Sad But True Story About Business Regulations in the Free State (Intro Blog)

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We recently read that the Governor wants the General Assembly to find and eliminate unnecessary government regulations. We have a friend who shared the following story:

"I own a business that, in part, distributes diesel motor fuel. Last July, two agents from the Comptroller of Treasury came to my business to conduct an audit of our State Excise Tax and International Fuel Tax Agreement (IFTA) records. The State Excise Tax reports are ten pages long and filed monthly. The IFTA report requires me to record the number of miles my trucks drive in each jurisdiction so that each state can collect its share of motor fuel tax. One agent was dedicated to auditing the Excise Tax records. The second agent was dedicated to auditing the IFTA records. The auditors took over my conference room for four days. When they completed inspecting records in my office the agents returned to their office for two additional days to compile their results.

"You may be thinking, two full-time agents working on an audit for six days, this must be a huge company with a fleet of trucks involved in interstate commerce. Actually, I’m a small business owner who employs thirty people, and only one of my trucks traveled between states a total of eighty-seven miles. 

"After compiling their report, the agents returned to my office for another half-day to double check their information and to present me with their results. It turned out that I had overpaid the taxes, and the State of Maryland owed my company approximately forty dollars. Then an amazing thing happened, the agents apologized for disrupting my business for four and a half days, they offered to compensate me for my lost productivity due to complying with their audit, and they thanked me for the excellent job that my company was doing collecting taxes for the State. Just kidding, none of those things happened although they should have. Instead, the agents presented me with six pages of instructions on how to “properly” fill out their reports.

"The most outrageous aspect of this sad but true story is that none of this was necessary. The State of Maryland and the federal government collect taxes on gasoline when it is picked up at the terminal. But, when on-road diesel fuel is picked up at the terminal, it is taxed by the federal government, but not the State. Instead, the State requires me to sell the diesel in retail fashion and collect the excise tax from each individual customer. Then I forward the tax that could have been collected at the terminal to the State. Then I fill out a ten page monthly excise tax report that details exactly how much diesel each of my customers purchased, and how much tax I collected on each sale. These are the records that the State must then audit to insure compliance. All of which would be unnecessary if the State operated as efficiently as the federal government.

"I run a small business, follow the rules, pay my employees a fair wage, and deliver a product to my customers at a fair price. Yet, I am saddled by the State of Maryland with unnecessary regulations and subjected to an audit that treats me as if I am a criminal."

If the Governor and General Assembly are truly committed to creating an environment where the private sector can create more jobs, then they will repeal burdensome regulations, eliminate wasteful positions in State government, and truly make Maryland business friendly. Do you have a similar story? Share it below. Let’s have a reasonable discussion about regulations in the Free State.