GAO surveyed the Treasury Department's and Internal Revenue Service's (IRS) administration of the Crude Oil Windfall Profit Tax Act of 1980. The Act contains a target revenue amount to be collected over an approximate 10-year period. The basic determinant of the windfall profit tax rate is property, a concept incorporated into the Act by reference to the Department of Energy (DOE) regulations. Thus, property has the same meaning for windfall profit tax rate purposes as it has for DOE price control purposes. The property concept is singularly important because it controls the category or tier of crude oil which establishes the applicable windfall profit tax rate.
Recommendations for Executive Action
|Department of the Treasury||1. The Secretary of the Treasury should require the Commissioner of Internal Revenue to provide IRS examiners with more specific guidance on how to make property determinations.|
|Department of the Treasury||2. The Secretary of the Treasury should give a high priority to clarifying the property concept for windfall profit tax purposes. Specifically, the Secretary should clarify the definition and scope of property for tax tier purposes, including the correct reference year for making property determinations and the proper treatment of land tracts which were unleased and/or did not produce oil in 1972.|
|Department of the Treasury||3. The Secretary of the Treasury should require the Commissioner of Internal Revenue to revise windfall profit tax training materials.|