01473316

Component

The primary source of funding for transportation infrastructure is a tax imposed on motor fuels. One aspect of fuel tax collections requires consumers to apply for refunds of taxes paid on fuels used for tax-exempt purposes. Fuel tax refund is a complex process and one of the many ways tax evasion occurs. Fuel tax evasion has been the focus of many studies, however, only a few have focused on tax evasion through the refund process. Fuel tax refund policies of states are being updated regularly in order to curb evasion and to make the process efficient. The Montana Department of Transportation has expressed concern over the possibility of fraud, errors, and inefficiencies in the current fuel tax refund process. This paper presents an evaluation of the fuel tax refund process of Montana by comparing it with neighboring states that have a similar fuel tax refund process. The study includes general fuel tax refund process, eligibility of fuel and refund, refund process, and identified tax evasion. Lessons learned such as allowing only one year to submit refund claims, bulk purchase for agriculture, and died diesel for any off-road use will help states to improve their fuel tax refund process and curb fuel tax evasion.

This paper was sponsored by TRB committee ABE10 Revenue and Finance.

01470560

13-1354

English

23p

2013

Transportation Research Board 92nd Annual Meeting

Digital/other

References; Tables

Agricultural exemption; Fuel taxes; Lessons learned; Policy

Tax evasion; Tax refunds

Montana

Energy; Finance; Highways; Policy; I10: Economics and Administration; I15: Environment

Transportation Research Board Annual Meeting 2013 Paper #13-1354

TRIS, TRB, ATRI

Feb 5 2013 12:21PM