North American Free Trade Agreement NAFTA. Lenor Montemayor Asst. Division Director Motor Carrier & Tax Services Motor Vehicle Division

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1 North American Free Trade Agreement NAFTA Lenor Montemayor Asst. Division Director Motor Carrier & Tax Services Motor Vehicle Division 1

2 The North American Free Trade Agreement (NAFTA) contains provisions allowing Mexican motor carriers to travel in the United States Arizona is one of four border states that the Mexican motor carrier will be allowed to register vehicles with, and obtain a fuel tax license 2

3 NAFTA Working Group-2004 AZ, CA, NM, TX Canada IRP Inc. IFTA Inc. FMCSA AAMVA Mexican Government 3

4 Purpose Of Working Group Work through the issues with the four border states. To allow MX carriers to be part of both IFTA/IRP Insure consistency-ifta/irp To allow MX carriers to enter the US the working group proposed new Ballots to both the IFTA and IRP plans. All States had to vote on 4

5 Demonstration Project February 23, 2007, UD DOT Secretary Mary Peters announces the Cross Border Demonstration Project Will allow Mexico based motor carriers to make deliveries in the U.S. by expanding cross border operations-travel beyond border zone 100 Mexico based motor carriers will be allowed to participate in a one-year demonstration project Travel point to point in US 5

6 FMCSA Requirements Must have insurance with a U.S. licensed firm Must meet all U.S. safety standards No Hazardous Materials and Passenger carriers Must pass a Pre-Authority Safety Audit Every vehicle entering the U.S. must have a valid CVSA decal 6

7 State Requirements MX carriers must choose one of the four border states as their base State for IFTA and IRP Make application for both IFTA and IRP Post Bond 7

8 Before Beginning Operations A MX motor carrier that operates a CMV must apply to FMCSA and obtain: USDOT# (USDOT X) Operating Authority (MX736372) 8

9 USDOT # Interstate Commercial Motor Vehicle (1) Has a gross vehicle weight rating or gross combination weight rating, or gross vehicle weight or gross combination weight, of 4,536 kg (10,001 pounds) or more, whichever is greater; or (2) Is designed or used to transport more than 8 passengers (including the driver) for compensation; or (3) Is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or (4) Is used in transporting material found by the Secretary of Transportation to be hazardous under 49 U.S.C and transported in a quantity requiring placarding. 9

10 MX # Currently a qualified carrier in the Demonstration Project may operate anywhere in the US and back to MX. (Point To Point) 10

11 What is IRP? The International Registration Plan is an agreement among 48 states and 10 Canadian provinces that simplifies the vehicle registration process for commercial motor vehicles. Allows motor carriers to register a fleet of vehicles with a simple, one-step registration Must operate in two or more member Jurisdictions One plate, One registration, one cab card Motor carriers can operate in any IRP member jurisdiction displayed on the cab card, provided they have obtained proper operating authority 11

12 What is IFTA? The International Fuel Tax Agreement is an agreement among the 48 states, and 10 Canadian provinces that simplifies fuel tax reporting and remittance Single fuel tax license is issued by the base jurisdiction authorizing travel in all jurisdictions Only one quarterly fuel tax report accounting for all movement within the jurisdictions Fuel tax audits are generally performed only by the base jurisdiction 12

13 MX Bond Requirements Bond Amount - $1, Bond Types- Surety Bond or Cash Bond Bond Claim- If the prompt filing of reports and payments are delinquent, the State will place a claim on the bond for payment of delinquent taxes and fees Closure of account - if the account is requested closed by the carrier, and all reports and fees have been paid, the cash bond amount filed, will be refunded to the carrier or the Surety bond will be terminated by the Surety company 13

14 Before Beginning Operations (New IRP Account) Place license plate, cab card, copy of the IFTA license and the place the stickers on the vehicle Create and implement a recordkeeping system: Dates of trip Miles traveled by vehicle Cumulative miles traveled in each jurisdiction, including Mexico 14

15 Fuel Tax Collection Process Licensee: Pays taxes on each gallon purchased Summarized purchases and distances traveled each calendar quarter Files a tax return that calculates tax due to each jurisdiction Base jurisdiction provides IFTA license and redistributes tax paid in one state/province to compensate use of highways in each state/province in which you operate 15

16 Records Kept for IRP and IFTA Date of trip (starting / ending) Trip origin and destination (with city & jurisdiction) Route of travel Beginning and ending odometer or hub odometer reading of the trip Total trip distance traveled Distance traveled by jurisdiction Unit Number or Vehicle Identification Number (VIN) At the discretion of the base jurisdiction, may also require vehicle fleet number, registrant s name, trailer number, and drivers name/signature 16

17 Acceptable Records - Fuel Purchase Receipts of invoices must have: Date of purchase Name and address of the seller Number of gallons or liters Type of fuel purchased Price paid per gallon or liter or total amount of sale Vehicle plate, unit, or identification number into which the fuel was delivered Absence of info = invalid receipt / invoice for tax computation 17

18 IRP/IFTA Audits Objective Slide 39 Ensure proper collection of registration fees and fuel use taxes owed to all jurisdictions Ensure registrant s recordkeeping requirements are met MUST retain at least the current year plus 3 preceding years for audit purposes check statute of limitations Jurisdictions may ask Carrier to provide appropriate source documents to verify proper recordkeeping procedures Audits will be performed every 3 months 18

19 Other Resources For Help Manuals with sample forms and instructions on state agency websites: (Operaciones de MX-CA) (Operaciones de MX-TX) 19 Thank You!

20 Questions? 20

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