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Tax Administration: Gas Guzzler Tax Compliance Can Be Increased

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Report Type Reports and Testimonies
Report Date July 16, 1987
Report No. GGD-87-85
Subject
Summary:

GAO: (1) discussed the need for improving taxpayer compliance with the gas guzzler excise tax; (2) evaluated Internal Revenue Service (IRS) efforts to enforce the tax; and (3) identified methods for improving taxpayer compliance.

GAO sampled independent imports entering the United States through ports in four Customs Service districts from November 1983 through November 1984. GAO found that: (1) less than 1 percent of the independent importers paid the gas guzzler tax; (2) this noncompliance resulted in lost tax revenues of over $6 million; and (3) most factory-authorized importers paid the tax. IRS believed that the primary reasons independent importers did not pay the tax, besides intentional tax evasion, were that: (1) many liable taxpayers were unaware of the tax; and (2) some importers, who were aware of the tax, did not believe that it applied to them. GAO concluded that, although IRS has taken actions to enforce the tax, these actions may not reduce tax noncompliance.

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