Revenue Enhancement Through Increased Motor Fuel Tax Enforcement

Abstract

The development of the FHWA fuel tax compliance program is described, and estimates of additional motor fuel tax revenues generated by enforcement programs are presented. Substantial revenue losses caused by motor fuel tax evasion schemes were discovered in the mid-1980s. Since 1986, the Internal Revenue Service and FHWA have worked cooperatively to reduce fuel tax evasion by supporting changes in tax collection procedures and additional enforcement resources. Since fiscal year 1990, FHWA has provided funding to supplement state and IRS fuel tax enforcement resources under the auspices of the Joint Federal/State Motor Fuel Tax Compliance Project (joint project). The Intermodal Surface Transportation Efficiency Act of 1991 provided $5 million annually through 1997 for the joint project. Enforcement activities directly contribute hundreds of millions of dollars to the Highway Trust Fund (HTF) and state transportation funds, a yield estimated at $10 to $18 per dollar spent on these programs. Furthermore, the...