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Southern Pines Trucking v. Commonwealth of Pennsylvania

May 2, 2012


The opinion of the court was delivered by: Robert Simpson, Judge

Argued: March 12, 2012



Southern Pines Trucking (Taxpayer) contests the interest amount calculated by the Department of Revenue (Department) on a Notice of Determination of fuel tax due under the Motor Carriers Road Tax Act*fn1 based on Taxpayer's reporting pursuant to its International Fuel Tax Agreement (IFTA)*fn2

license. Taxpayer argued that the interest on its credits should be offset against interest on its tax liability, regardless of the jurisdiction in which taxes were due. The Board of Finance and Revenue (Board) affirmed the Department Board of Appeals' determination that the interest assessed was properly calculated. Taxpayer appeals that order to this Court. Upon de novo review, we affirm.


Taxpayer is an interstate trucking company engaged in flatbed transportation. As an IFTA member, Pennsylvania licenses entities, like Taxpayer, which operate in multiple jurisdictions and report their fuel use taxes to Pennsylvania as the base jurisdiction pursuant to the Motor Carrier Road Tax Act (Act). The tax is imposed based on the amount of fuel used in a licensee's operations on state highways. The reporting covers each jurisdiction in which qualifying vehicles travel. The Department is charged with collecting and distributing the tax due to other member jurisdictions, and it audits licensees for compliance. IFTA governing documents include the Articles of Agreement, which incorporate the Audit Manual and the Procedure Manual, and apply to all 50 member jurisdictions.

The Department conducted an IFTA Road Tax audit of Taxpayer for the period from January 1, 2002 to September 30, 2006 (Audit). The Audit concluded that Taxpayer's mileage and fuel records maintained for IFTA tax reporting did not contain all data required by the Act. As a result of the Audit, the Department issued a Notice of Determination of taxes due relating to Taxpayer's reporting. The Notice set forth a net tax deficiency*fn3 in the amount of $17,840.25, plus interest of $18,615.24 (computed on the pre-credit amount of $83,918.19) for a total assessment of $36,455.49. The Notice of Determination identified overpayments and underpayments by jurisdiction and in summary form.

Taxpayer appealed the assessment. In its appeal to the Department's Board of Appeals, Taxpayer contested how the interest was computed, asserting that it was charged interest in jurisdictions where tax was underpaid, but it was not given credit for interest where tax was overpaid. Taxpayer did not contest the assessed tax deficiency. See Bd. of Appeals Dec. at 1. Taxpayer also contended the Department failed to provide documentation to support its interest calculation. Although Taxpayer requested a hearing, it declined to appear.

The Board of Appeals determined the Bureau of Motor Fuel Taxes gave Taxpayer a detailed explanation of interest calculations for each jurisdiction. As to Taxpayer's claim for interest on overpayments, the Board of Appeals cited IFTA Article R1230 as the pertinent provision. Section R1230 provides: the base jurisdiction, for itself and on behalf of the other jurisdictions, shall assess interest on all delinquent taxes due each jurisdiction except taxes collected directly by other jurisdictions in accordance with IFTA Procedures Manual Sections P1000 and P1120.300.

IFTA Art. XII, Sec. R1230. Section R1230 further provides:

Interest due shall be calculated separately for each jurisdiction from the date the tax was due for each month or fraction thereof until paid.

IFTA Art. XII, Sec. R1230.300.005 (emphasis added).

The Board of Appeals explained that IFTA Article XI, Section R1150 provides that refunds properly due shall be paid within 90 days after receipt of a refund request from a licensee, and interest shall accrue at the rate of one percent per month from the date the refund was due. However, as the credits here were established by an IFTA audit, and not by Taxpayer's refund request, the Department lacked authority to calculate interest on the tax credits found in the Audit.

Taxpayer timely appealed the decision to the Board.

On April 23, 2008, the Board issued an order affirming the Board of Appeals. The Board noted Taxpayer's appeal contested only the calculation of interest, not the tax deficiency. However, the Board stated as one of the issues before it: "Whether [Taxpayer] is entitled to a reduction of the [IFTA] road tax assessed, where that issue was not raised at the Board of Appeals." Bd. Dec. at 1. As to the tax deficiency, the Board stated "[Taxpayer] asserts that it is in disagreement with the tax deficiency and will provide additional documentation at the hearing to refute [it]." Id. at 2. Taxpayer did not submit documentation.

Regarding the Audit, the Board explained that while mileage records and individual fuel purchase receipts were maintained, they were not used to determine the miles traveled and the fuel purchased and reported each quarter. The Audit also found that the odometer readings were not maintained or used by Taxpayer to compute total miles on the returns, and that Taxpayer did not keep required data. The Board noted Taxpayer's noncompliance with record-keeping requirements.

Upon review of IFTA Articles at Sections R1230 and R1150, the Board concluded the Board of Appeals reached the right result on the interest calculation. The Board agreed the Department properly assessed interest without offsetting overpayments and deficiencies among jurisdictions. Article XI, Section R1150 pertains to interest only in connection with licensee requested refunds of taxes. The Board emphasized that any tax credits here were established by the IFTA audit, not the result of Taxpayer's refund request under Section 1150. The Board therefore concluded Taxpayer was not entitled to receive interest on credits found in the audit. The Board held it had no authority to abate interest properly calculated. The Board also advised it could not address any issues raised as to the tax deficiency because Taxpayer did not challenge the issue to the Board of Appeals.

Taxpayer petitioned this Court for review of the Board's Order on May 7, 2008. In its petition, Taxpayer asserts it is not subject to the Motor Carrier Road Tax (Tax) and should not have been assessed interest on the Tax. Taxpayer states several general challenges to the constitutionality of the Commonwealth's actions,*fn4 including that it was deprived of its property without due process of law and that the administrative decisions failed to conform to the authorizing statute.

After seeking a number of extensions, and this Court's order advising the matter would be dismissed absent a showing of cause, the parties filed a Stipulation of Facts on December 19, 2011 (Stipulation). The Stipulation, together with its ...

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