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U.S. Department
of Transportation
Federal Highway
Administration

Notice
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Subject
ALLOCATION OF FISCAL YEAR (FY) 1999 FUNDS FOR HIGHWAY USE TAX EVASION PROJECTS

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Classification Code
4510.414
Date
December 30, 1998
  Expiration Date
September 30, 1999

  1. PURPOSE. To allocate funds to the States for highway use tax evasion projects authorized for FY 1999 pursuant to Title 23, U.S.Code Section 143 and to Section 1101 of the Transportation Equity Act for the 21st Century (TEA-21) (Pub. L. 105-178), and to provide obligation authority for these funds (see Attachment 1).

  2. AVAILABILITY

    1. The funds resulting from this allocation, as shown in Attachment 2, are available, up to the limitation amount, for obligation until September 30, 1999, at which time any amounts not obligated will be withdrawn. The funds are being made available to the States that have expended and billed the Federal Highway Administration (FHWA) for all but one year's allocation of Tax Evasion Project funds.

    2. Obligation authority is provided for 100 percent of the amount allocated to the States with this Notice. The obligation authority being distributed with this Notice is to support the obligation of "non-formula" funds. Division Administrators should ensure that this obligation authority is included in any required notification of the status of funds obligated in FY 1999.

    3. The Federal share for projects authorized with these funds is 100 percent.

    4. The Program Code for these funds is Q96, and the project prefix is TCP.

  3. AUTHORITY. The TEA-21 authorized funds for Highway Use Tax Evasion Projects under 23 U.S.C. 143. Most of the funds authorized are reserved for the Internal Revenue Service (IRS) for the development and operation of an automated fuel reporting system. The balance of the funds are being allocated to the States, primarily to support continued participation in regional motor fuel tax enforcement task forces.

  4. BACKGROUND. Nine regional motor fuel tax enforcement task forces have been organized under the coordination and leadership of the IRS District Offices and State revenue agencies in the lead States of Massachusetts, New Jersey, North Carolina, Florida, Indiana, Nebraska, Texas, California, and Oregon. The tax evasion project funds for FYs 1992 through 1997 were allocated to the States and the District of Columbia to encourage participation in these task forces with $100,000 per year allocated to lead States and $50,000 per year to the other States and the District of Columbia. FHWA Notice N 4510.387 allocated FY 1998 funds authorized in the Surface Transportation Extension Act of 1997 at the same annual funding level to States that had expended and billed FHWA for the largest percentage of prior funds obligated. All States receiving the FY 1998 allocations under this Act obligated the available funds by March 31, 1998. A second allocation of FY 1998 funds became available after the signing of TEA-21. FHWA Notice N 4510.401 allocated additional FY 1998 funds at half of the annual funding level to States that had expended and billed FHWA for all but one year's allocation of prior funds. All States receiving FY 1998 funds under this Act obligated available funds by September 30, 1998.

  5. PROJECT REQUIREMENTS

    1. All FY 1999 funds allocated with this Notice shall be identified under Program Code Q96 and will follow the same FHWA-37 reporting procedures formerly established for Appropriation Code 94C in the February 7, 1991, memorandum from the Chief of the Program Analysis Division, subject: "FMIS Manual Prepublication Notification." Funds are available at 100-percent Federal share to the State agency responsible for enforcement of motor fuel taxes. However, as specified in 23 U.S.C. 143(b)(5), States wishing to receive funds for tax evasion projects must certify that the aggregate expenditure of funds of the State, exclusive of Federal funds, for motor fuel tax enforcement activities will be maintained at a level that does not fall below the average level of such expenditures for its last 2 fiscal years. To receive funding under this program, the State revenue agency responsible for enforcement of State motor fuel taxes shall comply with the procedures established for this program. This includes signing the Memorandum of Understanding agreeing to participate in at least one of the regional motor fuel tax enforcement task forces, preparing a project budget, complying with intergovernmental review requirements, and signing the Project Agreement.

    2. Payments to the States will follow normal Federal-aid procedures. These projects will use normal accounting codes for State projects, that is, Object Code 4105.

  6. ACTION. The Division Administrator may approve projects by signing the Project Agreement (Form FHWA-1548, Rev. 7/7/98, Attachment 3). One copy with original signatures shall be returned to the State and one copy with original signatures shall be retained in the Division Office. States that have already signed a Project Agreement to include FY 1998 funds allocated by Notice N 4510.401, shall sign the revised Amended Project Agreement (Form FHWA-1549, Rev. 11/25/98, Attachment 4). The period of performance may also be extended as needed, when the State and Division Office sign the Amended Project Agreement.

Original signed by:

Kenneth R. Wykle
Federal Highway Administrator

4 Attachments


ATTACHMENT 1

An Act [Pub.L. No. 105-178, signed June 9, 1998] 
/Amendments in the TEA 21 Restoration Act [Pub.L.No. 105-206, Signed 7-22-98]/

To authorize funds for Federal-aid highways, highway safety programs, and
transit programs, and for other purposes.

     Be it enacted by the Senate and House of Representatives of the United
     States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

     (a) SHORT TITLE- This Act may be cited as the `Transportation Equity
     Act for the 21st Century'.
...
SEC. 1101. AUTHORIZATION OF APPROPRIATIONS.

     (a) IN GENERAL- The following sums are authorized to be appropriated
     out of the Highway Trust Fund (other than the Mass Transit Account):

...
          (14) HIGHWAY USE TAX EVASION PROJECTS- For highway use tax
          evasion projects under section 143 of such title /$10,000,000
          for fiscal year 1998/ $5,000,000 for each of fiscal years 1998
          /1999/ through 2003.
...
SEC. 1114. HIGHWAY USE TAX EVASION PROJECTS.

     (a) IN GENERAL- Section 143 of title 23, United States Code, is
     amended to read as follows:

`Sec. 143. Highway use tax evasion projects

     `(a) STATE DEFINED- In this section, the term `State' means the 50
     States and the District of Columbia.

     `(b) PROJECTS-

          `(1) IN GENERAL- The Secretary shall carry out highway use tax
          evasion projects in accordance with this subsection.

          `(2) ALLOCATION OF FUNDS- Funds made available to carry out this
          section may be allocated to the Internal Revenue Service and the
          States at the discretion of the Secretary.

          `(3) CONDITIONS ON FUNDS ALLOCATED TO INTERNAL REVENUE SERVICE-
          The Secretary shall not impose any condition on the use of funds
          allocated to the Internal Revenue Service under this subsection.

          `(4) LIMITATION ON USE OF FUNDS- Funds made available to carry
          out this section shall be used only--

               `(A) to expand efforts to enhance motor fuel tax
               enforcement;

               `(B) to fund additional Internal Revenue Service staff, but
               only to carry out functions described in this paragraph;

               `(C) to supplement motor fuel tax examinations and criminal
               investigations;

               `(D) to develop automated data processing tools to monitor
               motor fuel production and sales;

               `(E) to evaluate and implement registration and reporting
               requirements for motor fuel taxpayers;

               `(F) to reimburse State expenses that supplement existing
               fuel tax compliance efforts; and

               `(G) to analyze and implement programs to reduce tax evasion
               associated with other highway use taxes.

          `(5) MAINTENANCE OF EFFORT- The Secretary may not make an
          allocation to a State under this subsection for a fiscal year
          unless the State certifies that the aggregate expenditure of
          funds of the State, exclusive of Federal funds, for motor fuel
          tax enforcement activities will be maintained at a level that
          does not fall below the average level of such expenditure for the
          preceding 2 fiscal years of the State.

          `(6) FEDERAL SHARE- The Federal share of the cost of a project
          carried out under this subsection shall be 100 percent.

          `(7) PERIOD OF AVAILABILITY- Funds authorized to carry out this
          section shall remain available for obligation for a period of 3
          years after the last day of the fiscal year for which the funds
          are authorized.

          `(8) USE OF SURFACE TRANSPORTATION PROGRAM FUNDING- In addition
          to funds made available to carry out this section, a State may
          expend up to 1/4 of 1 percent of the funds apportioned to the
          State for a fiscal year under section 104(b)(3) on initiatives to
          halt the evasion of payment of motor fuel taxes.

     `(c) EXCISE FUEL REPORTING SYSTEM-

          `(1) IN GENERAL- Not later than April 1/August 1/, 1998, the
          Secretary shall enter into a memorandum of understanding with the
          Commissioner of the Internal Revenue Service for the purposes of
          the development and maintenance by the Internal Revenue Service
          of an excise fuel reporting system (in this subsection referred
          to as the `system').

          `(2) ELEMENTS OF MEMORANDUM OF UNDERSTANDING- The memorandum of
          understanding shall provide that--

               `(A) the Internal Revenue Service shall develop and maintain
               the system through contracts;

               `(B) the system shall be under the control of the Internal
               Revenue Service; and

               `(C) the system shall be made available for use by
               appropriate State and Federal revenue, tax, and law
               enforcement authorities, subject to section 6103 of the
               Internal Revenue Code of 1986.

          `(3) FUNDING /PRIORITY/- Of the amounts made available to carry out
          this section for each of fiscal years 1998 through 2003, /and prior
          to funding any other activity under this section,/ the
          Secretary shall make available sufficient funds to the Internal
          Revenue Service to establish and operate an automated fuel reporting
          system.'.

     (b) CONFORMING AMENDMENTS-

          (1) The analysis for chapter 1 of such title is amended by
          striking the item relating to section 143 and inserting the
          following:

          `143. Highway use tax evasion projects.'.

          (2) Section 1040 of the Intermodal Surface Transportation
          Efficiency Act of 1991 (23 U.S.C. 101 note; 105 Stat. 1992) is
          repealed.

          (3) Section 8002 of the Intermodal Surface Transportation
          Efficiency Act of 1991 (23 U.S.C. 101 note; 105 Stat. 2203) is
          amended--

               (A) in the first sentence of subsection (g) by striking
               `section 1040 of this Act' and inserting `section 143 of
               title 23, United States Code,'; and
               (B) by striking subsection (h).


ATTACHMENT 2

U.S. DEPARTMENT OF TRANSPORTATION
FEDERAL HIGHWAY ADMINISTRATION
ALLOCATION OF FUNDS FOR HIGHWAY USE TAX EVASION
PROJECTS FOR FISCAL YEAR 1999
STATE FY 1999
ALLOCATION
OBLIGATION
LIMITATION
CONNECTICUT $ 25,000 $ 25,000
IDAHO 25,000 25,000
ILLINOIS 25,000 25,000
IOWA 25,000 25,000
KANSAS 25,000 25,000
KENTUCKY 25,000 25,000
LOUISIANA 25,000 25,000
MASSACHUSETTS 50,000 50,000
NEBRASKA 50,000 50,000
NEW JERSEY 50,000 50,000
NEW YORK 25,000 25,000
OKLAHOMA 25,000 25,000
RHODE ISLAND 25,000 25,000
SOUTH DAKOTA 25,000 25,000
UTAH 25,000 25,000
VERMONT 25,000 25,000
WASHINGTON 25,000 25,000
WEST VIRGINIA 25,000 25,000
WYOMING 25,000 25,000
STATE TOTAL 550,000 550,000


Attachment 3

FORM FHWA-1548:
PROJECT AGREEMENT FOR THE JOINT FEDERAL/STATE MOTOR FUEL TAX COMPLIANCE PROJECT (36K)
NOTE: This document is in PDF File format. To read it, download the PDF File Reader.


Attachment 4

FORM FHWA-1549:
AMENDED PROJECT AGREEMENT FOR THE JOINT FEDERAL/STATE MOTOR FUEL TAX COMPLIANCE PROJECT (7K)
NOTE: This document is in PDF File format. To read it, download the PDF File Reader.

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