The Car and Truck Fleet and Leasing Management Magazine

TRALA Wins Vote on MI Fuel Tax Liability Reform Initiative

September 18, 2006

LANSING, MI – On Sept. 12, the Michigan Senate Committee on Transportation unanimously approved House Bill 6031, legislation initiated by TRALA that would extend indefinitely the state’s moratorium on enforcement of the lessor/lessee fuel tax joint and several liability law. Prior to approving HB 6031, the committee also adopted TRALA-sponsored amendment language to outline more clearly the enforcement moratorium. The outdated joint and several liability law exists as part of the Michigan Motor Carrier Fuel Tax Act and holds a lessor responsible for unpaid fuel tax owed by a lease customer.

HB 6031 was sponsored in the Senate by the Transportation Committee Chairman, Sen. Jud Gilbert (R -Lapeer, St. Clair) and is expected to be heard in the full Senate shortly. The Michigan House of Representatives passed HB 6031 on Jun. 29.

Upon Michigan’s entry into the International Fuel Tax Agreement (IFTA) in 1994, the joint and several liability law was no longer enforced since Michigan’s IFTA enabling legislation included language stating, “If the provisions set forth in that agreement [IFTA] are different from this act [Michigan Motor Carrier Fuel Tax Act], the provisions of the IFTA agreement shall control.”

The IFTA guidelines clearly state that the lease agreement determines the fuel tax responsibilities of the lessor and lessee. Nevertheless, the initial law holding lessors jointly and severally liable was never repealed. Recently, the State Treasury Department resumed enforcement of the law on a Michigan-based TRALA member, according to TRALA.

Enactment of HB 6031 would further TRALA’s legislative victory in 2004 that put a two year moratorium on enforcement of the state’s fuel tax joint and several liability law. The passage of HB 6031 will ensure that other truck leasing companies are not faced with similar unfair tax liability should a customer fail to meet its contractual obligations.

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