Trucking issue costs state millions
NewsOK.com, November 18, 2006
By Randy Ellis
See related Grand Jury report

Oklahoma has paid 12 other states more than $30.5 million to resolve a legal dispute about truck registration fees that arose from an Oklahoma Tax Commission scandal, officials confirmed Friday.

Oklahoma didn't have to write checks to make the payments because the other states began withholding money from Oklahoma in January 2003 under sanctions imposed by the governing board of an international truck registration compact, said Paula Ross, spokeswoman for the state Tax Commission.

The sanctions were lifted in September of this year after Oklahoma agreed to forfeit the money that had been withheld and not appeal adverse federal court decisions.

The dispute arose because of the corrupt actions of former Oklahoma Tax Commission employees and truck registration agents.

Oklahoma participates in a compact with other states and Canadian provinces that allows truck drivers to register in just one state although they travel in many. Registration revenue is divided among the various states and provinces based on the distance the truck is expected to travel in each jurisdiction and the tax rate of each jurisdiction.

For years, corrupt Oklahoma Tax Commission employees allowed truck registration agents to use false projections to make it appear as if more miles would be traveled in low-cost states and less miles in high-cost states to lessen tax bills. Private trucking agents gave kickbacks to Tax Commission employees for favors they were granted.

Oklahoma didn't dispute that skewed mileage projections were used. Attorney General Drew Edmondson successfully prosecuted more than a dozen former Tax Commission employees and truck registration agents for fraud.

However, Oklahoma did dispute the amounts other states claimed they had lost.

Oklahoma lost the legal battle in Oklahoma City federal district court and the 10th U.S. Circuit Court of Appeals before deciding not to contest the matter further.

The biggest winners in the dispute were Illinois, which received more than $6.6 million from Oklahoma, and California, which received more than $5.6 million.

The Oklahoma Tax Commission did a major overhaul of rules and processing procedures in its truck registration section in the fall of 2002, Ross said. Compact officials reviewed changes made by Oklahoma and found the state to be in full compliance with the compact's requirements in November 2003.

Since that time, Oklahoma has "maintained a solid working relationship" with representatives of the other states, Ross said.

Oklahoma received about $11.9 million in out-of-state income from truck registrations in fiscal year 2006, she said. That amount should increase now that sanctions have been lifted.

Payment breakdown

Oklahoma had to pay 12 other states $30,570,238 to end litigation about truck registration fees that arose from an Oklahoma Tax Commission scandal. Following is a list of the money allotted to each state:

• Alabama, $346,401.

• California, $5,635,767.

• Colorado, $2,561,351.

• Illinois, $6,608,840.

• Indiana, $4,332,404.

• Iowa, $1,363,686.

• Kansas, $1,609,253.

• Michigan, $1,486,940.

• Minnesota, $280,529.

• Missouri, $4,940,314.

• Nebraska, $739,918.

• Nevada, $664,835.