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68 Table 22. Ratios of collection expenses for states with varying characteristics. Collection Expenses as Number of Measure of Characteristics % of Total Tax States Collections Average of all states that reported costs 1.1% 44 States with electronic tracking systems 1.0% 15 States with international borders 0.8% 17 States that border low tax states 1.3% 16 Top third tax collection states 1.1% 15 Mid third tax collection states 0.9% 15 Lowest third tax collection states 1.0% 14 States taxing at first receipt/sale 1.6% 1 States taxing at distributor level 1.0% 20 States taxing at terminal rack 1.1% 20 States taxing at retail level 0.7% 3 4.2.10 Analysis of Survey Results Auditing, Collection costs, As noted in Section 4.2, the questionnaires were distributed Enforcement costs, and to eight states based on the aforementioned criteria. The pur- Administrative costs. pose of the questionnaire was to gather more detailed cost data in order to disaggregate the total operating costs reported to Four states have provided information regarding the costs FHWA by states. The primary cost categories targeted for data to administer the motor fuel tax. Though the states that collection were as follows: returned surveys were able to provide detailed cost data, the Table 23. Fuel taxes total operating cost and revenue (in $000s). Average State 2003 2004 2005 2006 2007 over years Total Operating Cost California $24,711 $26,551 $23,320 $22,530 $22,569 $23,936 Colorado 2,758 2,557 2,583 2,334 3,693 2,785 Florida 22,299 22,893 23,677 24,853 24,761 23,697 Idaho 980 2,978 3,162 3,649 3,597 2,873 Iowa 1,099 1,099 1,181 1,250 1,258 1,177 New Jersey 5,544 6,178 5,645 5,794 5,896 5,811 Tennessee 11,606 11,927 12,121 12,069 12,239 11,992 Texas 29,176 29,843 29,972 30,686 31,330 30,201 Average over sample states 12,272 13,003 12,708 12,896 13,168 12,809 Total Revenue California 3,176,019 3,531,929 3,299,559 3,258,087 3,418,725 3,336,864 Colorado 544,337 553,593 516,575 602,897 567,680 557,016 Florida 1,851,781 1,891,053 2,029,290 2,165,327 2,233,129 2,034,116 Idaho 205,772 211,337 213,646 219,360 237,411 217,505 Iowa 409,191 418,164 424,354 430,083 444,086 425,176 New Jersey 554,365 617,811 564,505 579,392 589,571 581,129 Tennessee 800,720 812,091 891,499 842,236 849,662 839,242 Texas 2,789,208 2,912,008 2,915,672 2,970,092 3,086,196 2,934,635 Average over sample states 1,291,424 1,368,498 1,356,888 1,383,434 1,428,308 1,365,710 Source: FHWA, Highway Statistics, 20032007

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69 total operating costs reported often differed from the amounts joint auditing expenses. Labor costs for 2007 totaled $373,697, reported to FHWA. For example, the data collected from Col- which included salaries and benefits for supporting staff. orado indicate that operating costs in 2007 totaled approxi- Indirect costs include rent, utilities, training costs, materials/ mately $2.6 million, which differs by $1.1 million from the supplies, and personal services costs such as office support, total reported to FHWA in 2007. The following summary management, HR services, information services, other ser- includes details of the survey results that have been received vices, and supplies. Indirect costs associated with auditing in from each state. 2007 totaled $58,943. Enforcement costs: Colorado employs a motor-fuel track- ing system with electronic filing, but system expenses are not California included in enforcement costs since they are maintained by a Point of taxation: Diesel (terminal); gasoline (terminal). third-party operator. The state performs on-road dyed fuel The respondent from California was unable to provide a inspections at an annual cost of $735,102. The respondent detailed breakdown of costs associated with motor fuel tax also indicated that indirect costs associated with enforcement collection as outlined in the survey. Instead, the respondent totaled $26,150 in 2007. broke down the 2007 administrative budget into five parts Collection costs: Colorado uses an electronic system to both according to the state Board of Equalization budget alloca- process tax returns and receive tax payments. Costs associated tions. Breakdown is as follows: with this system in 2007 amounted to $411,148, with an addi- tional $90,834 in costs relating to manually processing tax Registration: This section includes licensing new accounts returns and payments. Colorado did not identify any costs and maintaining existing information in the licensing system. associated with payment transaction fees or debt collection The total reported in this section was $3.1 million in 2007. expenses but did identify an additional $3,232 in indirect col- Return processing: California budgeted $7.2 million for all lection costs. activities associated with processing returns, e-filing, advisory Administrative costs: Program administration costs, which services, and the California matching program in 2007. include the overarching management of the motor fuel tax col- Auditing costs: Auditing costs for the State of California lection department, totaled $751,902 in 2007, which included include auditing, refunds, and appeals. Total auditing costs in $243,676 in indirect costs pertaining to program administra- 2007 were $8.1 million. tion. Based on information gathered in the questionnaire, Enforcement costs: California reported $1.9 million for on- motor fuel tax administrative costs for 2007 totaled approxi- road inspections of dyed fuel and other (unspecified) enforce- mately $2.4 million, an amount which was $1.1 million less ment costs. than the total reported to FHWA. Collection costs: The respondent did not identify specific sys- tems that were involved in collection costs but did indicate that these activities amounted to approximately $1.5 million in 2007. Florida In addition, the respondent noted that although the five Point of taxation: Diesel (wholesaler); gasoline (wholesaler). categories have allotted budgets, there is a fair amount of over- Auditing costs: Total annual labor costs associated with lap between cost elements, especially between auditing and auditing activities were reported to be $794,039. Florida did enforcement and auditing and the matching process in return not report IFTA auditing costs or conduct joint auditing with processing. All five categories include personnel service costs, other states or the IRS. Additional indirect costs were reported operations expenses, and allocated overhead; personal service as $214,391, bringing the total auditing cost in Florida to costs was estimated at approximately 76% of the allocated approximately $1 million annually. budget. Administrative costs budgeted by California totaled Enforcement costs: Florida does not presently employ a approximately $21.8 million, and actual spending amounted to motor-fuel tracking system but is in the programming stages $21.6 million. These amounts differ slightly from the $22.5 mil- of implementing one. Florida does conduct on-road inspec- lion reported by FHWA. tions of dyed fuel through the Department of Agriculture, with costs reported to be approximately $6.8 million in 2007. The respondent at the Department of Revenue attributed an addi- Colorado tional $4,893 to other inspection activities. Indirect costs asso- Point of taxation: Diesel (distributor); gasoline (distributor). ciated with enforcement were reported to be $1,321, bringing Auditing costs: Auditing costs for the State of Colorado total enforcement costs to approximately $6.8 million. include labor overhead and indirect costs associated with Collection costs: Florida requires electronic filing; how- motor fuel tax auditing activities. The respondent to the sur- ever, a paper version is available for those taxpayers who vey did not indicate costs associated with IFTA licensing or request, qualify, and receive a waiver of this requirement. The