OTA Dispatch Issue 3

8 Oregon Trucking Associations, Inc. Oregon Truck Dispatch T he Oregon Department of Transportation audits each motor carrier for weight mile tax compliance every three years. There are approximately 8,000 Oregon based carriers with at least one active plate and approximately 15,000 foreign based carriers. How does ODOT audit these 23,000 motor carriers’ weight mile tax accounts with a total audit staff of about 40 employees? Obviously, all audits are not created equal! There is a review process in which audit lists are prepared and pre-audit staff conduct a preliminary review of files. Some simpler files are opened, examined briefly and then returned to the file system with no further review done. Others are examined by pre-audit staff and a simple audit is performed and documented in relatively short order. More complex files are referred to auditor staff to be handled. Simpler audits may be performed in the ODOT office using either available records on hand or additional records requested and received from the motor carrier. More complex audits may be referred for audit in the motor carrier’s office. In this manner, utilizing varying levels of scrutiny and effort, all motor carriers are “audited” for weight mile tax every three years. Generally, the availability of good records will determine whether or not a full month by month audit is performed. If satisfactory records are available a full audit can be done in two to three days. A full month by month audit is the most accurate audit. If your records are complete and accurate, you have the right to request a complete audit of the audit period. If your records are not complete and correct, or if your fleet and operations are very large, the auditor may ask you to sign an Audit Sampling Agreement. The intent in this circumstance is for ODOT to select sample months, quarters or periods at random and to then to apply the average of the results of the audit of those sample periods to all the unsampled periods in each respective stratum. The auditor is obliged to pay close attention that the samples selected are reasonable and fair so that the sample selection is truly representative of the carrier operation. If, for example, the audit adjustment for any individual sample period is unusually high or low when compared to the other sample periods, it might be an outlier and therefore inappropriately applied to non- sampled months. Outliers are time periods that are not representative of the normal routinely reported operations of the carrier fleet. This could result from seasonal variations in the motor carrier’s business or from unique events like the loss or addition of a major account or significant changes in hauling rates. Audit adjustments from outlier months should not be applied to other months. Outliers should be adjusted separately as a stratum by itself. Stratifying an audit is reasonable if the auditor believes he/she has enough information to identify months that are likely to have similar total dollar adjustments, i.e., smallest, largest and moderate dollar adjustments. The auditor should endeavor to create audit strata that will have months likely to have similarly sized total dollar adjustments. When the auditor has determined whether or not stratification will be used, he/she will then place each month in the audit period into one of the strata that have been identified. Next, the auditor will randomly select sample months from each stratum. Once the sample months have been selected the auditor will establish the population of vehicles to be audited. It is the size of the total vehicle population that governs whether all vehicles will be subject to audit, or a representative sampling of vehicles. Some carrier operations are very large and it might not be possible to audit all vehicles. In this case, randomly selected vehicles will be used to create what is called a “1 in X” sample. In selecting this sample, the auditor needs to take caution to ensure that the sample selected truly represents average fleet operations taking into consideration intrastate versus interstate vehicles, owner operators versus company vehicles, etc. It should be evident that selecting samples of audit months and vehicles is critical to the outcome of the audit. The auditor should involve you in the selection process regarding sample periods, sample size and vehicles included in a “1 in X” sample. The auditor What to Expect and How to Best Participate in a WEIGHT MILE TAX AUDIT By Gregg Dal Ponte, OTA’s Director of Regulatory Compliance REGULATORY COMPLIANCE