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FHWA - FAPG G 3016.4, Chapter 1, Use of Funds for Fuel Tax Evasion Projects

Formerly Federal-aid Policy Guide Non-Regulatory Supplement G 3016.4,
July 30, 1992, Transmittal 3
See Order 1321.1C FHWA Directives Management

Use of Funds for Fuel Tax Evasion Projects

Par.

  1. Purpose

  2. Authority

  3. Background

  4. Guidance

  5. Approvals

  6. Reporting

 

  1. PURPOSE. Funds have been authorized by the Congress for the use of the States and the Internal Revenue Service (IRS) to stem motor fuel tax evasion. This guidance describes the procedures for making these funds available to the States.

  2. AUTHORITY. Section 1110 of the Fixing America's Surface Transportation (FAST) Act (MAP-21) (Pub. L. No. 114-94).

  3. BACKGROUND: Section 1110 of the Fixing America's Surface Transportation (FAST) Act authorized $4 million per year for fiscal years (FY) 2016 through 2020 from the Highway Trust Fund for highway use tax evasion projects. The Highway Use Tax Evasion Projects program provides funding to the Internal Revenue Service, other Federal agencies and the States to carry out intergovernmental enforcement efforts along with training and research to reduce evasion of payment of motor fuel and other highway use taxes.

    Funds for this program are in the form of a deduction not to exceed $4 million per year for each of FYs 2016 and 2020 from the funds authorized for FHWA's administrative expenses. Funds are available until expended. The Secretary has discretion in the allocation of funds to the Internal Revenue Service, other Federal agencies and the States, except that $2 million must be made available only to carry out intergovernmental enforcement efforts, including research and training. In addition, each State is permitted to use up to ¼ of 1 percent of the funds apportioned to the State each fiscal year for the Surface Transportation Program on initiatives to halt the evasion of payment of motor fuel taxes.

  4. GUIDANCE.

    Funds may be allocated annually to the following limits

    1. a) $ 2 Million to the Internal Revenue Service;
    2. b) $ 2 Million for Intergovernmental Enforcement Efforts

    Funds may be used to:

    • Expand efforts to enhance motor fuel tax enforcement.
    • Supplement motor fuel tax examinations and criminal investigations.
    • Fund additional Internal Revenue Service staff for functions related to highway use tax evasion.
    • Develop automated data processing tools to monitor motor fuel production and sales.
    • Evaluate and implement registration and reporting requirements for motor fuel taxpayers.
    • Reimburse State expenses that supplement existing fuel tax compliance efforts.
    • Analyze and implement programs to reduce tax evasion.
    • Support efforts between States and Indian tribes to address issues relating to State motor fuel taxes.
    • Analyze and implement programs to reduce tax evasion associated with imported fuel.

  5. APPROVALS. For the Intergovernmental Evasion Enforcement grants, a team consisting of FHWA and IRS employees will review the submitted proposals and select the most qualified proposals up to the limit of available funds. Once awarded, the FHWA HQ Office will draft a Grant Agreement that will be forwarded to the authorized agency representative. The Grant Agreement includes all the specific requirements on the use of project funds, including the certification to maintain funding for motor fuel tax enforcement activities at the average level for the previous two fiscal years. The Division Administrator may approve projects by signing the Grant Agreement. One copy with original signatures shall be returned to the State and one copy with original signatures shall be forwarded to the Washington Headquarters (HPPI-10)), either directly or through the Division Office as directed by the Division Administrator. The Grant Agreement may be amended as needed to provide additional funding and to extend the completion date.

  6. REPORTING. The Commissioner of the Internal Revenue Service and each State shall submit to the Secretary an annual report that describes the projects, examinations, and criminal investigations funded by and carried out under this section. Such report shall specify the estimated annual yield from such projects, examinations, and criminal investigations. Copies of all reports should be forwarded to Federal Highway Administration (HPPI-10), 1200 New Jersey Ave, SE, Washington, DC, 20590


United States Department of Transportation - Federal Highway Administration
Page last modified on November 7, 2014
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