A federal court ruling has opened the door for a Detroit entrepreneur to avoid adding federal taxes to the fuel he sells at a "duty-free" location he operates at the Ambassador Bridge,
a major truck link between the U.S. and Canada.
Manny Maroon, who also owns the bridge as well as property at its Windsor, Ontario, terminus, thus is able to sell fuel for about what his competitors pay for it from their wholesaler - and still pockets 12 to 15 cents of pure profit per gallon. Moreover, it is believed Maroon has bought property at the Blue Water Bridge, connecting Port Huron, MI and Sarnia, Ontario, and at the Peace River Bridge, at Niagara Falls, N.Y. - ostensibly to operate duty-free fuel stops in those locations.
The "legal" tax evasion came to light last fall, when Billy Vollenweider, general manager of The Detroiter truckstop/travel plaza -- barely 15 miles south of the Detroit River crossing - got a call from the owner of a small truckstop near the foot of the bridge.
"He was devastated," says Vollenweider. "His fuel sales had suddenly dried up to almost nothing. Not long afterwards, we began feeling the effect. Currently, our sales are probably off 15% to 20% -- over and above the general economic slowdown." Vollenweider quickly contacted Scott Imus, NATSO's vice president for government affairs.
"Historically," says Imus, "the United States Customs Agency has prevented the sale of fuel at duty-free facilities, but in August the United States Court of International Trade ruled that the federal agency lacked the power to prohibit these sales."
U.S. Customs attorneys argued they did have the authority because dutiable items by law must fit the following four categories:
Because gasoline and diesel fuel possess none of these features, Customs prohibited their sale from duty-free stores.
The judge disagreed, stating that "had Congress intended Customs to restrict the sale of gasoline, diesel fuel, or other such fungible merchandise through duty-free stores, it could have included language to this effect in the statute. That Congress failed to identify such an intention in either language or legislative history persuades this court that the statute contains no such restriction."
Vollenweider says this is not the first time Maroon has tried to circumvent fuel taxes. "He first tried in 1997 and we notified Customs, who took him to court and won. Then he tried to get legislation introduced to bypass state and provincial taxes on fuel, but was turned down by lawmakers in both Michigan and Ontario.
"So he went back to the U.S. courts - and this time he won."
At Imus' direction, NATSO has quickly launched a counterattack to introduce legislation that would close the loophole by inserting language into the existing law that would exclude gasoline and diesel fuel from duty-free tax exemption.
Michigan Democratic Representative John Dingell has pledged his support and has persuaded fellow Michigan Democrat Rep. Sander Levin - a member of the powerful Ways and Means Committee - to introduce the legislation. Efforts are under way to enlist a Republican congressman to co-sponsor the bill - probably Dave Camp, also of Michigan.
Other truckstop/travel plaza operators have contacted their legislators - Delia Moon Meier, of Iowa-80 Group, Walcott, Iowa; Walt Murault, Murault's AMBEST Truck Plaza, Missoula, Mont., and Mike Marchbanks, Bruce's Truck Stop, Bakersfield, Calif.
"The thing is, it's not just me who's being affected," says Vollenweider. "It's hitting every truckstop within 1,000 miles of here. And eventually it can hit every border crossing in the United States and Mexico. You can bet a dozen copycats will try to follow Maroon's lead - if he doesn't get there first."
a major truck link between the U.S. and Canada.
Manny Maroon, who also owns the bridge as well as property at its Windsor, Ontario, terminus, thus is able to sell fuel for about what his competitors pay for it from their wholesaler - and still pockets 12 to 15 cents of pure profit per gallon. Moreover, it is believed Maroon has bought property at the Blue Water Bridge, connecting Port Huron, MI and Sarnia, Ontario, and at the Peace River Bridge, at Niagara Falls, N.Y. - ostensibly to operate duty-free fuel stops in those locations.
The "legal" tax evasion came to light last fall, when Billy Vollenweider, general manager of The Detroiter truckstop/travel plaza -- barely 15 miles south of the Detroit River crossing - got a call from the owner of a small truckstop near the foot of the bridge.
"He was devastated," says Vollenweider. "His fuel sales had suddenly dried up to almost nothing. Not long afterwards, we began feeling the effect. Currently, our sales are probably off 15% to 20% -- over and above the general economic slowdown." Vollenweider quickly contacted Scott Imus, NATSO's vice president for government affairs.
"Historically," says Imus, "the United States Customs Agency has prevented the sale of fuel at duty-free facilities, but in August the United States Court of International Trade ruled that the federal agency lacked the power to prohibit these sales."
U.S. Customs attorneys argued they did have the authority because dutiable items by law must fit the following four categories:
- The goods sold in duty-free stores must constitute "individual items of merchandise."
- The goods actually sold in duty-free stores must consist of pre-designated "saleable units."
- The goods sold in duty-free stores must be capable of being marked.
- If a pattern of re-importation exists with respect to particular goods, there must be a means of detecting such a pattern.
Because gasoline and diesel fuel possess none of these features, Customs prohibited their sale from duty-free stores.
The judge disagreed, stating that "had Congress intended Customs to restrict the sale of gasoline, diesel fuel, or other such fungible merchandise through duty-free stores, it could have included language to this effect in the statute. That Congress failed to identify such an intention in either language or legislative history persuades this court that the statute contains no such restriction."
Vollenweider says this is not the first time Maroon has tried to circumvent fuel taxes. "He first tried in 1997 and we notified Customs, who took him to court and won. Then he tried to get legislation introduced to bypass state and provincial taxes on fuel, but was turned down by lawmakers in both Michigan and Ontario.
"So he went back to the U.S. courts - and this time he won."
At Imus' direction, NATSO has quickly launched a counterattack to introduce legislation that would close the loophole by inserting language into the existing law that would exclude gasoline and diesel fuel from duty-free tax exemption.
Michigan Democratic Representative John Dingell has pledged his support and has persuaded fellow Michigan Democrat Rep. Sander Levin - a member of the powerful Ways and Means Committee - to introduce the legislation. Efforts are under way to enlist a Republican congressman to co-sponsor the bill - probably Dave Camp, also of Michigan.
Other truckstop/travel plaza operators have contacted their legislators - Delia Moon Meier, of Iowa-80 Group, Walcott, Iowa; Walt Murault, Murault's AMBEST Truck Plaza, Missoula, Mont., and Mike Marchbanks, Bruce's Truck Stop, Bakersfield, Calif.
"The thing is, it's not just me who's being affected," says Vollenweider. "It's hitting every truckstop within 1,000 miles of here. And eventually it can hit every border crossing in the United States and Mexico. You can bet a dozen copycats will try to follow Maroon's lead - if he doesn't get there first."
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