General Government: Inland Waterways Fuel Tax
Year Identified: 2017
Area Number: 22
Area Type: Cost Savings & Revenue Enhancement
◐- Partially Addressed
○- Not Addressed
◉- Consolidated or Other
⊘- Closed-Partially Addressed
⊗- Closed-Not Addressed
Last Updated:March 21, 2018
To maximize resources for the Inland Waterways Trust Fund, the Commissioner of Internal Revenue should consult with the U.S. Army Corps of Engineers (Corps) to explore options to obtain proprietary data to enhance IRS's efforts to ensure taxpayer compliance with the inland waterways fuel tax.
In response to GAO’s July 2016 recommendation, the Internal Revenue Service (IRS) has begun exploring options to obtain proprietary waterborne commerce and lock performance data that would enhance its efforts to ensure taxpayer compliance with the inland waterways fuel tax. While IRS already uses publicly available versions of these data to identify taxpayers that are not filing their inland waterways fuel tax, the proprietary data could be used potentially to identify individual taxpayers that may be underreporting their tax liability.
According to IRS, strict disclosure laws have inhibited the successful execution of a nondisclosure agreement with the Corps. IRS contacted the Corps’ Waterborne Commerce Statistics Center in November 2016 and began working with the Corps on a nondisclosure agreement to allow for data sharing. However, by May 2017, IRS and the Corps had reached an impasse regarding data disclosure requirements, although GAO confirmed that both agencies agreed to meet again to reach an accord. No agreement to share the data had been made, although the two agencies continued to work on this issue over the summer. As of December 2017, IRS is continuing to explore avenues for a modified non-disclosure agreement with the Corps. When this issue is resolved, access to the proprietary waterborne commerce and lock performance data should further improve IRS efforts to strengthen inland waterways fuel tax compliance and potentially increase revenues for the Inland Waterways Trust Fund—revenues that are critically important to improve and rehabilitate navigation infrastructure.