RALEIGH, N.C. -- North Carolina tax collectors are redoubling efforts to catch scofflaws who have cost the state millions in lost gasoline taxes, said the Charlotte Observer.
With gasoline prices hovering around $2 and the state's gasoline tax among the highest in the country, avoiding the tax has becoming increasingly attractive, said the report.
State officials said offenders include distributors who lie about where they deliver fuel and farmers and truckers who misuse special no-tax fuel.
Now tax collectors [image-nocss] are fighting back, the report said. They are installing a $1.1 million computer system to track each gallon of gasoline sold in the state, and they have hired a new team to catch gasoline tax cheats.
State officials said their new efforts have brought in $7 million in the last year, and they expect to collect another $48 million over the next two years.
Much of the recouped amount will help build and maintain roads, as does most of the $1.3 billion raised each year from the gasoline tax.
Most industry officials said they support the new collection program, according to the report. They said some of the uncollected tax results from honest mistakes or from smaller, fly-by-night companies.
The Observer detailed one way it said a petroleum company could avoid the tax: First, its drivers fill up their tanker trucks in North Carolina, but they say they are taking the fuel to another state that has a lower gasoline tax, such as South Carolina. They pay the lower tax. Next, they deliver to a gas station in North Carolina, passing on to the consumer a price that includes the higher North Carolina gasoline tax. Finally, the company pockets the difference.
North Carolina charges a gasoline tax of 30.2 cents a gallon, nearly double South Carolina's tax of 16.8 cents a gallon. For a tanker truck that holds 8,000 gallons, the difference is more than $1,000 per load.
No one knows for sure how much tax is not being paid, the report said. Industry officials said the state's $55 million target might be high. "We don't think there's as much evasion as they think there is," Garry Harris, executive vice president of the North Carolina Petroleum Marketers Association, told the paper.
Harris also said much of the unpaid tax could result from honest, human error, particularly when tanker drivers pick up fuel from distribution terminals. "The driver gets out, and a lot of times it's 3:00 in the morning, and he has to punch a code for where he's going," Harris said. "Sometimes he'll punch the wrong code."
The state's new computer system should help catch such errors, as well as intentional cheating, by comparing electronic records from various sources. Any discrepancies will show up automatically.
State officials said there are other ways people get around paying the gasoline tax. For example, some farms and small businesses are eligible to buy no-tax fuel if the fuel will be used on private property, under the theory that the gasoline tax should operate like a fee for using state roads. But that special no-tax fuel, which is dyed red, sometimes ends up in on-road vehicles, including farmers' pickup trucks and hauling companies' interstate trucks, the report said. Tax collectors try to catch them with roadside stops.
"North Carolina is really an at-risk state for cheating because of our very high fuel tax, relative to that of our neighbors," Charles Diehl, president of the North Carolina Trucking Association, told the paper.
Diehl and Harris both said their associations support increased enforcement of the gasoline tax because most or all of their members obey the law and lose out when other companies do not.
North Carolina revenue officials said the new enforcement program should be at full strength by mid-2007, when the new computer system is scheduled for completion. They are already spending almost $1 million a year for 19 new people, including roadside investigators and auditors who search for discrepancies in paperwork, said the report.
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