Star Paving Co

20-01

On July 27, 2018, Department assessed the Taxpayer for $23,155.27 in tax, penalty, and interest as the result of a Department audit. The Taxpayer paid the assessment but later submitted an application for refund for the amount, challenging the validity of the assessment. The Department denied the refund request on May 16, 2019, and the Taxpayer protested. The protest involved whether the Taxpayer adequately supplied records to support a one-way hauler weight distance tax rate. The Taxpayer owned and operated heavy trucks hauling materials to be used in construction projects. The Weight Distance Tax Act imposes a tax on all registered vehicles with a declared weight in excess of 26,000 pounds that travel on state highways. All the Taxpayer’s trucks met this qualification. The statute further establishes the base tax rates for all registered vehicles based on the declared gross weight and on the mileage traveled on state highways. The tax rate increases as a vehicle’s weight classification increases. There is, however, a reduced rate for a one-way haul. If the operator of the vehicle can satisfy the one-way haul rate criteria provided in regulation, the Taxpayer is allowed 33% less than the full tax rate. In this case, the Taxpayer needed to show that 45% or more of the mileage traveled was traveled empty of all load. During the timeframe at issue in the audit, the Taxpayer did not maintain records that separately recorded the mileage of its vehicles when driving from the vehicle storage yard, to the materials supplier, to the job site, and back to either the supplier or to the vehicle storage yard. Because of this, the Taxpayer’s records contained only total mileage for its trucks, which could be for miles when it was empty and miles when it was fully or partially loaded. Regulations describe exactly these requirements the records that must be kept to support the lower tax, but the Taxpayer argued that the records that were maintained showing only the total mileage traveled satisfied other record keeping regulations which it cited. However, the Hearing Officer disagreed, explaining that a plain reading of the statute clearly supported the requirements found in regulation that Taxpayers keep proper records to support that the lower one-way haul rate could be used. This having been determined the Hearing Officer denied the protest.