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Tolls: Managing Your Drop in the Bucket

No matter what you think about public-private partnerships — not to mention the various authorities that predate the National Highway System — they can make fleet compliance complicated. Navigating the various tolling systems in each state can be confusing, but here are some tips to help figure it all out.

by Sandy Johnson
January 18, 2017
Tolls: Managing Your Drop in the Bucket

 

3 min to read


Revitalizing infrastructure is one issue that everyone can agree on, but the trillion-dollar question is how to pay for it.

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Historically, roads and bridges are financed through state and local governments using a mix of their own revenues, federal highway aid, and bonds. But today 31 states allow some form of private-public partnership — 3Ps — to make up for budget shortfalls.

Those private investors expect a healthy return, and tolls are an obvious option.

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No matter what you think about 3Ps — not to mention the various authorities that pre-date the National Highway System — they can make fleet compliance complicated.

Each authority has its own set of rules and systems for toll collection.

Electronic tolling systems make it easy to flex the rates depending on the time of day or traffic congestion so it’s hard to forecast exactly what your toll charges will be. Transponder services like E-ZPass, Bestpass, and PlatePass promise compatibility across different systems but none is universally accepted.

Electronic tolls are still cheaper and simpler to manage than using cash. I remember passing through Indiana on I-90 when one of the toll booth gals must have sensed my panic at running out of change. She changed my paper money into enough coins to finish out the route. What did a girl from the Alberta prairies know about toll roads?

I’m learning. Here are a couple of lessons I want to pass along:

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Non-Taxable Distance

In general, toll miles are taxable miles but some jurisdictions allow non‑taxable distance for travel on a toll highway. For example, New York imposes a highway use tax (HUT) based on distance traveled on public highways there excluding toll-paid portions of the New York State Thruway.

It would be a double-tax if you paid to use the Thruway and were charged HUT. Therefore, you can subtract the toll distance traveled on the Thruway system from your HUT-reported distance.

Toll miles in New York are exempt only on your HUT return, though. Don’t try to take credit on your HUT return for all the tolls you pay in New York on your IFTA return.

The only toll miles that are tax-exempt from paying fuel tax under IFTA are on the Massachusetts Turnpike. If you have traveled and paid a toll that qualifies for a tax credit, include these miles in your “total IFTA miles” and exclude them from taxable miles. If you’re audited, you will need to provide copies of the toll receipts.

Know Before You Go

In 2012, Congress gave tolling agencies until Oct. 1, 2016, to make the country’s electronic toll collection systems interoperable.

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That deadline came and went.

Tolling agencies across California are interoperable by law, and Washington State has adopted the same tag. Oklahoma is interoperable with Texas, and Kansas is offering a second tolling transponder to make its turnpike interoperable with Oklahoma’s. Florida and Georgia have harmonized their systems. In the northeast, the E-ZPass Group has moved south into Virginia and as far west as Indiana.

Do your homework. In locations with electronic toll collection, if your transponder isn’t valid or doesn’t match the vehicle it’s registered to, you’ll be subject to a “camera” charge plus higher tolls per trip.

Transponder lease fees, periodic maintenance fees, paper statement fees… They add up, especially if you have accounts with multiple tolling authorities. Are you reviewing those bills to make sure the charges are correct?

Tolls are not a fuel tax or a mileage tax; they are a user fee. But like taxes, they can be managed and kept in check. Every bit helps when you need the stretch your money to the end of the month.

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Sandy Johnson has been managing IFTA, IRP, and other fleet taxes for more than 25 years. She is the author of the free book, “7 Things You Need to Know About Fleet Taxes,” and operates FleetTaxPro.com, which provides vehicle tax and license compliance services for trucking operations. She can be reached at 877-860-8025 or FleetTaxPro.com.

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