Opinion ID: 2064119
Heading Depth: 2
Heading Rank: 2

Heading: Motor Carrier Surcharge Tax

Text: In 1985, the General Assembly added a surtax on motor fuel consumed by commercial carriers in Indiana highway operations. 1985 Ind. Acts P.L. 59 (codified as Ind. Code § 6-6-4.1-4.5 (1985 Supp.)). The portions of the surtax statute (the Surcharge Tax Act) applicable to this case provide: (a) A surcharge tax is imposed on the consumption of motor fuel by a carrier in its operations on highways in Indiana... . ... . (d) The tax imposed under this section does not apply to that portion of the motor fuel used to compel the continuous movement apparatus of a ready mix concrete truck, as determined by rule of the commissioner. Ind. Code § 6-6-4.1-4.5 (1985 Supp.). Additionally, the department promulgated Ind. Admin. Code tit. 45, r. 13-8.5-4 (1986) (the Surcharge Tax Regulation), which provides: The tax imposed by IC 6-6-4.1-4.5 does not apply to the portion of motor fuel used to operate the equipment in or on the motor vehicles identified in 45 IAC 13-4-7 and in the proportions identified therein and as determined by the commissioner. Ind. Admin. Code tit. 45, r. 13-8.5-4 (1986).
Taxpayer asserts that it should receive a percentage exemption from the surcharge tax equal to the 24% tank truck motor carrier fuel tax exemption to which it argues it is entitled. The department contends that during the years at issue the Surcharge Tax Act permitted a surcharge tax exemption for fuel consumed by ready mix concrete trucks only. [1] Thus, to allow the Surcharge Tax Regulation to expand that exemption exceeded the department's authority because an administrative agency may not promulgate rules that exceed statutory authority. Taxpayer argues that the Surcharge Tax Regulation is a companion regulation to the Surcharge Tax Act and when this regulation and this statute are construed together and harmonized, as principles of statutory construction require, it is clear that the Surcharge Tax Regulation properly incorporates motor carrier fuel tax proportional exemption percentages provided in Ind. Admin. Code tit. 45, r. 13-4-7 discussed in the preceding section of this opinion and that taxpayer is entitled to the same exemption rate under the surcharge tax as it is under the motor carrier fuel tax. The Tax Court found in favor of taxpayer and ordered the department to compute taxpayer's surcharge tax exemption in the same way that it computed the motor carrier fuel tax exemption. Bulkmatic Transp., 629 N.E.2d at 958-59. The Tax Court reasoned as follows: The exclusion under subsection (d) explicitly provides that the tax imposed by subsection (a) does not reach the fuel used to propel the continuous movement apparatus of a ready mix concrete truck even though that fuel is consumed as a concrete truck drives along Indiana highways. Therefore, 45 I.A.C. 13-8.5-4 does not exceed the ambit of IC 6-6-4.1-4.5. Rather, it directs itself to off highway use of fuel. The court giving effect to every word and clause of the regulation ... finds that 45 I.A.C. 13-8.5-4 provides for a proportionate exclusion to the surcharge tax for tank trucks. Id. The department contends that the Tax Court wrongly concluded that taxpayer was entitled to a surcharge tax exemption percentage equal to its motor carrier fuel tax exemption percentage because, during the years at issue, the Surcharge Tax Act only authorized a surtax exemption for ready mix concrete trucks.
We conclude that the Indiana motor carrier surcharge tax exemption only applied to ready mix concrete trucks during the years at issue. We agree with the department's analysis that it had no authority to promulgate the Surcharge Tax Regulation because this regulation creates surtax exemptions that the legislature did not authorize under the Surcharge Tax Act during the years at issue. An administrative agency may not promulgate regulations which add to the law as enacted or extend its powers. Johnson County Farm Bureau Coop. v. Indiana Dep't of State Revenue (1991), Ind. Tax, 568 N.E.2d 578, 587, aff'd (1992), Ind., 585 N.E.2d 1336. In Indiana Dep't of State Revenue v. Colpaert Corp. (1952), 231 Ind. 463, 109 N.E.2d 415, this Court stated: An administrative board has the undoubted right to adopt rules and regulations designed to enable it to perform its duties and to effectuate the purposes of the law under which it operates, when such authority is delegated to it by legislative enactment... . But it may not make rules and regulations inconsistent with the statute which it is administering, it may not by its rules and regulations add to or detract from the law as enacted nor may it by rule extend its powers beyond those conferred upon it by law. Id. at 479-80, 109 N.E.2d at 422-23. By promulgating the Surcharge Tax Regulation, the department created surtax exemptions for types of vehicles other than the ready mix concrete vehicle that the Surcharge Tax Act provided was the sole type of vehicle entitled to an exemption during the years at issue. The creation of these exemptions was an addition to the Surcharge Tax Act which the department had no authority to make. We conclude that during the years at issue only ready mix concrete trucks could receive a motor carrier surcharge proportional exemption and that the Tax Court erred in finding that the taxpayer was entitled to a motor carrier surtax exemption for the years at issue. [2] Accordingly, the order requiring the department to compute taxpayer's motor carrier surtax refund in the same manner as the motor carrier fuel tax exemption is reversed.