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Uncollected gas taxes may cost Georgia $20 million

ATLANTA (AP) – State transportation officials hope new legislation will allow the state to collect millions of dollars in gasoline taxes that are lost to fraud and mistakes each year.

Beginning in this month, all of Georgia's approximately 12-cents-per-gallon gasoline tax will be collected by the state's 350 wholesale distributors when they sell tankerloads of fuel to retail filling stations.

Lawmakers estimate that will increase collections by as much as $20 million a year.

For years, nearly 5 cents of the gasoline tax, which brings the state about $700 million a year, has been collected by the retailers.

State Department of Transportation officials say there are flaws in that system.

Truckers burn untaxed fuel meant for off-road vehicles in their on-the-road big rigs. Gas station owners shave gallons off their tax returns. Bootlegging distributors purchase fuel in Georgia and report selling it to retailers here, but actually sell it in neighboring states with higher gas taxes and pocket the difference.

Others simply make mistakes that go unnoticed.

When the General Assembly convenes next month, the DOT will push for more legislation in an effort to increase collections further. But opposition within the motor fuel industry and state revenue officials may undercut the proposal.

Opponents say the DOT should give the new gas tax collection system, enacted during the last legislative session, time to work before pushing for more changes.

DOT officials believe it is best to move all collections to the terminal, where fuel is pulled from a refinery's pipeline and loaded onto distributors' tanker trucks.

"We ought to be able to account for almost 100 percent," said Earl Mahfuz, treasurer of the DOT.

If it started collecting at the state's 45 terminals, Georgia would join 21 states that now collect gasoline taxes either at the terminal or as soon as gasoline shipments arrive within their borders. Georgia and Alabama are the only Southeastern states that have not made the change.

Fuel distributors are expected to oppose taxing at the terminal.

Distributors get 20 days to turn over collected taxes to the state Revenue Department. This lag, referred to in the business as the "float," has become important for distributors. They can use the short-term, interest-free cash to pay for new product, explained Roger Lane, president of the Georgia Oilmen's Association, which represents distributors.

The association lobbied to shift tax collections away from retail gas stations. But Lane said it opposes shifting collections higher up the distribution chain without some concessions. "It would take cash flow from the distributor, and they're struggling to survive now," he said.

The state also compensates distributors for acting as the Revenue Department's surrogate tax collector. They get to keep 1 percent of the first 5.5 cents tax on every gallon they collect. During the past budget year, which ended in June, the state paid out $3.6 million in compensation to distributors.

Transportation Commissioner Harold Linnenkohl said the distributors no longer would bear the costs associated with collecting the taxes, so they would not need the compensation. And he dismissed the distributors' concern about the float.

"The state should not be fronting their businesses," Linnenkohl said.

Linnenkohl said the proposal to collect taxes at the terminal could take a couple of legislative sessions to gain momentum, considering the opposition from the distributors and the Revenue Department.

The Revenue Department is still training distributors to use the new collection system. And the process would have to be revamped a second time if legislators again shift the tax collection point.