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Highway Information Seminar. Motor Fuel Session November 16, 2004. The Big Picture. FHWA determines how much federal Highway Trust Fund tax money comes from each State Compared to how much each State receives from FHWA Derives a “for every dollar in, how much does my State receive” ratio.

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Highway Information Seminar

Motor Fuel Session

November 16, 2004

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The Big Picture

  • FHWA determines how much federal Highway Trust Fund tax money comes from each State

  • Compared to how much each State receives from FHWA

  • Derives a “for every dollar in, how much does my State receive” ratio

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The Big Picture II

  • This analysis is extremely important:

    • To Congress

    • FHWA

    • States

  • It’s important that the data be correct

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  • Uses of State motor fuel data

    • Federal-aid highway funds Apportionment

    • Federal motor fuel Attribution

  • Importance

    • 20 years ago, historical records

    • Today, drives the distribution of significant federal funds

    • Tomorrow, indications are the data will remain significant

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  • Funds for several FHWA programs are apportioned to the States:

    • Formula based

    • Set by law

    • About 85 % of Federal highway funds are apportioned

  • Under TEA-21, about $12 billion (40% of Federal Highway Programs) was annually apportioned based on motor fuel data

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The Attribution Process

  • FHWA attribution supports the apportionment process

  • How FHWA calculates attribution

  • The role of State data

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How Attribution Works I

State-by-State contributions to the Federal Highway Trust Fund are not available from the Internal Revenue Service (IRS)

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How Attribution Works II

  • Typical federal motor fuel taxpayer is an oil company or oil wholesaler

  • 8,000 are licensed with IRS

  • Federal tax is imposed as the fuel crosses the rack

  • Where is the fuel consumed?

  • IRS didn’t know, but has begun to address fuel tracking

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How Attribution Works III

  • IRS reports tax receipts for each motor fuel tax type

  • HTF contributions from highway users in each State are estimated using State motor fuel data

  • States report the motor fuel taxed under each State’s procedures

  • FHWA uses established procedures to derive a consistent, compatible dataset for attribution

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How Attribution Works IV

  • Measure on-highway gallons of motor fuel

    (Gasoline - Gasohol - Special fuels)

  • Sum to derive the national total (by type)

  • Derive each State’s share of the national total

  • Use those shares to determine revenue shares

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How Attribution Works V

  • For the federal truck taxes:

    • Tire tax

    • Truck and trailer retail sales excise tax

    • Heavy vehicle use tax

  • Attribution to each State is in proportion to the highway use of special fuels

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Attribution and Data Quality

  • FHWA’s goal is an accurate data-set with which to determine attribution

  • To improve data quality, FHWA needs to work with State data providers to achieve accurate reporting

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In Summary

  • Processes:

    • Apportionment process

    • Attribution process

  • Importance:

    • Measurement of motor fuel data

    • Equitable treatment for all States

  • FHWA needs your commitment

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FHWA Motor Fuel Reporting:



Changing Environment

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  • Re-Assessment

  • Input procedures

  • Motor fuel reviews

  • Data verification

  • Outreach

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Accomplished: Re-Assessment

  • Time line

    • Began in late 1998

    • Shortly after TEA-21 passed

  • Methodology

    • Expert advisory group

    • Identify issues

    • Propose solutions

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Accomplished: Re-Assessment

  • General Accounting Office (GAO)

    • Concurrent assessment

    • Cooperative effort

    • Substantial agreement on conclusions

  • GAO identified several actions

    • Review & verify State MF reporting

    • Document FHWA attribution methodology

    • Independent review of FHWA methodology

    • Evaluate EXSTARS-EXFIRS for validation

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Accomplished: Re-Assessment

  • FHWA identified areas for further study/revision

    • Federal Register Notice

    • General support for the proposals

  • Publication: Attribution and Apportionment of Federal Highway Tax Revenues: Process Refinements

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Accomplished: Input Procedures

  • Implemented a submittal process

    • All motor fuel data since January 2002

    • Generally considered easy-to-use

  • Computer security requirements

    • Secure submittal site

    • Required change to Input Tool use

      • Data providers received USERID

      • Managed by Division Offices

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Accomplished: MF Reviews

  • Division Office reviews

  • Continuous Process Improvement Model

  • 45 States have done reviews

  • Quality varies

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Accomplished: Data verification

  • Process review versus data verification

  • Why verify?

    • Old procedure - data hand-entered

    • Data needs checking until new procedures

  • Verification memo

    • Sent in March – June each year

    • Typically, several States revise their data

    • So several iterations occur

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Accomplished: Publications

  • Attribution and Apportionment of Federal Highway Tax Revenues: Process Refinements

  • Your State’s Share: Attributing Federal Highway Revenues to Each State

  • Guide to Reporting Highway Statistics has been revised and approved by OMB

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Accomplished: Revised Guide to Reporting Highway Statistics

  • Data requirements have changed

  • Data providers need to be aware of these changes

  • It will require some effort on the State’s part to be aware and make these changes

  • FHWA will discuss these with you at any time, if you need assistance

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Motor fuel reviews and follow-up

  • Quality of reviews

  • Quality improvements

  • Risk assessment

  • Verification of data

  • Communication

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    Challenges: MF Reviews

    • Quality of reviews/Quality improvements

      • Need to bring up the average

      • Three core items:

        • Procedures document

        • Procedures assessment

        • Oversight plan

    • Risk assessment

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    Challenges: Communication

    • Goal: Keep stakeholders in loop

    • Methods

      • Workshop-Video conference options

        • November workshops on Highway Statistics

        • January-February motor fuel workshops

        • Special request/event video conferences

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    Challenges: Verification of Data

    • About 20 are reviewing the data

    • Apparently, about 30 are not reviewing the data

    • It’s the States last chance to make sure what they reported is correct

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    Challenges: Communication II

    • Methods (continued)

      • Community of Practice:

        • Location for all publications/materials

        • Bulletin-board style listserv

      • http://knowledge.fhwa.dot.gov/cops/hcx.nsf/home?openformgroup=motor%20 fuel%20reporting/htf%20attribution

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    Changing Environment:

    • Reauthorization

    • Reporting changes

    • Attribution analysis changes

    • Gasohol data

    • Federal law changes combating tax evasion

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    Changing Environment: Reauthorization

    • TEA-21 ended September 30, 2003

    • Administration-proposed legislation

    • 8 month extension until May, 2005

    • What Congress will do is unknown

    • No significant MF changes expected

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    Changing Environment:Reporting & Analysis Changes

    • FHWA will be treating some data differently

      • On-highway public diesel use

      • Alternative fuels reporting

      • Loss allowance treatment

    • Reporting changes

      • Computer security

      • Data uniformity

      • State responsibilities

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    Changing Environment:Gasohol Revenue

    • Hot topic in reauthorization

    • American Jobs Creation Act of 2004

      • Highway Trust Fund compensated for gasohol subsidy

      • How this will be treated administratively is still to be determined

      • Will mean increased revenue to the Trust Fund

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    Changing Environment:Fuel Tax Evasion

    • Federal law changes

      • Mobile machinery

      • Aviation grade kerosene

      • Dye injection equipment

      • Intercity buses

      • Pipeline/vessel registration

      • Other administrative changes

    • Contact: Linda Morris at FHWA

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    In Summary

    • Identified and discussed

      • Accomplishments

      • Challenges

      • Changes in the MF environment

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    FHWA Motor Fuel Reporting:

    Data Submittal Process

    Discussion of Improvements

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    Background I

    • 2002 and beyond motor fuel data submitted electronically

    • Submitted by State DOT’s, DOR’s, or FHWA

    • Form 551M submitted monthly

    • Form 556 submitted annually

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    Background - II

    • Reported using Smart Input Tool

    • Submitted using

      • Spreadsheet view

      • Wizard view

      • Direct XML

    • Instructions for reporting – Guide to Reporting Highway Statistics – Chapter 2

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    Motor Fuel Reporting

    • We begin here……..

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    Motor Fuel Reporting

    • Gallons from tax returns of seller

    • Depending on point of taxation in State:

      • Terminal Holders

      • Wholesalers

      • Retailers

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    Motor Fuel Reporting

    • Gasoline and Gasohol Gross Volume Reported Includes:

      • Fully taxed

      • Exempt sales

      • Fully refunded sales

      • Partially exempted sales

      • Partially refunded sales

      • Taxed at reduced rates

      • Assessments

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    Motor Fuel Reporting

    • Diesel and LPG Gross Volume Reported Includes:

      • Only Highway Use of Diesel and LPG

      • Include Public Use Diesel

      • Revised Chapter 2 of Guide – March 2003

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    Motor Fuel Reporting

    • Other State Fuel Data

      • Alternative fuels

        • Per gallon equivalent

        • Registration fees in lieu of per gallon taxes

      • Aviation Fuels

      • Transit Fuels

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    Motor Fuel Reporting

    • Consistency in Data Entries

      • Enter text and data on same line each month

      • New text and data - Identify the entry in the comments section on page 2

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    Motor Fuel Reporting

    • New Feature in DBMS

      • Data that is incorrectly submitted will be rejected

      • State will be notified that their submittal has been rejected and comments to explain why

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    Motor Fuel Reporting

    • Stop reporting Off-Highway Diesel fuel

    • Enter zero or nothing in the cell(s)

    • Remember to remove the gallons from the Highway Diesel/LPG Gross Volume Reported in line 1

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    Motor Fuel Reporting

    • Report current State tax rates every January, and in any month there is a change

    • Enter all rates that apply in your State

    • Enter the effective date

    • Important because the FHWA DBMS uses these entries as input

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    Motor Fuel Reporting

    • Form Section Defaults Allows you to:

      • Customize the form for your State

      • Set a time period for the custom settings

      • Revise the settings if your State legislature changes motor fuel tax law

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    Motor Fuel Reporting- Conclusions

    • Report accurate data

    • Enter text and data consistently each month

    • Use Form Section Defaults

    • Enter tax rates

    • Stop reporting off-highway diesel

    • New Procedure – FHWA ability to reject data

    • Revised Chapter 2 – March 2003