The Senate Finance Committee recently held a hearing on the subject of fuel-tax fraud and revealed such criminal activity costs the Highway Trust Fund billions in lost revenues.
Committee Chairman Max Baucus (D-Mont.) said ensuring full collection of all taxes due on motor fuels could generate enough funds to allay calls for increased fuel taxation to support surface and air transportation programs.
Federal Highway Administrator Mary Peters noted that the system for collecting such taxes is complex and profits from such fraud can be temptingly high. According to Peters, a single truckload of diesel fuel, sold at market rates but with tax diverted, can lead to an illegal profit of as much as $3,600 to an unscrupulous fuel vendor.
Variations of such fraud include paperwork falsification, bootlegging of untaxed fuel across the borders, blending taxable with untaxed fuel and selling fuels authorized for low or no taxation as taxable diesel fuel.
A fuel tax compliance officer told the panel that closer monitoring of fuel-truck movements for security reasons after last year's terrorist attacks revealed that some 30,000 gallons of jet fuel were being moved, monthly, into communities that had no airports where such fuel would be legitimately used. There was reason to believe the fuel was being trucked to service stations and sold as diesel fuel, with the tax component later pocketed by fraudulent vendors.
