Out-of-State Driver Policy Development (71)

Description:

Developing a policy to handle out-of-state drivers will gain importance as the RUC program grows beyond a small-scale program. The policy should ensure out-of-state drivers pay their fair share without hindering interstate travel or being burdensome to the drivers or the state.

Details:

For all states, the status quo is to collect fuel tax from out-of-state drivers who purchase fuel within the state. This status quo will continue for a significant time in many states, but it does not resolve the issue of travel by out-of-state electric vehicles and highly fuel-efficient vehicles. The status quo also does not address the issue of vehicles that purchase fuel outside the state and then drive on state highways. As RUC programs grow and transition, there is the potential for increased registration fraud (e.g., domiciling vehicles out of state to avoid the RUC). At some point, states may wish to eliminate the gas tax altogether.

To include out-of-state travel in your state’s RUC program, consider the following methods:

  • Interoperability with other state RUC systems. If both states have RUC and recognize one another, RUC-paying drivers from one state can simply drive in the other state. The interoperability systems will ensure the funds are paid to the correct state.
  • Passes/permits. Drivers whose vehicles are not enrolled in a RUC system can purchase a pass for a day, week, or some other period of time. This could be done on the internet or any mobile device, and potentially via manual enrollment at participating fuel or charging stations or other locations. It would involve typing in a vehicle’s license plate number and the days for which the pass would be valid, then paying a flat rate for the pass. Rates would need to be set at the higher end of charges to prevent high-mileage drivers from using such passes to avoid paying the RUC.
  • Enrollment with state-sponsored account managers. Out-of-state drivers from states without a RUC can simply enroll in their neighboring state’s RUC program. This may be desirable only for residents who travel frequently in the state with a RUC program, such as those who live near state borders, and would want to avoid purchasing many passes or permits.
  • A national RUC clearinghouse. With this clearinghouse model, drivers would register in their home states and report all miles driven in any state to their home state. The home state would collect RUC fees for all states and transmit the data and collected fees to a clearinghouse. The clearinghouse would then net the fees received from all states and send a consolidated statement and payment (or net due) to each state.

Primary Use:

Charge RUC to out-of-state drivers.

Best Practices/Lessons Learned:

  • Seek out other states with similar systems and needs for useful lessons learned.
  • Maintain personal relationships among RUC leaders and experts to support out-of-state driver policy development.
  • It may be useful to meet with other states both inside and outside the context of membership organizations. Organizations are helpful but can have drawbacks—there may be membership limitations, and some members may have more power when working within an organization than they would outside of it.
  • Whether a state-driven clearinghouse solution or a vendor-driven fee exchange solution is chosen will be determined by participating states. Models exist for interjurisdictional tax and fee collection and transmittal within the International Fuel Tax Agreement and the International Registration Plan. Although the organizations administering these agreements may or may not be appropriate for RUC programs, they offer many valuable lessons.
  • While mileage and fuel data are collected from interstate commercial motor vehicles that are eligible for the International Fuel Tax Agreement and the International Registration Plan, this is not the case for intrastate and medium-duty commercial motor vehicles. Data from medium-duty and intrastate heavy-duty vehicles could be collected in the same manner as it would be collected from non-commercial vehicles, or they could be required to submit an informational tax return to report mileage and fuel use.

State Government Context and Assumptions:

This task is completed by the lead RUC agency.