GAO: Airports, FAA Missing Out on Billions in Taxes Collected From Truckers
A Government Accountability Office report released this week estimated that since fiscal 2006, between $1 billion and $2 billion in noncommercial jet fuel taxes that should have been transferred from the Highway Trust Fund to the Airport and Airway Trust Fund — which funds FAA as well as provides grants-in-aid to the nation’s airports — wasn’t.
A mechanism was put in place by Congress beginning in fiscal 2006 because of federal officials’ concerns that truckers and trucking companies were avoiding paying a 2.5-cents-a-gallon higher tax on diesel fuel by using jet fuel.
The mechanism was to assess a tax of 24.4 cents a gallon on both diesel and jet fuel, and divert the jet fuel tax to the highway trust fund.
Once providers of jet fuel filed for a 2.5-cents-a-gallon refund with the Internal Revenue Service, the jet fuel tax would then be transferred to the airport fund.
But the GAO report said half of the providers of jet fuel haven’t claimed refunds to the IRS for each gallon of jet fuel they dispensed, so that money stayed in the highway fund.
While “there are some companies that do it [file refunds],” National Air Transportation Association Senior Vice President William Deere said Aug. 11, there are other, smaller jet fuel providers that “don’t want to go through the paperwork hassle for 2.5 cents a gallon, and possibly expose themselves to an [IRS] audit.”
The report said that “fuel diversion” by truckers likely hasn’t occurred because the retail price of jet fuel, on average, was $2 a gallon higher than diesel fuel between 2002 and 2015, and changes to diesel engines since 2007 “discourage jet fuel diversion.”
“This policy serves no practical purpose in the real world and has accomplished nothing short of robbing the aviation industry of billions of dollars over the past decade,” U.S. Rep. Mike Pompeo (R-Wichita) said in a statement this week.
Jim Coon, senior vice president of government affairs at the Aircraft Owners and Pilots Association, said Aug. 11 that the GAO report “validated what we’ve been saying for the past 10 years,” which is that no fuel diversion ever really occurred.
What’s more, the airport trust fund is losing tens of millions of dollars annually for things such as new runways and equipment at airports across the country.
“It’s very frustrating and very unnecessary,” Coon said. “From our position, we need to put trust back into the trust fund and correct this.”
Pompeo officials said Aug. 11 that they are expecting to introduce “a legislative fix” in the next few months.
