United States Legislative Updates

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Internal Revenue Service Decision Regarding
The Purchase And Distribution Of Tax-Free Fuel

The NAFA Fleet Management Association recently learned of an Internal Revenue Service (IRS) decision regarding the purchase and distribution of tax-free fuel sold to state and local governments. The IRS is reportedly taking the position that tax-free fuel purchased by a local governmental unit, such as a county, cannot be distributed to or used by another governmental unit, such as a city sheriff’s department, for example. NAFA’s understanding is that this was not a formal IRS ruling, but may have arisen in the course of an IRS audit that found that a county had been selling fuel to  nonprofit organizations. However, it has been reported in a popular fleet management trade publication and is causing concern.

In a letter to the Commissioner of the IRS, NAFA President Chris Amos asked for a confirmation that long standing IRS policy has not changed with respect to fuel sales by state and local governments. "The recent IRS interpretation has a potentially dramatic impact on state and local governments and is putting in immediate jeopardy long standing refueling agreements between state and local governmental entities," President Amos said.  "Many local jurisdictions have developed fueling infrastructure for their vehicles. It is a common practice for these local jurisdictions to develop fueling arrangements with other tax-exempt governmental jurisdictions or to jointly purchase fuel through consortium buying arrangements.  And, by increasing the volume of gas purchased, the city keeps its inventory fresh and is able to spread its overhead for maintaining the fueling facilities over a broader pool of purchasers."

Further, President Amos pointed out the potential impact on alternative fuels:  "This result also has particularly damaging implications for alternative fuels, where the use of shared fueling facilities is essential to accelerating the deployment of alternative fuel vehicles (AFVs) and building a local AFV refueling infrastructure."

In addition to contacting the IRS, NAFA representatives have met with congressional leaders asking for their assistance to resolve this issue.

Updates to CSA 2010

The Federal Motor Carrier Safety Administration (FMCSA) has announced updates to the Comprehensive Safety Analysis 2010 (CSA 2010).  The updates are to the Safety Management System methodology to better identify fleets deemed "high risk" or otherwise have safety compliance problems.

Most notably, the measure of exposure will be changed from Power Units only to a combination of Power Units and Vehicle Miles Travelled (VMT) in the Unsafe Driving BASIC and Crash Indicator. In addition, these two BASICs will change from using Power Units as a safety event grouping (formerly referred to as peer grouping) to using the number of crashes for the Crash Indicator and the number of inspections with a violation for the Unsafe Driving BASIC.

According to FMCSA’s CSA 2010 website, other updates to the SMS include:

• The measure of exposure will change from Power Units to the number of relevant inspections in the Controlled Substances/Alcohol BASIC;
• Severity weights for some roadside inspection violations will be updated; and
• The Agency will employ a more strategic approach to addressing fleets with a history of size and weight violations rather than counting these violations in the Cargo-Related BASIC; the new approach will include alerts to roadside inspectors when fleets have a history of size and weight violations.

FMCSA also announced that beginning August 16, the CSA 2010 Data Preview Website will soon provide fleets with an assessment of where they stand in each of the SMS’s seven Behavior Analysis and Safety Improvement Categories (BASICs) so they can understand and address their safety compliance issues right away. The seven BASICs – which replace SafeStat’s Safety Evaluation Areas (SEAs) in December 2010 – are Unsafe Driving, Fatigued Driving (Hours-of-Service), Driver Fitness, Controlled Substances/Alcohol, Vehicle Maintenance, Cargo-Related and Crash Indicator. For additional details about the Data Preview and the improvements to the SMS, visit: http://csa2010.fmcsa.dot.gov/Documents/SMSImprovementsFAQs.pdf