23 U.S.C. § 143 — Highway use tax evasion projects

(a) State defined. In this section, "State" means the 50 states plus the District of Columbia. (b) Projects. (1) In general. The Secretary must carry out highway use tax evasion projects under the rest of this subsection. (2) Funding. From administrative funds made available under section 104(a), the Secretary may deduct up to $4,000,000 for each of fiscal years 2022 through 2026 to carry out this section. The Secretary decides how to allocate that money between the Internal Revenue Service and the states, except that $2,000,000 of it each year must go only toward intergovernmental enforcement efforts, including research and training. (3) Conditions on funds given to the IRS. Except as this section otherwise provides, the Secretary may not impose any condition on how the IRS uses its share of the funds. (4) Limits on use of funds. The money may be used only to: (A) expand motor fuel tax enforcement efforts; (B) fund additional IRS staff, but only to do this work; (C) supplement motor fuel tax examinations and criminal investigations; (D) develop automated data tools to monitor motor fuel production and sales; (E) evaluate and set up registration and reporting requirements for motor fuel taxpayers; (F) reimburse state expenses that supplement existing fuel tax compliance efforts; (G) reduce tax evasion tied to other highway use taxes; (H) support state and Indian tribe efforts on state motor fuel tax issues; and (I) reduce tax evasion tied to imported fuel. (5) Maintenance of effort. The Secretary may not allocate money to a state for a fiscal year unless the state certifies that its own (non-federal) spending on motor fuel tax enforcement will not fall below the average of its spending in the preceding two fiscal years. (6) Federal share. The federal government pays 100 percent of the cost of a project carried out under this subsection. (7) Period of availability. Funds authorized for this section remain available to spend for 3 years after the end of the fiscal year for which they were authorized. (8) Extra state funding option. Beyond funds provided under this section, a state may also spend up to one-quarter of one percent of the funds apportioned to it for a fiscal year under section 104(b)(2) on initiatives to stop motor fuel tax evasion. (9) Reports. The IRS Commissioner and each state must submit an annual report to the Secretary, the House Committee on Transportation and Infrastructure, and the Senate Committee on Environment and Public Works, describing the projects, examinations, and criminal investigations the funding supported, and estimating their annual yield. (c) Excise tax fuel reporting. (1) In general. Within 90 days after the SAFETEA-LU law was enacted, the Secretary had to enter into a memorandum of understanding with the IRS Commissioner. Its purposes: build the capabilities needed for new reporting requirements and databases created by that law and the American Jobs Creation Act of 2004, plus any other reporting or database work the Secretary and Commissioner agree would help enforce fuel excise taxes, including recommendations from the Fuel Tax Enforcement Advisory Committee; complete electronic reporting of fuel transactions by carriers and terminal operators; operate and maintain a system for tracking terminal fuel activity and analyzing domestic and foreign motor fuel distribution trends; collect, analyze, and share information on fuel distribution and tax compliance; and develop, complete, operate, and maintain an electronic fuel-tax claims filing system and database, and a database of heavy-vehicle highway use tax payments. (2) Elements of the agreement. It must provide that the IRS develops and maintains these systems through contracts, that the IRS controls the systems, and that appropriate state and federal revenue, tax, and law enforcement authorities may use them, subject to the privacy rules in section 6103 of the Internal Revenue Code of 1986. (3) Funding. Each fiscal year, the Secretary must give the IRS whatever funds are needed, from money made available under this section, to complete, operate, and maintain these systems. (4) Reports. By September 30 of each year, the IRS Commissioner must report to the Secretary on the status of these IRS projects.