Tax Administration:

Gas Guzzler Tax Compliance Can Be Increased

GGD-87-85: Published: Jul 16, 1987. Publicly Released: Jul 16, 1987.

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GAO: (1) discussed the need for improving taxpayer compliance with the gas guzzler excise tax; (2) evaluated Internal Revenue Service (IRS) efforts to enforce the tax; and (3) identified methods for improving taxpayer compliance.

GAO sampled independent imports entering the United States through ports in four Customs Service districts from November 1983 through November 1984. GAO found that: (1) less than 1 percent of the independent importers paid the gas guzzler tax; (2) this noncompliance resulted in lost tax revenues of over $6 million; and (3) most factory-authorized importers paid the tax. IRS believed that the primary reasons independent importers did not pay the tax, besides intentional tax evasion, were that: (1) many liable taxpayers were unaware of the tax; and (2) some importers, who were aware of the tax, did not believe that it applied to them. GAO concluded that, although IRS has taken actions to enforce the tax, these actions may not reduce tax noncompliance.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress may consider this matter in the future. Since this was not a direct recommendation to Congress, GAO should consider it closed.

    Matter: Congress should consider amending Internal Revenue Code section 4064, "Gas Guzzler Tax," to require importers to pay the tax to Customs at the time fuel-inefficient vehicles are imported.

  2. Status: Closed - Not Implemented

    Comments: Congress is unlikely to consider this matter in the future. Since this recommendation was not a direct recommendation to Congress, GAO should consider it closed.

    Matter: Congress should consider amending the bonding requirement for independent importers to require proof of payment of the gas guzzler tax before the bond is released.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS developed and delivered language for inclusion in Customs' publication on importing a car, as recommended.

    Recommendation: To promote voluntary compliance through increased taxpayer awareness, the Commissioner of Internal Revenue should arrange for Customs to include information on the gas guzzler tax in the pamphlet it provides to independent importers.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS believes its current procedures adequately respond to this recommendation, and GAO concurs.

    Recommendation: To enhance IRS efforts to improve compliance with the gas guzzler tax and assure itself that the levels of district office enforcement efforts are appropriate, the Commissioner of Internal Revenue should: (1) monitor district office enforcement efforts and identify enforcement problems, as well as effective enforcement approaches; and (2) communicate, IRS-wide, information on effective enforcement approaches and actions needed to solve identified problems.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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