recently completed redetermination audit resulted in an assessment of more that $400,000. Another is in process. They are also dealing with a large supplier who filed for bankruptcy in November 2001, the same month they issued a substantial check to the Motor Carrier Section with insufficient funds to cover it.
Auditors in California, Arizona and Nevada have shared information on special fuel imports and exports by a supplier operating in these States and have found "very substantial reporting errors." The errors have resulted in assessments of millions of dollars.
Between July 1, 2001, and March 2002, the Audit Section has received 18 dyed fuel citations from the Highway Patrol. In FY 2000, 94 citations were issued. In FY 2001, the count was 52.
As of January 1, 2002, the Compliance Enforcement Division will be responsible for gasoline as well as special fuels. Previously, the Department of Taxation was responsible for gasoline.
New Mexico - Bills have been introduced in the legislature that would: 1) eliminate the 60 million gallon per year deduction for certified distributors, and 2) require joint information sharing agreements with Tribes to allow deduction for sales on Indian land. The second bill has a chance of passing, which means the Taxation and Revenue Department will be doing more joint projects with the Tribes.
Oklahoma - Several bills have been introduced that, if passed, would increase the tax rate for motor fuels. Another bill was introduced that would create the Oklahoma Ethanol Plant Feasibility Advisory Committee. This would require the Department of Agriculture to conduct a study to demonstrate the potential of the State to attract industry leaders interested in establishing an ethanol processing plant. Another bill would prohibit the Oklahoma Corporation Commission from requiring specific labeling of motor fuel containing ethyl alcohol sold at retail establishments in the State.
Related to idle time refunds, the Tax Commission is waiting on a legal ruling on how to apply city and county sales tax on idle time fuel. State sales tax can be deducted from the motor fuel refund on the claim form. The Tax Commission is still receiving idle time refund claims supported by computerized truck idle time versus running time. The average is then applied to the Oklahoma IFTA mileage to compute Oklahoma idle time percentages.
Texas - In FY 2001, the Comptroller of Public Accounts, Criminal Investigations Division, opened 13 motor fuels criminal cases and closed 17 cases. Total restitution for this period was $441,088.57. In FY 2002, to date, 5 cases have been opened and 6 closed. Restitution is $402,748. Total active criminal cases as of February 2002 is 26. Convictions include Emmanuel Ololade who received 28 years for first degree felony theft. Ololade processed false motor fuel refunds totaling $2,017,807.47. Donald Clayton Smith was sentenced to 25 years for motor fuels tax violations. He was charged with 188 separate violations of the Motor Fuels Tax Statute. Some are second degree felony offenses with enhanced punishment of 5 years to life. The defense opted for sentencing by the judge instead of by the jury.
Effective September 2000, Texas Motor Fuels Tax Law was changed to include provisions for off-road use of dyed diesel fuel. Dyed fuel inspections take place at highway inspection sites maintained by the Texas Department of Public Safety. Inspections are also conducted based on leads or complaints received by the agency. In FY 2001, there were 2,185 total inspections, 11 dyed diesel and 49 permit violations found. Total penalties assessed were $60,405.29. In FY 2002, to date, 170 inspections were performed, 10 dyed fuel violations found and total assessments are $445.00.
The Audit Division reorganized into four regions to provide better coverage and more consistency in the motor fuels tax program. Tommy Hollingsworth and Barbara Gluck oversee the fuels tax program for the Division.
Utah - See the California Task Force report.
Federation of Tax Administrators - Cindy Anders-Robb, Federation of Tax Administrators, provided an update on FTA activities. She started with the brief explanation of the Motor Fuel Tax Section Executive Board and its members. She also provided a summary of the Uniformity subcommittees current activities and identified the co-chairs of each. Next, she gave the dates and locations for the Uniformity Committee and regional meetings that will take place in 2002 and 2003.
Motor Fuel Tax Section Uniformity Committee
Pacific Region
Northeastern Region
Southern Region
Motor Fuel Tax Section Annual Meeting
A summary and schedules for the FTA sponsored Basic and Advanced Auditor, and the Investigations training courses were covered.
Basic Auditor Training
The basic training course provides an overview of the motor fuel industries practices. It gives a detailed view of the different points of taxation in the distribution chain, follows the movement of fuel through the chain, and identifies the source documents that should be looked at when performing a compliance audit. In addition, it shows where fraud can occur at the different points in the distribution chain and the schemes used. Participants learn when to involve investigators. ExxonMobil will sponsor the next basic training course that will take place in 2003.
Advanced Auditor Training
The advanced course covers audit techniques that facilitate the tracking of fuel transactions between dealers, the tax and the payment of the tax. The class members participate in hands-on auditing procedures and are required to document findings and evaluate possible criminal activities. In addition, they are taught interviewing techniques. The 2003 advanced course will be sponsored by the State of New York.
Criminal Investigation Training
The investigation course is designed to look at the roles of the auditor and the investigator in various fuel tax evasion schemes, and learn the investigation procedures necessary to ensure a good case. Participants will learn case preparation issues including case management, chain of evidence, report writing and how to be a good witness. Also, the class will learn about forfeiture, how to seize and dispose of fuel property. The class is offered to those who have a basic understanding of criminal tax investigations and work for a government agency.
Canadian Fuel Tax Project - Dave Turnbull, Senior Project Officer, Canadian Fuel Tax Project, Canada Customs and Revenue Agency (CCRA), gave an update on the current phase of the Canadian Fuel Tax Project. The group is developing a template for a memorandum of understanding (MOU) that will deal with information sharing, specifically with regard to fuel taxes. The MOU will be designed for use by CCRA and the Provinces and will identify the information the agencies are gathering and will provide to those included on the MOU. The next steps will focus on sharing of information between CCRA, States, Provinces and U.S. Customs.
The Northwest Border Project, which took place in June 2001, involved Saskatchewan, Alberta and British Columbia and the northwest border States. It took place over 36 daylight hours during the week of June 18, 2001. Federal, State and Provincial agencies participated. The project had several goals including: compliance with State, Provincial and Federal laws relative to transportation, highway use, fuel taxes, and environmental regulations; validation of bills of lading; dyed fuel inspections; vehicle safety checks; and others.
The project was considered a success, even though minimal violations were found. However, the participants agreed that future joint projects might be more successful if there are fewer agencies involved and small, shorter "blitzes" are utilized. All agencies agreed that the relationships developed as a result of working together are beneficial, and they would continue these types of projects on a semi-routine basis.
Chris Poston, Fraud Counsel, Defense Energy Support Center (DESC), Defense Logistics Agency, a combat support agency within the Department of Defense (DOD), talked about the role of the DESC as fuel purchaser for the DOD and Federal civilian agencies. She provided information on the DESC website that is a compilation of fuel related information for the Federal government, States and the District of Columbia, Puerto Rico, the US Virgin Islands and the Northern Marianas Islands (Attachment 3). The site can be found at: http://www.desc.dla.mil/dcm/dcmpage.asp?LinkID=DESCGCounsel. Click on "Compilation of United States Taxes" for the information. The site provides the tax or fee related to each fuel, the legal basis for the tax/fee, the exemption, credit or refund status, and other specific information related to the motor fuel. A phone contact is also provided. Since the meeting in April 2002, the DESC-G website has been upgraded to include more detailed links and a provision whereby one may be automatically notified of updates to the Tax Table Compilation. There are four links:
The website also provides information related to DESC Ground Fuel contracts including: a listing of outstanding contracts in the continental US sorted by contractor, State, and other data; ground fuel deliveries listed by transporter; information on retail and fleet cards; and disposal of used oil and waste fuel connections. DESC administers a number of different types of energy contracts and the amount of information about each type of fuel contract available on the Internet depends on the state of electronic automation in the particular program.
Ms. Poston talked about the disposal of waste fuel, which may or may not be off spec, by an increasing number of Federal agencies. She also mentioned that Congress is considering privatizing disposal operations, including that of waste fuel.
Ms. Poston talked about the role of the Defense Criminal Investigative Service (DCIS) as the investigative arm of the DOD when the crime affects more than one procurement agency. She mentioned that tax violations are grounds for debarment and suspension from government programs. If suspended or debarred, the debarred or suspended entity is precluded from participating in Federal programs and contracts. Information about debarment for tax violations can be found in Federal Acquisition Regulation Subsection 9.406-2(a)(3) accessible on the Internet at: http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/far/09.htm#P379 69411
Tim Torri, ExSTARS Project Manager, IRS, gave an update on the status of ExSTARS. He provided some statistics related to the number of terminals reporting electronically and using paper returns; the number of companies and terminals approved for production/use of the system; the number of companies and terminals submitting production data from the 720TO electronically; and, the 720CS data reporting, including the estimated number of pipeline and barge operators, and the number of these companies filing electronically and by paper (Attachment 4).
In other areas of ExSTARS development, two-party exchange issues are being worked out and the preliminary report looks good. Regarding information on paper returns, only summary data will be entered into the system. No destination State information will be made available from the paper returns.
Rich Little, from IRS, gave an update on biodiesel. He stated that IRS is continuing to work on developing guidance on the taxation of biodiesel. Guidance has since been published. Because of the make up of the fuel, it can be classified as an excluded liquid and therefore not taxed under section 4081(a)(1) of the Internal Revenue Code. Since most biodiesel is used in a blend of 20 percent biodiesel to 80 percent petro-diesel, the blended fuel is taxable under section 4081(b)(1) of IRC (Attachment 5).
Al Howard, Al Howard Consultants, talked about the use of jet fuel since the events of September 11. He began his presentation by asking the question "where did the jet fuel go after 9/11?" The tax on jet fuel used by commercial airlines is 4.4 cents per gallon and 21.9 cents per gallon for general aviation. He explained that jet fuel can be purchased over the terminal rack tax free by an H registrant who can then sell it to another H registrant tax free. This can occur any number of times before the tax is finally remitted.
Attachment 6 shows the difference between the supply of jet fuel and the demand, and Attachment 7 shows the cost of jet as compared to the cost of diesel at New York Harbor. Questions have been raised concerning the difference between supply and demand after September 11.
Mr. Howard point out some areas where questions might be raised. He showed the group an article that mentioned a 35 percent increase in jet fuel demand while there was still a 20 percent reduction in flights. He showed a website for Dodge Ram trucks that states jet fuel can be used in those vehicles if blended with motor oil. He noted that during Desert Storm, troops were instructed to use jet fuel, blended with motor oil, in the diesel vehicles since only jet fuel was made available to them.
In closing, Mr. Howard noted the importance of knowing the receiving location of each jet fuel shipment and an understanding of the sale and movement processes for security reasons.
Wayne Rhoads, Fuel Tax Coordinator for the Mississippi DOT, talked about evasion and what is being done about it in Mississippi. He noted that Mississippi is surrounded by water and receives a large amount of fuel from out of State terminals. He said enforcement efforts are coordinated under the DOT, which does perform regular dyed fuel checks. As part of the checks, he said that the inspectors often get information on what is going on by asking questions of the truckers who volunteer information.
Mr. Rhoads talked about the amount of fuel that is moved by water on the Mississippi and Tennessee Tombigbee Rivers. He noted that one barge load of fuel is equal to 60 tank truckloads. He mentioned that he has been able to develop contacts in other Federal and State agencies that help in enforcement.
He talked about a tank trailer parked behind a restaurant, with a portable pump attached where trucks would pull in and fill up. The placard on the tank was marked as jet fuel. A second site was also found and both are being investigated.
Linda Morris provided a brief update on the Fuel Imports working group. The group is working toward gaining a better understanding of the fuel imports process, and identifying areas where fuel may get into the distribution system without passing through the terminal rack and, ultimately, without paying the appropriate taxes. A strategic plan has been developed that outlines the mission and goals of the working group, as well as a short issue paper that identifies the reasons for looking into the imports process, and enlists support from the numerous agencies that are involved in motor fuel imports.
The group has identified six areas to concentrate on including: Canadian border; Mexican border; seaports; bonded warehouses and foreign trade zones; barge movements; and Customs and other data sources. These areas are not mutually exclusive and often the work of one group will overlap into another. Teams have been working in each of the areas and have agreed to have something to report by the next steering committee meeting. A final write-up is scheduled for completion by the FTA Annual Meeting in Charlotte, September 2003.
A short discussion was held concerning alternative sources of revenue for support of the transportations system. Linda Morris mentioned a study commissioned by the Transportation Research Board that is looking at alternative revenue sources. The multi-State pooled fund study is not yet complete, but is looking into the use of GPS. Quintin Hess mentioned that Oregon has in place a Road User Fee Task Force that is looking at alternative revenue sources including the use of GPS and electric cars.
Ray Barnhart identified the current Joint Federal/State Motor Fuel Tax Compliance Project as a topic for discussion. He said that the program was "treading water" for the past four years, and that there was no substance to the program any longer. He mentioned that there are no required reporting mechanisms and as a result no measures of success or accomplishment.
Past accomplishment were briefly mentioned, but the need to move forward and identify and work on issues that have yet to be addressed was pushed. Increasing on-road and/or on-water enforcement efforts was mentioned as was developing the relationships between State revenue and transportation departments to bridge the current gap. A reminder that the transportation reauthorization legislation is underway was mentioned and that now is the time to get involved in working toward building a program that will better meet the needs of the highway use tax program at both the State and Federal levels.
A specific date for the next meeting was not determined, but it was agreed that it would be held in the spring.
