Trucking Industry Overpaying Taxes in Oregon Finally Sues the State

The Oregon Trucking Association and some of their members, are in a lawsuit against the state of Oregon because the trucking industry is overpaying taxes by over 30%, the state knows about the problem, there are no plans to fix this, and taxes are increasing in 2024!

In Oregon, trucks over 26,000 pounds pay a weight-mile tax, while passenger cars pay fuel taxes to fund the state’s infrastructure. But for the last five years, carriers have been overpaying an unfair amount in taxes.

“For too long, Oregon trucking companies, the vast majority of which are small, family-owned businesses, have paid far more than their fair share of transportation taxes,” said OTA President and CEO Jana Jarvis.

“By 2025, the trucking industry is expected to have overpaid by half a billion dollars. Trucking companies in Oregon simply cannot sustain paying the highest transportation taxes of any state in the country any longer.”

So, OTA and a few members have filed a lawsuit that seeks three things:

1. a mandatory adjustment of revenue sources to ensure fairness and proportionality of vehicle taxes,
2. an injunction to stop “unconstitutional weight and mile taxes” from taking effect in 2024, and
3. for the trucking companies who brought the suit to entitled to recover damages of at least a combined $925,200.63.

If they win, they also have the option to turn this into a class-action lawsuit so other carriers can get their money back.

So, how did this all become so unfair?

Problems began with the 2017 Transportation Bill

In 2017, a $5.3 billion transportation bill passed the Oregon House and Senate and was signed by then Gov. Kate Brown into law with a 10-year plan that included:

• Increasing the gas tax on cars and trucks at the pump by 10 cents in 2024
• It called for plans to toll some Portland roads and bottlenecks, and 
• Increased weight-mileage tax from about 16 cents/mile to over 25 cents/mile in 2024

For purposes of comparison, if that 80,000-pound truck gets 7.0 miles per gallon, that 20.48 cents a mile is the equivalent of a diesel fuel tax at $1.43+ a gallon. In 2024, that’s $1.76 a gallon!

For the pocketbook, if a trucker fuels their 300-gallon tanks at half-tank… say 250 times per year… that an extra $23,0000 per year per truck. A fleet of 5 trucks would see $116,000 extra in fuel tax compared to normal business in 2017.

While the bill was supported by the OTA, as the state really needs these road improvements to better freight traffic, the bill forecasted rates and projects – but the government guessed wrong.

To date, major road improvements have not been completed, road maintenance has been delayed and Oregon roads are less safe for passenger vehicles and trucks.

Since the taxes didn’t go to those projects, the extra money from carriers is basically overcharged and not being used.

The other issue is that the state knows about the overtax problem!

What the Oregon legislature biennially review found

Oregon’s state constitution requires the state to impose taxes on vehicles to fund highway and road maintenance, which are required to be “fair and proportionate to the costs incurred for the highway system because of each class of vehicle.”

To ensure the taxes are fair and proportionate, the state legislature is required to biennially review and, if necessary, adjust revenue sources.

A study by the state determined “For the past three study periods, heavy trucks have shouldered an increasing share of the burden.”

The studies found that heavy vehicle users overpaid by approximately:

• 3% for 2019-’21,
• 16% for 2021-’23, and
• 32% is expected for 2023-’25

Basically, carriers are overpaying $193 million a year, or more than $528,000 each day. By 2025, the trucking industry is expected to have overpaid by half a billion dollars.

Because of these studies, ODOT is aware of the problem, but the Oregon Transportation Commission has failed to make fair changes.

Members of the Legislature’s Joint Transportation Committee highlighted it last year, and two lawmakers, went as far as to ask for a special session solely to fix the problem (but that request fell on deaf ears).

Specifically, in a Nov. 3 email, ODOT director Kris Strickler presented options for fixing the problem to members of the Oregon Transportation Commission and the Joint Transportation Committee.

Each of the options Strickler laid out presents a problem for ODOT as they were highly dependent on the gas tax.

So, OTA took matters into their own hands, and is applying pressure with this lawsuit.

While there is no timeline, and could take years to fight, we will follow this closely and announce important updates as they come.

Need Help with Fuel Tax Management?

Fuel and weight-mileage tax management is complicated.

Carriers need to have an IFTA account to file your fuel taxes for many of the other states and there are unique rules, exemptions, and registration requirements for each of these states.  

You don’t want to face the heavy fines that can be imposed on carriers for not following the rules!

Our team of Compliance Specialists can help you get licensed quickly and accurately and our IFTA Fuel Tax Specialists will work with you to collect your data, ensure your fuel and mileage match, prepare your filings, and even file the paperwork for you.

We promise to: 

• Compile and file completed IFTA tax returns on time
• Compile and file Mileage tax returns for KY, NM, NY, OR, and CT
• Create detailed MPG Reports by Truck, Division, and Fleet
• Have paper driver trip reports, or “paperless” (GPS) data management
• Give you 24/7 access to our online portal to see past IFTA filings
• Give you online backup for fuel receipts and trip permits.
• Help you with fuel tax training and Tax reduction strategies
• and more

Then, if you ever get audited by IFTA or the unique states, we take many specific steps in preparing you for the audit.

If you have any questions or want to learn more, just call or email us, or you can fill out the form below, and one of our Fuel Tax Specialists will help you out.