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Montana Fuel Tax Refunds

Started: January, 2010 Ended: June, 2011 Project ID #4W2968 Status: Completed

Objective

This project will investigate Montana’s motor fuel tax refund process to evaluate its current governing policies, the potential for errors, omissions, and evasions (EOE), and the possibility of moving from a paper system to an electronic tracking system.

Abstract

Taxes on motor fuels are used primarily to fund the transportation infrastructure. It has been estimated that annually state and federal fuel taxes are under-collected by $1.5 billion to $2.5 billion due to errors, omissions and evasions (Eger et al., 2003). Much of the prior work to reduce errors, omissions and evasions (EOE) has focused on motor carrier enforcement (e.g., monitoring use of dyed fuels) and eliminating EOE where fuel taxes are collected (for Montana, this is at the distributor level). Limited research has focused on EOE with the tax refund process. Refunds are available on the taxes paid for fuels used for agriculture, heating oil, power take-off units, government vehicles and other off-highway use (primarily construction work). The current paper system for fuel tax refunds makes cross checking of refund requests difficult. It is possible for a refund request to have been paid twice. The laws governing the refund system may be outdated and inappropriate. Research is needed into whether Montana’s system of refunding the tax for non-taxable fuel use is functioning as it should.

Contacts

Files & Documents

Sponsors & Partners

  • Montana Department of Transportation (MDT) Sponsor

Part of: Transportation Planning and Economics

Project Tagged In: fuel tax, funding, policy

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