Waynes World - March 2006

NEW TAX IN OHIO, CA TRUCKING SCHOOL HAS
ITS CERTIFICATION REVOKED, AND...

THE IMPORTANCE OF A
THOROUGH CONTRACT
By Wayne Schooling

Q: Recently I heard that Ohio had a new tax for truckers. Since I have to go through this state to get to California, can you tell me more about this? Paul R., Pittsburgh, PA

A: Well, it looks like you are right. Ohio has a new Commercial Activity Tax for not only truckers based there but also for those who simply drive through. While the criteria to be subject to the tax seems pretty clear – any business with at least $150,000 a year in gross taxable receipts – for truckers, it gets a little more complicated. The Ohio Department of Taxation said the taxable gross receipts will be determined based off of Ohio IFTA miles. So, whatever percentage a company runs in Ohio will be calculated against the total gross receipts. For example, if a trucker grosses $300,000 in a year and runs half of his/her mileage in Ohio, the tax will be levied against half of this figure ($150,000), which would cost the trucker the minimum fee of $150 for that year. Truckers who just run through Ohio – no pickups or deliveries – are also subject to the tax if the miles and gross receipts work out right.

Q: I got my CDL through a C.R. England training school. Now, the DMV is telling me that I have to retake the driving test. What is this all about? Mike P., Ontario, CA

A: I have some sad news for you. Truckers who received a California CDL after passing a road test given by the C.R. England Truck Driving School in Mira Loma, CA must act quickly or lose their CDL. The Mira Loma testing facility had its Employer Testing Program (ETP) certification revoked on October 3, 2005 because of deficiencies noted during a recent annual inspection. Truckers who took and passed the driving test administered by this facility starting as far back as November 19, 2003 began receiving notices that their tests were not in compliance. Truckers who passed their test have only two options to keep their CDL: retake the driving test or prove that they have passed another road test through an ETP-approved facility. To make matters worse, CDL drivers have only five days to respond to the notices sent and reschedule their tests. The only problem is the California DMV does not provide a database of approved ETP facilities. Good luck on this one!

Q: We are in the process of getting our authority to run perishables from the West Coast back East with certain shippers. We would like to use owner-operators. Is it really necessary to have a big lengthy contract or can it be just a one-pager? Do I really even need contracts? Bruce M., Riverside, CA

A: The quick answer to your question is that you need two contracts. One contract for your shippers and one for your owner-operators. Each one should follow certain criteria. Let me explain. For the better part of the 20th century, the transportation industry was highly regulated and there was little or no need for shippers and carriers to enter into formal contracts with each other. That has all changed now. As a result of legislative initiatives, the transportation industry has entered an era that is virtually free of any government regulation. Without regulations or government oversight, shippers and carriers must look out for themselves. The best way to protect your interests in a transaction involving transportation services, like any other business transaction, is with a thorough contract. Even if you currently have a contract, many of the provisions may be outdated given the extensive changes in the law. To fully protect yourself, it would be wise to have an experienced professional review and critique your existing transportation contracts. Many legislative and regulatory changes were enacted affecting motor carrier transportation in 1993, 1994 and 1995, culminating with the end of the Interstate Commerce Commission (ICC). Regulations governing motor carrier contracts were eliminated, and the ICC Termination Act (ICCTA) eliminated the statutory distinction between “common” and “contract” carriage. As a result of the changes brought about by ICCTA, all motor carriers are now essentially considered common carriers with the right to enter into contracts with individuals and shippers. This fact makes it imperative to examine contractual arrangements for compliance with current laws, regulations and practices. Also, doing business in this deregulated environment, without the ICC’s regulatory oversight, makes it highly advisable to put contracts into place where none existed before. Our association has several service providers who have assisted hundreds of carriers to prepare these transportation agreements. These contracts are drafted with the provisions they feel are necessary to clearly define the services to be provided, the duties and obligations of the parties, and to protect the interests of the client. The shipper-carrier contracts address the key issues and potential problem area of the shipper-carrier relationship, such as rates and charges, rules and tariffs, cargo liability, insurance, indemnity provisions, etc. Contracts are tailored for your particular transportation needs and can then be submitted to the carriers with whom you do business. A shipper-oriented contract will help to protect your company against any unilateral increases in rates and “surprise” charges, as well as unrecoverable transit losses and costly disputes. Motor carrier contracts follow the federal written lease provisions to ensure that the carrier will not run into any disclosure trouble later on.

~ If you have a question that you would like answered, send it to Wayne Schooling at NorthAmerican Transportation Association, 2533 N. Carson Street, Suite 346, Carson City, NV 89706-0147 or send an e-mail to wayne@ntassoc.com. NTA is a nationwide association established to provide services, benefits and information to owner operators, trucking companies and private fleets. Until next month, “Drive Safe - Drive Smart!”