BULLETIN

Presiding over the conference was Roland Marr, from the Illinois Department of Revenue. Welcoming the participants to Rochester, New York, was Gary R. Viken, Secretary of the South Dakota Department of Revenue.

Gary Viken, Secretary of South Dakota Department of Revenue, welcomed everyone to South Dakota and gave advice on what the great state of South Dakota has to offer. He commended the Motor Fuel Tax Section for its efforts in uniformity and for partnering with industry for the good of everyone involved.

Cindy Anders-Robb, Motor Fuel Tax Associate, Federation of Tax Administrators gave an update on the Motor Fuel Tax Section activities during the past year. She also released the dates of the basic and advanced training courses for the year 2002.

Linda Morris, Transportation Specialist, Federation Highway Administration, gave a brief presentation on the TEA-21 (Transportation Equity Act) legislation. She encouraged the states to apply for the available funds in the Surface Transportation Project (STP Funds) included in TEA-21.

Ron Miller, Manager of Motor Fuel Tax, Marathon Ashland Petroleum LLC, talked about the partnership between States and Industry that has evolved in the Uniformity Committee. Working together makes a more effective and efficient way of doing business for both sides. He also mentioned that a partnership helps break down barriers and helps in making a level playing field for industry. To date, Marathon Ashland Petroleum has worked with 10 states with laws and forms. Joe O’Gorman, Assistant Chief, State of New Jersey, talked about the partnership between states and industry on the Uniformity Committee. He mentioned that those who attend uniformity meetings have a better relationship with the industry. He also talked about the partnership with industry on the ExSTARS project.

Ken Duggan, Project Manager, Canadian Fuel Tax Project, gave an overview of uniformity updates occurring in Canada. Mike Robb, State of Wyoming discussed uniformity updates for the U.S. and introduced each of the new co-chairs of the reorganized subcommittees. He also introduced the past subcommittee co-chairs and wanted to thank them for the hard work they have done over the past several years.

Two concurrent sessions were repeated throughout the afternoon.

One session was the different states talking about resent court cases. Tom Scott, Director, Bureau of Motor Fuel Taxes, Pennsylvania Department of Revenue talked about the dyed fuel case of Commonwealth of Pennsylvania vs Wilbur Waltz. David Wiest, Attorney for South Dakota Department of Revenue talked about Muddy Creek vs South Dakota Department of Revenue. Dar Walters, Fuels Tax Manager, Fuels Tax Section, Idaho State Tax Commission talked about Goodman Oil of Lewiston, ID vs. Idaho State Tax Commission ---- Idaho Supreme Court Case #25994 and Richard Doane, Assistant Chief talked about the several dyed fuel cases in Texas.

One session was an explanation on the rewrite of the Federal Excise Tax Code. Al Howard, Al Howard Consultants talked about how the rewrite came about and explained the proposal to redraft the Internal Revenue Code provisions dealing with the fuel excise taxes. All federal excise tax provisions relating to taxable fuels would be consolidate into a new chapter with separate subchapters dealing with imposition of taxes, refunds and credits, and administration and penalties that specifically apply to fuel taxes. All definitions specifically dealing with the fuel tax provision s would be consolidated in another subchapter. Other provisions in the Code would continue to apply to fuel taxes unless a specific rule is provided in the new chapter. There is substantial simplification and reordering of the present law rules.

The four regions; Midwestern, Northeastern, Pacific, and Southern, conducted their separate meetings to review the 2001 activities and to plan 2002 activities.

David Retz, Tax Counsel, Chevron Corporation gave a brief update on American Petroleum Institute Update. He hopes that all states continue in the Uniformity effort and if a State is developing an electronic system to please contact the industry before they start or use the standards developed by the Uniformity Committee.

Linda Morris, Transportation Specialist, Federal Highway Administration gave an update on the Fed/State Import Task Force that was established in April 2001 to evaluate the United States imports of foreign refined products. This task force is gathering information on imports of foreign refined products to access the risk to state and federal governments in fuel tax evasion. Dave Skinner, Fuel Tax Compliance Coordinator, State of Florida shared pictures from the Fort Everglades Port off loading system for fuels and explained how the system operates. Al Howard, Al Howard Consultants shared pictures of the Wilmington, North Carolina terminal and explained how that terminal operates.

Dar Walters, Fuels Tax Manager, Fuels Tax Section, Idaho State Tax Commission made a presentation on Idaho’s project on refunds. This involves educating the tax preparing along with the taxpayer. Idaho has had success with this project.

Eddie McCormack, Audit Manager, Audit Division, Tennessee Department of Revenue made a presentation on Electronic Auditing. He supplied a handout, which showed who would perform the audit, equipment to read data, equipment to store data and software to read the data.

A welcome and invitation to the 2002 Annual Meeting was made by Robynn Wilson with the State of Alaska. The meeting is scheduled for September 22-25, 2002, at the Sheraton Anchorage Hotel in Anchorage, Alaska.

Robert Beck, presented Donald Paswater from the State of Maryland the Robert E Beck award.

Roland Marr concluded the general session with the presentation the National Chair Awards to Peter Steffens, Carol Player, Robert Bray, Donna Alderman and Doug Burdick for their contributions to the advance training course. Roland also presented Cindy Anders-Robb an appreciation award for her dedication to the Motor Fuel Tax Section.

Two concurrent sessions were repeated throughout the afternoon.

Steve Miller, Administrator, State of Idaho and Doreen Warren, Tax Automated systems Specialist, State of Idaho made a presentation of Commercial off the shelf (COTS) approach to integrated systems that Idaho is using. Idaho supplied a handout showing how Idaho gets the taxpayer involved along with why COTS is cost effective. Bill Gray, Excise Tax Manager, Sinclair Oil made a presentation on how industry compiles data and submits to ExSTARS. Bill supplied a handout showing the different steps Sinclair goes through to produce the necessary data to submit.

Tim Torri, ExFIRS project manager, IRS gave an update where the ExSTARS and ExTOLE systems are today. Dave Skinner, Fuel Tax Compliance Coordinator, State of Florida discussed the current status of the ExSTARS program and handed out a questions and answer paper. Joe O’Gorman, Assistant Chief, State of New Jersey talked about the need for States to have an open mind when they log on to the system for the first time. Not everything will be perfect for awhile. Dan Gostage, State of California went over the ExTOLE system and what the States should expect. A handout was available showing the seven areas of the ExTOLE program.

The four regions reported on their regional meetings for 2001 and announced the locations for their 2002 meetings. The MFTS Time and Place Committee announced the following upcoming meetings:

The MFTS Resolutions Committee offered fifteen resolutions, all of which were adopted. The MFTS Nominations Committee nominated Eddie McCormack, Audit Manager of the Audit Division, State of Tennessee, for 2002 MFTS Chair, and Joe O’Gorman, Assistant Chief, State of New Jersey, for 2002 MFTS Vice Chair. Both nominations were accepted and approved.

Sam McCahon, Director of Regulatory Management for the National Biodiesel Board, gave a presentation on Biodiesel. He supplied a handout showing what is biodiesel, how biodiesel cad help Global Warming and what tax administrator need to consider

Ron Hess, Executive Director of ND/SD American Petroleum Institute gave a presentation on Alternative Fuels of the Future. He supplied a handout showing alcohol and dual fuels, environmental aspects, incentives and taxes and public debate.

Joseph Roop, Staff Scientist, Pacific Northwest Laboratories gave a presentation on IRS’s Feasibility Study on economic Indicators of Excise Tax Revenue Collections. He supplied a handout showing the project overview, State/Federal modeling needs, State tax revenue models and the Federal models.

FTA 2001 Motor Fuel Tax Section Annual Meeting
Papers Currently Available from FTA
General Session

Motor Fuel Tax Section

Motor Fuel Tax Section Uniformity Updates

2001 Motor Fuel Tax Section Uniformity Project Booklet

2002 North American combined Reporting Methods

September 2001 — Uniformer Newsletter

Uniformity upcoming meetings for 2002

Canadian Fuel Tax Project

Northwestern States — Western Provinces Border Project

Federal Highway Administration

Carol Player, State of South Carolina
Outsourcing for Motor Fuel Tax Reporting

Eddie McCormack, State of Tennessee
Electronic Petroleum Tax Audits

Joseph Roop, Pacific Northwest National Laboratory
Estimating Fuel Tax Revenues, overview of the IRS project progress, potential directions

Ron Hess, API
Alternative Fuels of the Future

Sam McCahon, Biodiesel Board
Biodiesel 101

ExSTARS/ExTOLE Projects

ExSTARS - Questions and Answers

ExTOLE — Major Program Functions

Al Howard, Al Howard Consultants
Rewriting of the Fuel Excise Tax provision of the Internal Revenue Code

Bill Gray, Sinclair Oil
How Industry Compiles Data and submits to ExSTARS

Steve Miller, State of Idaho
A Commercial Off the Shelf (COTS) approach to Integrated Tax Systems

Thomas Scott, State of Pennsylvania
Commonwealth of the Pennsylvania vs Wilbur Waltz

RESOLUTIONS OF THE MOTOR FUEL TAX SECTION
Adopted at the Annual Business Meeting
September 25, 2001 — Rapid City, South Dakota

WHEREAS, this the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section held at the Rushmore Plaza Holiday Inn in Rapid City, South Dakota, will be remembered as informative and enjoyable, and

WHEREAS, the success of the meeting has been due in large part to the excellent arrangements made, informative program presented, and the generous hospitality provided,

NOW, THEREFORE, BE IT RESOLVED, that the delegates and guests at the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, express their thanks and appreciation to their hosts, Secretary Gary R. Viken, South Dakota Department of Revenue; Debra Hillmer, Director, Motor Vehicles Division; Alana Gourneau, Section Manager; Jan Talley, Audit Specialist; Kelly Thompson, Special Projects Director; Earl Coggins, Senior Fuel Tax Agent; Rip Ray, Fuel Tax Agent; and Laura Ellenbecker, Fuel Tax Agent.

WHEREAS, the proceedings of the formal sessions of this seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, have featured the presentation of timely, interesting and well prepared papers, and

WHEREAS, the exchange of technical and administrative information that has been accomplished in our breakout sessions is one of the principal functions of the meeting,

NOW, THEREFORE, BE IT RESOLVED, that the members of the Federation of Tax Administrators, Motor Fuel Tax Section, express their thanks and appreciation to Roland Marr from the Illinois Department of Revenue, Chair of the Motor Fuel Tax Section, who presided at the sessions, and to the speakers and moderators at the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section for their contributions to the success of the program.

WHEREAS, the Federation of Tax Administrators, Motor Fuel Tax Section established an Executive Board, and

WHEREAS, the Executive Board of the Federation of Tax Administrators, Motor Fuel Tax Section is comprised of the following positions:

National Chair
National Vice Chair
Current National Past Chair
Uniformity Committee Chair
Uniformity Committee Vice Chair

WHEREAS, to foster representation from each region we recommend the Executive Board of the Federation of Tax Administrators, Motor Fuel Tax Section now be called the Steering Committee and be comprised of the following positions:

National Chair
National Vice Chair
Current National Past Two Chairs
Uniformity Committee State Co-Chair
Uniformity Committee Industry Co-Chair

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota endorse the change in the Executive Board name, to the Steering Committee, and adding an additional Past National Chair to the Steering Committee of the Federation of Tax Administrators, Motor Fuel Tax Section.

WHEREAS, the petroleum industry and state tax agencies desire to operate in the most effective and efficient manner, and

WHEREAS, the evasion of motor fuel taxes has been a problem over the years that has greatly affected the tax revenue of the states and the ability of the industry to effectively conduct its business, and

WHEREAS, the Motor Fuel Tax Uniformity Committee, FTA Motor Fuel Tax Section has met and adopted the checklist for "Federal Considerations" to offer a resource to all taxing jurisdictions who are interested in strengthening their motor fuel tax laws to combat motor fuel tax evasion, and

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota, adopt the following checklist for "Federal Considerations" be adopted as a resource to all taxing jurisdictions who are interested in strengthening their motor fuel tax laws.

O. Federal considerations (always review current laws).

1. No power take-off exemption (cannot use dyed fuel).

2. Allows state and local government to use dyed fuel in highway vehicles.
3. Federal agencies should not use dyed fuel in highway vehicles and are subject to federal tax.
4. Interstate bus companies are authorized to use dyed fuel and remit tax directly to the IRS based on a reduced rate.
5. Highway vehicles are not allowed to use dyed diesel and must pay all federal taxes even if used off road.
6. Vessels of all types are exempt from federal diesel fuel taxes and may use dyed diesel.
7. Federal Ultimate Vendor refunds are limited to state and local governments and farmers.
8. Kerosene and kerosene equivalents are considered to be forms of diesel and are treated basically the same for federal tax purposes.
9. Aviation grades of kerosene may be clear. Only qualifying airlines may be exempt from federal aviation tax.

Research and preparation when drafting dyed fuel legislation can lessen conflicts and confusion that may occur. If a state simply adopts a dyed fuel statute without addressing these issues there is bound to be an unintended burden on the taxpayer or the state.

WHEREAS, the petroleum industry and state tax agencies desire to operate in the most effective and efficient manner, and

WHEREAS, the evasion of motor fuel taxes has been a problem over the years that has greatly affected the tax revenue of the states and the ability of the industry to effectively conduct its business, and

WHEREAS, the Motor Fuel Tax Uniformity Committee, FTA Motor Fuel Tax Section has met and adopted the checklist for "Sales to Third Party Credit Card Companies" to offer a resource to all taxing jurisdictions who are interested in strengthening their motor fuel tax laws to combat motor fuel tax evasion, and

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota, adopt the following checklist for "Sales to Third Party Credit Card Companies" be adopted as a resource to all taxing jurisdictions who are interested in strengthening their motor fuel tax laws.

16. Sales to Third Party Credit Card Companies — Third party credit card companies are defined as card companies not wholly owned by an oil company, which use a credit card for motor fuel transactions.

1. Registration or licensing of these companies.
2. Bonding of these companies.
3. Addition of special enforcement and audit processes.
4. Only allow exemptions that apply to eligible governmental entities.
5. Determine if the third party company must hold title to the product to be eligible to file the claim.
6. Establish a retail identification number that is unique to a specific retail location and is used by all credit card companies.
7. Require reporting of the volume and type of fuel by each retail outlet handling the transaction.
8. Determine who is eligible to file the refund claim and to whom it will be paid.
9. Establish a refund process to meet your business need.

WHEREAS, the petroleum industry and state tax agencies desire to operate in the most effective and efficient manner, and

WHEREAS, the evasion of motor fuel taxes has been a problem over the years that has greatly affected the tax revenue of the states and the ability of the industry to effectively conduct its business, and

WHEREAS, the Motor Fuel Tax Uniformity Committee, FTA Motor Fuel Tax Section has met and adopted the checklist for "Electronic Payment" to offer a resource to all taxing jurisdictions who are interested in strengthening their motor fuel tax laws to combat motor fuel tax evasion, and

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota, adopt the following checklist for "Electronic Payment" be adopted as a resource to all taxing jurisdictions who are interested in strengthening their motor fuel tax laws.

1. Considerations for legislation.

3. Credit or Debit cards:

1. Will the state absorb the merchant fee or will the taxpayer be charged a convenience fee?
2. Determine how you will market this service

WHEREAS, the Federation of Tax Administrators strives to promote uniformity of motor fuel tax administration, and

WHEREAS, the Uniformity Committee, being a part of this effort, has reviewed and approved the Uniform License Application and the Combined Supplier’s, Common or Contract Carrier’s, and Terminal Operators Reports,

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota, adopt these two new forms for use by state administrators in their uniformity efforts.

WHEREAS, the Federation of Tax Administrators strives to promote uniformity of motor fuel tax administration,

WHEREAS, the Uniformity Committee, being a part of this effort, has proposed to retitle the Guide to Reporting on the Uniform Distributor’s Schedules to reflect the following: "Products Received Different than Products Sold Below the Rack". Further the committee has proposed a second example for products above the rack. The "above the rack" example is to include an explanation that, for those states that wish to see the detail of the reclassification; transfers out of a product will be added to a disbursements schedule with the "BA" mode code and the receipts into a product will be reported on a receipt schedule using the "BA" mode code.

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota, adopt these examples as a guide to state administrators and industry to facilitate uniform motor fuel tax reporting.

WHEREAS, the Federation of Tax Administrators strives to promote uniformity of motor fuel tax administration,

9F Gallons sold to licensed charter schools
9R Gallons sold to state and local government from refinery
10Y Gallons delivered tax-exempt to railroad

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota, adopt these schedules to enable continued compliance among states for uniform reporting purposes.

WHEREAS, the Federation of Tax Administrators strives to promote uniformity of motor fuel tax administration,

WHEREAS, the Uniformity Committee, being a part of this effort, has reviewed and approved the ExSTARS Forms 720TO and 720CS, ExSTARS product code list and the new transport code of RT for use by the states for continued uniform administration of motor fuel taxes:

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section, held in Rapid City, South Dakota, adopt these schedules to enable continued compliance among states for uniform reporting purposes.

WHEREAS, the Federation of Tax Administrators strives to promote uniformity of motor fuel tax administration,

WHEREAS, the states employ different requirements for the reporting of motor fuel tax information, and

WHEREAS, the Motor Fuel Tax Uniformity Committee, has adopted uniform schedules for reporting of motor fuel tax information,

NOW, THEREFORE, BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section held in Rapid City, South Dakota adopt the product code "152" for heating oil.

WHEREAS, the petroleum industry and state tax agencies desire to operate in the most effective and efficient manner, and

WHEREAS, the states employ different requirements for the reporting of motor fuel tax information, and

WHEREAS, the Motor Fuel Tax Electronic Commerce Subcommittee, FTA Motor Fuel Tax Section has adopted a uniform Electronic Data Exchange Implementation Guide for the reporting of motor fuel tax information,

NOW, THEREFORE BE IT RESOLVED, that the delegates of the seventy-fifth annual meeting of the Federation of Tax Administrators, Motor Fuel Tax Section held in Rapid City, South Dakota adopt the North American Combined Reporting Methods, X.12 and XML, Electronic Data Exchange Implementation Guide, ANSI ASC X.12 V.4030, W3C XML Version 1.0, be adopted as approved by the Motor Fuel Uniformity Committee on September 22, 2001.

WHEREAS, the success of the Federation of Tax Administrators, Motor Fuel Tax Section depends on the dedication of many State, Federal and Industry participants, and

WHEREAS, several of these individuals, who have contributed to the success of the Federation of Tax Administrators, Motor Fuel Tax Section, during the previous years, have recently retired or moved on,

NOW, THEREFORE, BE IT RESOLVED, that the members of the Federation of Tax Administrators, Motor Fuel Tax Section express their thanks and appreciation to Donald Paswater, State of Maryland, Larry Hecksher, Internal Revenue Service (IRS), Maria Smith, State of Pennsylvania, William Salisbury, State of Montana, Lawrence Keeley, State of New York, Ronald Pinkett, State of Delaware, James Jarzabek, State of Ohio, Suzanne Flynn, State of Indiana, Keith Hudson, Canada Customs & Revenue Agency, Mike Albin, State of Nevada, J.D. Thornton, State of Connecticut, Charles Schiavi, Union 76 and Steve Annis, State of North Carolina and wish them luck in their future endeavors, and

BE IT FUTHER RESOLVED, that a copy of this resolution be forwarded to these individuals.

WHEREAS the success of the Federation of Tax Administrators, Motor Fuel Tax Section, depends on the dedication of many participants, and

WHEREAS the Federation of Tax Administrators, Motor Fuel Tax Section, sends it’s thoughts and prayers to the family and loved ones of Lloyd Peters, Province of Manitoba, who passed away in January 2001; William Fulcher, Commonwealth of Virginia, who passed away in November of 2000; and Randy Boyer, State of Pennsylvania, who passed away in September of 2001.

NOW, THEREFORE, BE IT RESOLVED, that the delegates and guest of the 2001 Annual Motor Fuel Tax Section conference, held in Rapid City, South Dakota, send their prayers to the families of these individuals.

WHEREAS the Federation of Tax Administrators, Motor Fuel Tax Section, express their concerns for the victims of the cowardly attacks in New York City, Washington, DC and Pennsylvania, and

WHEREAS the Federation of Tax Administrators, Motor Fuel Tax Section, sends it’s thoughts and prayers to the families and loved ones of all FTA members, especially Charles Mills and William Pohlman, from the State of New York, who are among the missing in the World Trade Center collapse.

NOW, THEREFORE, BE IT RESOLVED, that the delegates and guest of the 2001 Annual Motor Fuel Tax Section conference, held in Rapid City, South Dakota, send their prayers and concerns to the victims of this tragedy.