Excise Taxes:

Use of Safe Harbor Look-Back Rules

GGD-97-175R: Published: Sep 25, 1997. Publicly Released: Sep 25, 1997.

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Pursuant to a congressional request, GAO reviewed problems with the transfer of excise tax receipts to the Airport and Airway Trust Fund, resulting from airlines' use of regulatory safe-harbor look-back rules to delay deposits, focusing on whether those rules could cause similar problems with the crediting of other excise taxes.

GAO noted that: (1) regulatory safe harbor look-back rules should not cause similar problems in the future for two reasons; (2) first, deposits of most excise taxes are covered by the modifications made this year as a part of the aviation excise tax legislation; (3) these modifications make safe harbor look-back rules unavailable for calculating deposits of taxes that were not in effect in the look-back period; (4) the aviation excise tax legislation covers most excise taxes that fund trust funds; (5) second, the two excise taxes that are still subject to safe harbor look-back rules--taxes on ozone-depleting chemicals and on firearms--are not deposited in a trust fund; (6) if taxes on either the ozone-depleting chemicals or firearms were revoked, those making deposits of the taxes could rely on the safe harbor provisions to delay deposits of taxes; and (7) however, both of these taxes are deposited in the general fund, not a trust fund; and thus any potential delayed deposit would not create trust fund problems.

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