2

ATTRIBUTION AND APPORTIONMENT OF

FEDERAL HIGHWAY TAX REVENUES:

PROCESS REFINEMENTS

February 2002

Prepared for the

Office of Highway Policy Information

Federal Highway Administration

U.S. Department of Transportation

Washington, D.C. 20590

Prepared by the

Center for Transportation Analysis

Oak Ridge National Laboratory

Oak Ridge, Tennessee 37831

managed by

UT-Battelle, LLC

for the U.S. Department of Energy

under Contract No. DE-AC05-00OR22725
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TABLE OF CONTENTS

EXECUTIVE SUMMARY ....................................................................................................... v

BACKGROUND.................................................................................................................... 1

Historical Perspective ................................................................................................. 1

Revenue Collection .................................................................................................... 2

State Data Reporting.................................................................................................. 4

ATTRIBUTION AND APPORTIONMENT .............................................................................. 8

Attribution Overview.................................................................................................. 8

Preliminary Estimation Procedures.............................................................................. 8

State-by-State Analysis ............................................................................................. 10

Apportionment ........................................................................................................ 14

FHWA REASSESSMENT EFFORTS ...................................................................................... 15

FHWA/AASHTO/FTA Review ..................................................................................... 15

GAO Recommendations........................................................................................... 16

PROCESS REFINEMENTS ................................................................................................... 17

Reporting of Public Use of Diesel Fuel ...................................................................... 18

Accounting for Motor Fuel Losses ............................................................................ 18

Oversight of State-Reported Data............................................................................. 19

Special Fuel Versus Diesel Fuel as an Attribution Issue ............................................... 20

Reporting of Alternative Fuels................................................................................... 21

Accounting for International Fuel Tax Agreement Procedures ................................... 21

Additional Comments Received on the Federal Register Notice ................................. 22

IMPLEMENTATION/ACTION PLAN................................................................................... 24

Motor Fuel Attribution Process Improvement ........................................................... 24

Model Updates ........................................................................................................ 24

Oversight, Training, and Outreach ........................................................................... 25

SUMMARY ........................................................................................................................ 26

SOURCES ........................................................................................................................... 27

APPENDIX A: ACRONYMS ................................................................................................ 29

APPENDIX B: DEFINITIONS .............................................................................................. 30

APPENDIX C: FORMS FOR REPORTING STATE DATA ....................................................... 31

APPENDIX D: FEDERAL HIGHWAY USER FEES ................................................................. 36

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Highway-based excise taxes are paid by highway users, and the

tax revenues are distributed to States for supporting highways,

safety, and transit programs. The processes for collecting these

taxes and redistributing them to the States are very complex.

The U.S. Treasury collects most of the taxes from a relatively

small number of large corporations located in only a few States.

The Internal Revenue Service (IRS) does not have an accurate

picture of where the motor fuel is eventually consumed. Because

the actual State-by-State contributions are not available, detailed

analyses are required to estimate a State’s on-highway motor

fuel use. The attribution process uses State-reported data and

nationally applied statistical models to determine how much fuel

is used on highways in each State and the proportion of each

State’s usage in comparison to the total motor fuel usage

for all States.

Apportionment is the distribution of funds by statutory formula.

Apportionment of funds to the States for four major highway

programs is based on factors from the fuel usage attribution

process. Currently, about $12 billion in highway funds is

distributed based on motor fuel usage data.

On August 17, 2000, a Federal Register notice was issued (65 Fed.

Regist. 50269). The notice, which described proposed revisions

to motor fuel reporting and the attribution process, served also

as a request for comments on the revised methodology. On the

basis of this notice and the resulting comments, certain

processes for collecting and reporting on-highway motor fuel

data will be revised. These process refinements will take effect

when the Federal Highway Administration publishes written

guidance, currently scheduled for June 2002. The new

procedures will improve consistency in reporting tax revenues

among the States and help reduce risks in attribution. This

document describes the new processes for collecting data and

attributing highway trust funds.

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ATTRIBUTION AND APPORTIONMENT OF

FEDERAL HIGHWAY TAX REVENUES: PROCESS REFINEMENTS
6

EXECUTIVE SUMMARY

Federal highway taxes are based on specific tax rates, which differ by type of fuel taxed or by

type of user fee (tires, retail sales, or heavy vehicle-use tax). These taxes, which are ultimately

paid by final users in specific States, are not paid directly by the final users to the Internal

Revenue Service (IRS). Rather, most taxes are collected by the IRS from large corporations

(typically large oil companies or distributors with storage facilities) which have no way to

measure fuel usage within each State. Since State-by-State tax contributions to the Federal

Highway Trust Fund (HTF) cannot be directly measured, other procedures have been

developed to attribute on-highway fuel usage, which is then used to apportion Federal funds

back to the States. Correct State data and precise attribution procedures are extremely

important because apportionments for some highway programs use the percentages of

revenues attributed to each State as factors and because the amount of money to be

distributed is very large (billions of dollars).

States provide consumption and tax data to the Federal Highway Administration (FHWA) on

gallons of gas, gasohol, on-highway diesel, on-highway liquefied petroleum gas, and other

alternative fuels that were consumed in the State. Because State tax data are collected and

organized to administer State programs, the fuel usage data sets submitted to FHWA from the

States differ, sometimes significantly.

To develop a complete and reasonably consistent data set across all States, FHWA must make

adjustments to the State motor fuel data. These adjustments are necessary, for example, to

account for public use of gasoline and special fuels (e.g., State laws differ for government use

of gasoline and government use of diesel fuel), gasoline losses, fuel types (e.g., gasoline,

gasohol at various percentages, special fuels), tax rates (e.g., fully taxed fuels, exempt sales,

partially exempt sales, full and partial refunds, and fuels taxed at reduced rates), and

off-highway fuel use.

Additional Federal non-fuel-based fees are assessed on heavy vehicle use and on the purchase

of heavy vehicle trucks, trailers, and tires. These fees are attributed to States based on special

fuels usage.

The end result of this process is a set of tables that attribute on-highway motor fuel usage, by

fuel type, to States. The Federal-aid highway apportionment process uses revenue and fuel

volume data resulting from attribution to distribute HTF program funds in four categories: the

Surface Transportation Program, Interstate Maintenance, National Highway System, and the

Minimum Guarantee.

The following figures depict an overview of the revenue collection, attribution, and

apportionment processes that are part of Federal highway financing. The first figure is a simple

view of the flows of revenue and data. The second provides a slightly expanded view of the

apportionment process.

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Legislation from the Transportation Equity Act for the 21st Century (TEA-21) increased

significantly the amount of Federal apportionments that rely on the motor-fuel/HTF attribution

process and factors. For example, under the current attribution process, more than $12 billion

are apportioned annually to the States in TEA-21 Federal apportionments, compared to

$1-2 billion annually under preceding legislation. Also, all the States receive Federal

apportionments through this process while under previous legislation only about 20 States did.

This brochure describes the motor-fuel/HTF process including some refinements and

improvements FHWA is making after consultation with the States.

The first two sections of the brochure provide general background on the process; the third

section describes the FHWA reassessment of the process. The fourth section describes

refinements FHWA is making to ensure that data are reported and processed in a consistent

manner. An implementation timetable for these refinements is also included. The fifth section

describes an Implementation/Action Plan that will incorporate the latest in technology and

management processes into the motor-fuel/HTF attribution process.

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1

BACKGROUND

Historical Perspective

The Highway Trust Fund (HTF) was established in 1956 (Public Law 84-627) to ensure a

dependable source of Federal funding to support highway programs. Prior to 1956, motor fuel

and vehicle taxes went to the General Fund; although highway funding was provided from the

General Fund, there was no relationship between fuel tax receipts and highway funding. Since

1956, legislation has periodically extended taxation of motor fuels and the HTF. The

Transportation Equity Act for the 21st Century (TEA-21) extended the HTF through

September 30, 2005.

The HTF currently contains two accounts: the Highway Account and the Mass Transit Account;

this document only concerns funds in the Highway Account. The income and outlays for

transportation have increased steadily over time. The closing balance of funds in the Highway

Account of the HTF remained at around $10 billion from 1983 through 1995. In 2000, the

closing balance in the Highway Account was over $22.5 billion. It is necessary to maintain a

balance of funds in the HTF to be able to meet unpaid commitments. This balance is not

surplus funds because the HTF functions as a reimbursable program and must maintain funds

for reimbursing obligations. The closing balance (income – outlays = closing balance) is shown

in the following chart for 1957 through 2000 (the latest available data).
2

Funds from the Highway Account are distributed to the States for highway use. Under TEA-21,

State-reported motor fuel data have been used, along with other factors, in the apportionment

of these funds for the Surface Transportation Program (STP), the National Highway System

(NHS), the Interstate Maintenance (IM) program, and the Minimum Guarantee.1

The Federal Highway Administration (FHWA) uses motor fuel usage data, supplied by the

States, to determine where (i.e., in which State) motor fuel is being expended for on-highway

use. The current process has been in place since 1985. This process for attributing on-highway

motor fuel usage to the States is explained in the section “Attribution and Apportionment.”

Revenue Collection

The Internal Revenue Service (IRS) collects Federal fuel taxes from large oil companies or large

oil distribution firms with storage facilities prior to distribution of the fuels to customers. The

Federal fuel taxes are imposed when the fuel is first removed from bulk storage and sold.

Although these taxes are “passed on” to the individual purchaser, data at the individual

purchaser level are simply not available.

Additional Federal heavy vehicle non-fuel-based fees include (1) the retail sales excise tax on

tractors and trailers, (2) the tax on heavy vehicle tire sales, and (3) the heavy vehicle-use tax.

Truck registration was once used as a proxy for truck taxes, but was rejected because it did not

accurately reflect on-highway usage in a particular State. In fact, the State where the heavy

vehicle and/or tires are purchased is not necessarily the State in which these purchases will

be used.

The process for collecting Federal motor fuel taxes and user fees, issuing credits, and certifying

receipts is shown in the flow chart below. This process involves four organizations within the

Treasury Department. The final information from Treasury, which documents receipts for the

previous fiscal year, determines the overall level of highway user tax receipts attributed to the

Highway Trust Fund by tax type. This amount represents the total highway program funds

available for apportionment to the States. In addition, the revenue by tax type is used in the

distribution of funds for specific programs; for example, on-highway diesel usage is a factor in

the formula for the NHS program.

1The Minium Guarantee program ensures that each State receives at least 90.5 percent

of its share of contributions to the Highway Account of the HTF.
3
4

Federal tax rates for each of the highway fuels and other highway user fees and the

distribution of these tax revenues into the Highway Trust Fund or other accounts are provided

in Appendix D of this report (reproduced from Table FE-21B from Highway Statistics). The

Federal motor fuel taxes make up about 85% of the HTF’s receipts. The following table shows

actual net Highway Account revenues for 2000 by the fuel or fee category.

State Data Reporting

State-reported motor fuel data is a critical component of the process that distributes HTF

monies to the States. Currently, motor-fuel-based apportionment factors result in the

distribution of about $12 billion for the STP, IM, NHS, and minimum guarantee programs.

Under ideal data conditions, all States would treat motor fuel taxation exactly the same. This is

not, however, the case. Indeed, even though all States must use the same two forms for

reporting motor fuel data to FHWA, significant differences in reporting can occur.

The data reports submitted to FHWA by the States are Form FHWA-551M (“Monthly MotorFuel Consumption”) and Form FHWA-556 (“State Motor-Fuel Tax Receipts and Initial

Distribution by Collection Agencies”). Copies of these forms are shown in Appendix C. Form

FHWA-551M, which is typically completed by the State agency that collects the motor fuel tax,

is sent to the FHWA Office of Highway Policy Information and to the FHWA Division Office. The

form is to be submitted no later than 90 days after the close of the month for which data are

being reported. Unavailable data from one month can be included in the next month’s report,

with notes of explanation included on the second page of the form. FHWA uses these
5

State-reported revisions and corrections of motor fuel data to update the State data files. Data

are currently submitted from the States in several formats – mailed in paper reports, facsimile

paper reports, e-mailed reports, or computer disk reports in spreadsheet format. FHWA is

converting to electronic submissions in calendar year 2002.

The first page of Form FHWA-551M contains columns for entry of gallons of four types of

motor fuel: gasoline, gasohol, highway diesel fuel, and highway liquefied petroleum gases.

The rows of the report provide space for entry of gallons of fuel for each type that meets any

of several State taxation characteristics (e.g., gross volume reported, fully tax exempt gallons,

gross volume taxed, fully refunded gallons, and net volume taxed). The second page provides

space for notes, technical information, and general comments. There is also space for State tax

rates for the various motor fuel types, space for computation of motor carrier gallons, which

are taxed and calculated differently due to International Fuel Tax Agreement (IFTA) reporting.

Finally, there is space for details on State treatment of gasohol by blend ratio.

With the data submitted by the States, FHWA produces a report entitled Monthly Motor Fuel

Reported by States. This monthly report is produced about six months after the month in which

the transactions occur that trigger State taxation of motor fuel. It normally takes States about

three months to administer the tax collection process and produce accurate monthly data. It

then takes about three more months for that data to be reported and placed in FHWAgenerated tabular format. The data on hand from the States at the time of preparation for

publication are included, and States that have not submitted data by that time are, obviously,

not included. Although the data are not consistent or complete at this early stage, they

represent the first place for States to check FHWA motor fuel entries for reasonableness and

consistency with their own records.

Form FHWA-556 is an annual report of State highway-related tax receipts, which is due to

FHWA by April 1 of each year. The form represents motor-fuel tax revenue collections for the

State’s fiscal year. It contains columns for reporting separate receipts for gasoline, special fuels,

and other receipts. Page 2 of Form FHWA-556 provides space for notes and comments.

Instructions for completing both forms are given in Chapter 2 of A Guide to Reporting

Highway Statistics.

A draft summary report is compiled by FHWA about August of each year for the preceding

calendar year. During the next 12 months, the draft report is reviewed and modified, as

necessary, with State participation in the review process. Therefore, the final report on motor

fuel usage for calendar year “xx” is available in August of calendar year “xx + 2.”

A time line of activities is shown in the following figure. The length of time required to obtain

and analyze the States’ data, estimate missing and/or inconsistent data, and coordinate these
6
7

results with updated highway user tax data from Treasury is about two years from the end of a

calendar year. For example, fuel usage for a State for calendar year 1997 was combined with

Treasury information for fiscal year 1998 to provide apportionments to the State for fiscal

year 2000.

Although States report their gallons of fuel used monthly (FHWA-551M) and total tax receipts

(FHWA-556) annually, it is not currently sufficient for FHWA to simply sum up the total gallons

of fuel reported and use that data for attribution. States have very different tax legislation, tax

forms, and administrative procedures. There are significant variations among the States in, for

example, exemptions or refunds for off-highway use or for government use. In order to ensure

more equitable reporting, FHWA must make adjustments to the State data to account for these

discrepancies. These adjustments are part of the attribution procedure, which is discussed in

the next section.
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ATTRIBUTION AND APPORTIONMENT

Attribution is basically the process of determining a State’s on-highway gallons of motor fuel

use by looking at a State’s motor fuel tax data and determining if the fuel represented by the

tax data is used on-highway. The outcome of the attribution process is a set of tables listing

how much fuel of a specific type is used in each State and the proportion of each State’s usage

in comparison to the total usage for all States. The proportion of the gallons of fuel expended

in a State is then used to estimate the Federal Highway Trust Fund receipts attributable to

highway users in each State.

Apportionment is the distribution of funds to the States by statutory formula. Certain

factors in the apportionment formulas of four major highway programs are based on the

attribution tables.

Attribution Overview

Attribution starts when Federal revenue is collected by IRS and assigned to the appropriate tax

category – i.e., gasoline, gasohol, diesel and special fuels, tire tax, truck-tractor and trailer retail

excise tax, and heavy vehicle-use tax. The total funds in each tax category are verified and

reported by IRS; however, IRS has no record of where or how the fuel was consumed.

Therefore, FHWA uses the attribution process to determine on-highway fuel use within each

State. FHWA uses State-reported data and also statistical methods to estimate missing or notreported State data.

The validity of the attribution process is dependent on receiving accurate data from the States.

Typically State revenue departments maintain records according to the legislative requirements

of that State. For example, some fuels may be exempted from tax, or taxes may be refunded,

or the tax rate for a particular fuel may vary depending on the fuel’s use. In some States, these

data do not exist, and FHWA must estimate the data.

Preliminary Estimation Procedures

FHWA completes several steps in the motor fuel analysis process prior to beginning the annual

State-by-State analysis. These steps include an estimation of non-highway fuel uses, public fuel

uses, and gasohol consumption. The estimation models are briefly described below. The

models require data from several outside sources. One major dataset is the Census Bureau’s

Vehicle Inventory and Use Survey (VIUS). This data set contains information on annual vehicle

miles of travel, percent of off-road use, major use of the truck (agriculture, retail, etc.), engine

type, and the State in which the truck is registered. VIUS does not, however, provide a fuel use

breakdown between gasoline and gasohol, on-road versus off-road fuel economy, or a

distribution of off-road travel by State. The VIUS is conducted every five years; the latest survey

was in 1997.
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The vast majority of State-reported motor fuel gallons are for on-highway use. The estimation

process to determine gallons of non-highway gasoline, public fuel use, and gasohol

consumption is needed to ensure consistency. The following chart summarizes the reasons

these three estimation models are needed.

Estimates of off-highway fuel gallons of gasoline and gasohol include fuel used for agricultural,

construction, industrial and commercial, marine, aviation, and off-road recreational purposes.

It should be noted that off-highway use of diesel does not need to be estimated because

FHWA motor fuels reporting procedures do not include gallons of diesel used off-highway.

FHWA estimates the public use of gasoline for the same reasons that it estimates off-road uses

of gasoline. Although the Federal tax code exempts public uses of gasoline, not all States do

so. Thus, it would be inconsistent to use as-reported State data without adjustment. A model

was developed to estimate Federal government civilian highway gasoline usage. When States

report Federal use in excess of the estimation produced by the model, the excess is assumed to
10

be a non-highway usage and is subtracted. State, county, and municipal fuel usage is

generally exempt from State taxes, or taxes may be fully or partially refunded, or taxes may

be imposed at reduced rates. State, county, and municipal use of gasoline is included in

gasoline attribution.

Some States are able to provide data on off-highway and/or public uses of motor fuels. After

the FHWA models have compiled their estimation on a State-by-State basis, FHWA applies

business rules to determine which data to use.

FHWA also needs reliable estimates of gasohol consumption. The Energy Policy Act of 1992

created three types of gasohol for Federal tax purposes – 10, 7.7, and 5.7 percent ethanol by

volume. However, few States recognize or define three types of gasohol in State legislation.

This disconnect in the tax treatment of gasohol requires FHWA to estimate gasohol revenues

attributed to each State using the Federal definitions since attribution is based on Federal

motor fuel tax revenue. Thus, FHWA runs a nationwide model to estimate the number of

gallons of ethanol used within each State. The total number of gallons of ethanol used

nationwide and reported to IRS is used for comparison and for production of a final

percentage of use by State.

State-by-State Analysis

Because of the differences in State data reporting, FHWA evaluates and adjusts the data

submitted by the States. FHWA’s State-by-State analysis is a detailed process, requiring

completion of four worksheets for each State, plus additional calculations in some situations. It

is important to note once again, that the purpose of this process is to attribute to each State

its proportion of on-highway motor fuel usage. This attribution of gallons is based on State tax

information. To obtain equal treatment of all States, adjustments are made to the State reports

to account for unequal reporting of off-highway uses, public uses, and differences in

definitions of gasohol.

The first step in the FHWA annual analysis of a State’s data is to run a summary program of the

monthly FHWA-551M reports for a calendar year. [The State annual summary report (FHWA556) is for a State’s fiscal year, which may be on a calendar basis or may be on some other

annual basis.] Using this calendar year summary, FHWA compares the annual summary totals

based on FHWA-551M monthly reports with the preliminary estimates provided through the

nationwide models for non-highway fuel use, public fuel use, and gasohol consumption.

From the gross gallons reported, FHWA subtracts the gallons of gasoline listed as exempt or

refunded for off-highway purposes or exported to other States and the gallons of diesel listed

as non-highway, public (except transit), and exported. (There has been a change regarding
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reporting of public diesel usage. More information is provided in the section on “Process

Refinements.”) FHWA also examines motor fuel loss allowances. (There has been a change

regarding reportable losses. More information is provided in the section on “Process Refinements.”)

Because IFTA data are available on a quarterly rather than a monthly basis, some months will

contain “spikes.” In addition some States do not report IFTA gallons on FHWA-551M; the

missing IFTA data may be on FHWA-556, or the data may be on supplementary documents.

(FHWA will be providing additional guidance on reporting IFTA data.)

Form FHWA-556 serves as a checkpoint for the time period covered by the State’s fiscal year. It

is used to compare State-reported revenue against State-reported gallons multiplied by the

State’s tax rate. Some States have very complicated tax structures and require additional

special attention.

Generally, State motor-fuel taxes are levied on all consumers, and refunds of the taxes paid or

exemptions to the tax are given for non-highway use of motor fuel. However, not all States

offer refunds or exemptions for all classes of non-highway use, and not all available refunds are

actually claimed. Thus, often the net volume of fuel taxed is not the same as the volume

consumed on highways. Volume of motor fuel consumed on the highways in each State is the

primary data parameter of interest for FHWA purposes. Therefore, various adjustments to the

tax-status information provided by the States are needed to treat States equitably.

By FHWA definition, transit use, regardless of the ownership of the transit system, is treated as

private and commercial use of special fuels. Many States do not report their use of transit

special fuels. Transit motor fuel use is available on the Federal Transit Administration web site,

and States may use this data if they wish.

Aviation gasoline is another fuel tracked by an independent source. Since aviation gasoline is

treated differently than normal gasoline, the U. S. Department of Energy (DOE), Energy

Information Agency, tracks its inventory. FHWA uses this source along with estimation

procedures for determining the stock of aviation gasoline in a State.

While intrastate diesel fuel use is captured under normal State reporting procedures, interstate

use is covered under IFTA procedures. Almost all States and Canadian Provinces now use IFTA

provisions. (The Yukon, Alaska, and Hawaii are the exceptions.) IFTA taxation addresses the

issue of where the fuel is used, rather than where it is purchased. IFTA measures the use of

diesel, gasoline, gasohol, and other special fuels. A problem with IFTA data is the reporting lag.

IFTA processing takes place on a quarterly basis and a State does not know its IFTA net tax

revenue until five to six months after tax liability occurs. Current FHWA guidance asks for State

data within 90 days of the end of the reporting month.
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At this point in the attribution process, the State’s data will have been separated into use (onhighway versus off-highway), fuel type (gasoline, gasohol, special fuels), and tax status based

on public, private, and commercial categories (exempt, refunded, taxed-at-other-rate, etc.). As

a final step, FHWA sums the on-highway gallons to derive a national total for each of the three

motor fuel types and divides each State’s gallons by the total gallons. This percentage is the

State’s share. For the Federal truck tax revenue, each State’s share of special fuels is used to

calculate attribution. This analysis is documented in a draft data report, issued about eight

months after the end of the calendar year being reported. States and the FHWA work together

to review and modify the report as needed. The final version is issued around August, about 20

months following the calendar year being reported.

In summary, the attribution process estimates the gallons of motor fuel used on-highway in

each State. The process uses data reported by the States, develops estimates for unreported

data, and adjusts the data based on consistent definitions. The methodology is sound.

However, improvements in data uniformity, accuracy, and consistency would ensure that each

State receives its share, consistent with Congressional intent. FHWA proposes to provide

improvements in instructions (e.g., a revised Guide to Reporting Highway Statistics) and other

documentation (e.g., IFTA reporting description and a description of FHWA models and

analyses). The purpose of these documentation improvements is to assist the States in

reporting their data.

A flow chart showing the basic steps in the attribution process is shown on the following page.

The boxes on this chart represent actual tables of data; the ovals are steps in the analysis

process as described above. Titles of the tables (e.g., MF-1) shown in the chart are provided in

the table below the chart.
13
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Apportionment

Apportionment is the distribution of funds using a statutory formula. Funds are available for

obligation by the State at the time of apportionment, usually the first day of the Federal fiscal

year (October 1) for which they are authorized. The following table shows the apportionment

formulas, under TEA-21, for the four programs whose funds are distributed, at last partially, on

the basis of fuel use or contribution to the Highway Account of the HTF. Because the

apportionment of funds in these programs is based heavily on the data provided to FHWA by

the States, complete and accurate data are extremely important.
15

FHWA REASSESSMENT EFFORTS

Because TEA-21 increased the importance of motor fuel data as an apportionment factor, the

FHWA initiated a review of the entire motor fuel reporting system and attribution process in

late 1998. Expert support was solicited from the American Association of State Highway and

Transportation Officials (AASHTO) and the Federation of Tax Administrators (FTA). In addition,

State Departments of Revenue, State Departments of Transportation (DOTs), and FHWA field

offices provided technical expertise. Comments were also received during three public

workshops held during late 1999 and early 2000. The General Accounting Office (GAO) also

completed a study in June 2000 identifying concerns with HTF information.2

FHWA/AASHTO/FTA Review

The review conducted by FHWA with assistance from AASHTO and FTA concluded that the

existing motor fuel reporting and fundamental attribution processes were basically sound;

however, some improvements were recommended. Better, more thorough, updated

documentation was needed. The attribution methodology needed process improvements in

reporting, treatment of motor fuel data, and process management. Improved instructions and

advice to the States also could result in improved reporting.

Four specific recommendations resulted from the review:

• Modify the current data reporting and attribution processes to reduce the likelihood of

error;

• Improve the information flow to the States about the attribution process and include the

States in process improvements;

• Develop a “smart system” for reporting and analysis processes and for calculation of

apportionments; and

• Provide training to State and FHWA personnel.

To address these recommendations, both short-term enhancements and long-term strategic

actions have been proposed. These improvements are discussed in the section,

“Implementation/Action Plan.”

2U.S. General Accounting Office (GAO), Highway Funding: Problems with Highway Trust

Fund Information Can Affect State Highway Funds, GAO/RCED/AIMD-00-148, June 2000.
16

GAO Recommendations

The June 2000 GAO report addressed the processes for (1) collecting and reporting accurate

information on highway tax receipts and (2) distributing highway program funds to the States.

The report discussed the Treasury Department’s process for allocating highway user tax

receipts to the Highway Account of the HTF, FHWA’s attribution and appropriation processes

(as discussed in the previous section of this brochure), and the impact of the Treasury and

FHWA processes on the amount of highway funds received by each State.

A discussion of the GAO findings and recommendations for improvements to the Treasury

Department’s processes is not included here. The GAO report expressed two concerns about

the reliability of the FHWA attribution process:

• State data were not thoroughly and independently reviewed to verify their accuracy,

reliability, and consistency; and

• The FHWA attribution methodology (1) was not fully documented or independently

reviewed, (2) was very complicated, using almost 200 formulas to accommodate for

differences among States’ taxation laws and methods, and (3) had been repeatedly

“patched” over the years to adapt to new laws and program requirements.

GAO provided four specific recommendations to address these concerns:

• Ensure that detailed independent verifications of motor fuel data are performed for each

State, perhaps on a rotational basis over a period of years;

• Fully document the methodologies, processes, procedures, and rationale for attribution;

• Conduct an independent, comprehensive review of the attribution models and

methodology; and

• Evaluate the potential use of IRS data systems currently under development which may

provide data on highway motor fuel usage.

FHWA agrees with these conclusions and is implementing actions to address each

recommendation. These plans for improvement are discussed in the section, “Implementation/

Action Plan.”
17

PROCESS REFINEMENTS

Based on FHWA’s reassessment of the reporting and attribution process and on the GAO study,

several specific issues were identified. These issues were published in a Federal Register notice

for public response.3 Sixteen States provided comments on the issues provided in the Federal

Register. Two additional issues were also raised by commenters. The comments may be found

at http://dmses.dot.gov ; search for docket number FHWA-2000-7635. All of the issues are

discussed below. Certain process refinements are required to address these issues; these

changes are explained in the following sections.

Some of the issues concern the data reported by the States. Because of differences in State

laws, States collect different types of data. Chapter 2 of A Guide to Reporting Highway Statistics4

provides instructions for completing Forms FHWA-551M and FHWA-556.

An implementation timetable for the process refinements is shown in the following table.

3U.S. Department of Transportation, Federal Highway Administration, “Highway Motor

Fuel Reporting Reassessment; Public Workshop,” Federal Register, Vol. 65, No. 160, August 17,

2000, pp. 50269-50272.

4U.S. Department of Transportation, Federal Highway Administration, A Guide to

Reporting Highway Statistics, http://www.fhwa.dot.gov/ohim/hsguide/tocpref.pdf
18

Reporting of Public Use of Diesel Fuel

In the past, FHWA instructions to the States called for the inclusion of private and commercial

diesel gallons but excluded public diesel gallons. Changes in historical methods for collecting

diesel taxes and differences among States concerning tax exemptions for public diesel use

have increased the need for a more refined method of reporting diesel fuel usage. Only about

seven States can separate public diesel usage from other uses and report the usage correctly

according to instructions.

Process Refinement: To ensure equity and consistency, FHWA will utilize total onhighway diesel fuel usage, including private, commercial, and public uses.

Other methods exist for ensuring equity among the States. For example, FHWA could require

that States implement procedures to collect the appropriate information, or FHWA could

estimate the information for the States. The process refinement noted above involves the least

State reporting burden, the least expense, and the most reliable results. Many States do not

separately identify publicly used diesel motor fuel. In addition, there would be a reporting

burden on counties and school districts reporting to the State.

In comments on the Federal Register notice, five States opposed the proposed change. These

five States expressed concerns of not being able to report on gallons of diesel used by public

entities because the public use of diesel fuel in these States is currently not taxed and there is

no mechanism for obtaining usage reports. One additional concern was that the revision could

impact smaller rural States that have a small public use of diesel.

Although these five States opposed the change, other States specifically mentioned that this

process refinement would appear to provide equitable treatment.

Accounting for Motor-Fuel Losses

Motor fuel may be lost by leakage from storage tanks, spillage, fire, or other means; in

addition, measurement differences brought about by temperature or other conditions and

meter faults can result in apparent losses. Because this lost fuel is neither consumed on the

highway nor used for off-highway purposes, it presents a problem for determining the

appropriate base for taxation. In the past, FHWA allowed States to report actual losses or a

percentage loss, which was capped at 1%. Usage data for States that did not report losses

were not adjusted by FHWA to account for losses. In addition, diesel losses were not

considered significant and were not counted. During the reassessment meetings and in the
19

Federal Register notice of August 17, 2000, it was recommended that actual diesel losses also

be documented and reported. However, because diesel reporting accounts for actual onhighway fuel use, a reporting of diesel losses is unnecessary.

Process Refinement: To ensure equitable and consistent reporting, States will

report actual losses of gasoline. FHWA will discontinue calculating percentage

losses; no percentage losses will be allowed.

On comments to the Federal Register notice, three States opposed the change in percentage

allowances. These States were concerned that the change would confuse distributors who are

accustomed to taking a flat percent loss allowance. Other States supported the change.

Oversight of State-Reported Data

For decades, States reported motor fuel usage data to FHWA for record-keeping purposes and

publication in Highway Statistics. During the past two decades, this data has been increasingly

used for apportioning highway funds to the States. Responsibility for oversight of Statereported motor-fuel data is an FHWA Division Office responsibility. Currently, FHWA Division

Offices conduct motor-fuel reviews on a three-year cycle. The purpose of these reviews is to

address key reporting issues, help the FHWA evaluate the quality of the data being submitted

by the States, and identify problem areas. The GAO report mentioned earlier concluded that

the FHWA needed to ensure that State data were independently verified. Enhanced FHWA

oversight of State-reported motor-fuel data is beginning in FY 2002. Baseline oversight reviews

will be conducted using the continuous process improvement technique and risk assessment

as tools.

Another potential data verification tool is the Excise File Information Retrieval System (ExFIRS).

ExFIRS is a tracking and reporting system developed cooperatively by the IRS, U.S. DOT, States,

and the motor fuel industry. The purpose of ExFIRS is to ensure proper payment of excise taxes

on motor fuels. ExFIRS contains several modules, one of which is the Excise Summary Terminal

Action Reporting System (ExSTARS). ExSTARS collects and analyzes data on fuel delivery into

terminals (about 1300 nationwide), fuel inventory balances, and fuel destination information.

ExSTARS then compares this information with taxpayers’ Federal Excise Returns. ExFIRS was

demonstrated as a prototype in 1995; actual development began in FY98 with

a 5-year development timeframe. ExSTARS, planned as the first module for development,

officially started March 31, 2001. About 20 major oil companies are submitting data

for testing.
20

Process Refinement: To ensure appropriate oversight of State-reported data, FHWA

Division Offices will be conducting bench-marking motor-fuel reviews and

establishing a plan for continuous process improvement. In addition, training

and technical assistance in the implementation of periodic reviews will be

provided to the FHWA field offices. Finally, FHWA will disseminate the preliminary

attribution data early (February to June) for verification by the States. Thus, the

States can provide comments, revisions, or concerns to the FHWA prior to the

data’s use in the appropriation process. This process will either be part of the

preliminary notice of apportionment or will be part of a separate motor-fuel

verification process.

States generally agreed that oversight and verification is important. The methodology for

conducting the oversight was not generally agreed upon. Two States did not support the use

of ExSTARS data for verification because they do not believe that it will be accurate enough to

be useful. FHWA will continue to monitor ExSTARS.

Special Fuel Versus Diesel Fuel as an Attribution Issue

Historically, the FHWA has allowed States to report gallons of diesel fuel together with small

amounts of other special fuels and has labeled the total “special fuels.” These special fuels

include liquefied petroleum gases (LPG), compressed natural gases (CNG), liquefied natural

gases (LNG), 85% alcohol mixtures, and other fuels. The language of TEA-21 directs that the

amount of diesel fuel used on highways be used as one factor (worth 30%) in apportioning

NHS funds. The language does not include LPG and other fuels, which implies that these

special fuels should not be reported as part of the diesel gallons. Unfortunately, about half of

the States do not, or cannot, separately identify these other special fuels from the diesel. In

addition, the amounts of these special fuels are estimated to be very small (less than 2%).

Process Refinement: No change; the FHWA will retain its current reporting

position and not require States to split diesel and other special fuels. For those

States that can readily provide information on a variety of alternative fuels, the

FHWA will request that they report this information so FHWA can monitor the

use of special fuels.
21

No States responding to the Federal Register notice disagreed with the FHWA assessment

that it would be too difficult to capture the data necessary to separate diesel and special

fuel gallonage.

Reporting of Alternative Fuels

Alternative fuels, such as 85% ethanol (E85), 85% methanol (M85), LPG, LNG, and CNG, are

currently a very small portion of the motor fuels used on highway. Trends indicate, however,

that the use of alternative fuels is growing. Although gallons is the traditional unit for

measuring fuels, some alternative fuels are compressed gases which are measured in other

units. In addition, some States impose taxes for alternative fueled vehicles in the form of

registration fees rather than on a per-gallon basis. Although these receipts are reported to

FHWA as State revenue, no gallons of highway fuel are reported or shown in the consumption

and attribution tables. For States that report “gallons” of fuel use rather than a registration

fee, E85 and M85 fuels are reported with State-reported gallons of gasoline, and CNG and

LNG are reported as LPG. These amounts are reported in FHWA tables and used in the

attribution process.

Process Refinement: The FHWA will revise the method for reporting alternative

fuels and will develop a methodology for reporting motor fuel gallons for use

by those States that have a registration fee in lieu of per gallon taxes on

alternative fuels.

Only one State opposed mandatory reporting. This State currently has a tax structure for

alternative fuels and is concerned that the Federal methodology might require major

changes in its current reporting system. All other commenting States agreed with the

proposed change.

Accounting for International Fuel Tax Agreement Procedures

IFTA is a motor fuel accounting process which became mandatory in 1996 and is now

used in all States. Under IFTA, carriers report the distances trucks travel in all States and

Provinces in which they operate. They pay fuel taxes in their base State (where the carrier’s

business is headquartered). Then, on a quarterly basis, the States adjust the motor carrier tax

revenues among themselves to allocate motor fuel taxes to the State in which the travel

actually took place.
22

FHWA requires the States to report adjusted gallons, adding in and subtracting out gallons of

fuel based on the adjusted tax receipts sent to and received from other States. Accurate and

timely reporting of the IFTA adjustments is important.

Process Refinement: The FHWA will implement actions to document State

practices in reporting IFTA data to the FHWA. This documentation will describe

how States collect IFTA revenue, how States separate out revenues not related to

the gallons of motor fuel and motor fuel taxes, how they calculate net gallons

and revenues, and the time required to process IFTA data and report to the

FHWA. FHWA will suggest alternatives for IFTA calculations if full data are not

available. These actions will improve FHWA’s instructions to States for reporting

IFTA data.

No States disagreed.

Additional Comments Received on the Federal Register Notice

Two additional comments were received which were not included as issues in the original

notice. One State suggested that the FHWA should provide additional guidance and

procedures to address issues related to motor fuel sold on Native American Tribal Lands. In

addition, one State expressed concern over the recent efforts to convert from the gasoline

additive Methyl Tertiary Butyl Ether (MTBE) to ethanol and the impact that this change will

have on the receipts assigned to the HTF.

Native American Tribal Lands Comment

As with State and local government uses, fuel purchased for Native American government uses

is exempted from Federal tax. In the past few years, some Native American tribes have

purchased motor fuel for resale or for uses associated with tribal business (e.g., casinos). In

many cases, the State and Native American representatives have agreements for reporting this

data; in other cases, they do not. If the States do not receive the data, they cannot report the

gallons to FHWA, and therefore they do not receive credit for this on-highway fuel usage

during attribution. Obviously, this is a disadvantage for the State.

There is currently no statistical model available to estimate this fuel use. It is possible that the

ExSTARS may provide data on fuel shipped to Native American reservations. FHWA wants
23

States to report gallons of motor fuel sold on reservations and will work to resolve

the problems.

MTBE Comment

In November 1998, a Blue Ribbon Panel was appointed by the Environmental Protection

Agency (EPA) to examine the effects of MTBE, an oxygenate added to reformulated gasoline to

reduce air pollutant emissions. Although the Panel found that reformulated gas provides

considerable air quality improvements they also recommended that the use of MTBE as a

gasoline additive be substantially reduced because of water quality problems.5

One State expressed concern that a conversion from a gasoline/MTBE fuel to a gasohol or

ethanol fuel would have an adverse effect on receipts to the HTF and on a particular State’s

contributions. The concern was based on (1) the lower tax rate on ethanol fuels, and (2) the

transfer of a larger percentage of the gasohol taxes (than for gasoline) to the General Fund of

the Treasury.

There is no process revision based on this concern. Several factors will contribute to the actual

impact of any change in fuel composition based on MTBE. The Minimum Guarantee will tend

to make up what the State may lose through converting to gasohol or ethanol fuels. A State’s

losses may also depend on which States impose MTBE bans, and precisely which oxygenate, if

any, replaces MTBE.

5

 U.S. Environmental Protection Agency, “The Blue Ribbon Panel on Oxygenates in

Gasoline: Executive Summary and Recommendations,” July 27, 1999.
24

IMPLEMENTATION/ACTION PLAN

As noted in the section “Process Refinements,” the basic attribution process is valid; however,

improvements are desirable and technological advancements can contribute to the FHWA

objective of providing better data in an earlier timeframe. Thus, FHWA developed an

implementation plan for FY2001-2003 to address improvements in three areas – the motor

fuel attribution process; model revisions; and oversight, training, and outreach. Process

refinements noted in the previous section are part of the overall implementation plan.

Motor Fuel Attribution Process Improvement

Several actions are being implemented to improve the attribution process. To ensure that

States understand the process, additional documentation has been and is being developed.

This additional documentation includes, for example, the pamphlet, “Your States Share –

Attributing Highway Trust Funds to the States” (http://www.fhwa.dot.gov/ohim/attrib.htm)

and this booklet. Also, additional instructions on how to complete forms FHWA-551M

and FHWA-556 will be provided in a revision of Chapter 2 of A Guide to Reporting

Highway Statistics.

System improvements are also being planned and implemented. A new tool is being

developed for States to use in submitting their data. The first stage of this information system

tool was released in December 2001. States will begin using this tool, which is

on-line at http://apps.fhwa.dot.gov/motorfuel, in January 2002.

Because of differences in State tax laws and regulations, State data reporting can be

inconsistent. An AASHTO survey (February 2000) identified several areas in which State

reporting may be at risk for data errors. The use of IFTA for reporting diesel fuel usage among

the States is one avenue that is being evaluated. By 2003, FHWA will examine methods for

reporting alternative fuels to improve the information on usage of non-traditional fuels.

Finally, FHWA has contracted with an independent agency to conduct a thorough review of

the attribution methodology. This assessment will include a risk analysis and examine the

process from a multi-disciplinary viewpoint, considering, for example, areas of accounting,

information management, and statistical models.

Model Updates

Currently, as noted in the section on “Attribution and Apportionment,” FHWA uses several

sophisticated models to achieve uniformity needed for equitable funds distribution. Between

now and 2003, FHWA will update the existing models as necessary and will investigate

alternative approaches to the use of the current models. In Spring 2002, FHWA is sponsoring a
25

workshop for States and other partners on alternative methods for developing models and

using model data. Additional models may be developed if necessary. The goal is to provide

States with the tools needed to provide FHWA with more accurate information.

Oversight, Training, and Outreach

In early 2001, a working group of FHWA Field and Headquarters staff was convened to

develop a methodology for verification of State-reported data. Responsibility at the FHWA

Division level, use of the continuous process improvement technique and risk assessment as

tools, and the requirement for a “baseline” review during FY 2002 were the principal

recommendations of this working group. Beginning in FY 2001 and continuing through

FY 2003, FHWA plans to provide additional training in all aspects of collecting and preparing

motor fuel data reports. Outreach sessions were held in FY 2000 and FY 2001 concerning

reassessment and proposed process refinements; further workshops are planned to provide

additional outreach.

As noted above, FHWA has taken a phased approach to implementing improvements. Shortterm efforts have been put into effect to ensure that the information used for FY 2002 and

FY 2003 is reliable. In addition, long-term planning to refine the process, reduce State burden,

and use current information technology has been initiated.
26

SUMMARY

In an attempt to continually provide updated information to the States, this document

presents an overview of the attribution process, outlines recommendations of recent program

assessments, and describes process refinements. Accurate, timely, and complete State data

lead to equitable attribution of a State’s on-highway motor fuel use and accurate

apportionment of Federal highway tax revenues.
27

SOURCES

Microsoft Corporation. “Gasohol,” Microsoft Encarta Online Encyclopedia 2001,

http://encarta.msn.com .

U.S. Department of Transportation, Federal Highway Administration, A Guide to Reporting

Highway Statistics, http://www.fhwa.dot.gov/ohim/hsguide/tocpref.pdf.

U. S. Department of Transportation, Federal Highway Administration, Financing Federal -Aid

Highways, FHWA-PL-99-015, August 1999.

U. S. Department of Transportation, Federal Highway Administration, Highway Statistics 1999,

FHWA-PL-00-020, November 2000; Highway Statistics 2000, DRAFT.

U. S. Department of Transportation, Federal Highway Administration, “Highway Motor Fuel

Reporting Reassessment; Public Workshop,” Federal Register, Vol. 65, No. 160, August

17, 2000, pp. 50269-50272.

U. S. Department of Transportation, Federal Highway Administration, Primer: Highway Trust

Fund, http://www.fhwa.gov/policy/primer98.pdf, November 1998.

U. S. Department of Transportation, Federal Highway Administration, “Your State’s Share:

Attributing Federal Highway Revenues to Each State,”

http://www.fhwa.dot.gov/ohim/attrib.htm .

U.S. Environmental Protection Agency, “The Blue Ribbon Panel on Oxygenates in Gasoline:

Executive Summary and Recommendations,”

http://www/epa.gov/otaq/consumer/fuels/oxypanel/rec721.pdf , July 27, 1999.

U.S. General Accounting Office (GAO), Highway Funding: Problems with Highway Trust Fund

Information Can Affect State Highway Funds, GAO/RCED/AIMD-00-148, June 2000.
29

APPENDIX A. ACRONYMS

AASHTO American Association of State Highway and Transportation Officials

CNG Compressed Natural Gases

CVO Commercial Vehicle Operation

DOE Department of Energy

DOT Department of Transportation

E85 85% Ethanol, 15% Gasoline

EPA Environmental Protection Agency

ExFIRS Excise Files Information Retrieval System

ExSTARS Excise Summary Terminal Activity Reporting System

FHWA Federal Highway Administration

FTA Federation of Tax Administrators

GAO General Accounting Office

HTF Highway Trust Fund

IFTA International Fuel Tax Agreement

IM Interstate Maintenance

IRS Internal Revenue Service

LNG Liquid Natural Gases

LPG Liquefied Petroleum Gases

M85 85% Methanol, 15% Gasoline

MTBE Methyl Tertiary Butyl Ether

NHS National Highway System

ORNL Oak Ridge National Laboratory

STP Surface Transportation Program

TEA-21 Transportation Equity Act for the 21st Century

VIUS Vehicle Inventory and Use Survey

VMT Vehicle Miles Traveled
30

APPENDIX B. DEFINITIONS

Allocation An administrative distribution of funds among the States for programs

that do not have statutory distribution formulas

Apportionment The distribution of funds as prescribed by a statutory formula; a “line

of credit”

Appropriation Legislation that makes funds available for expenditure with specific

limitations; legislation that provides for States to be reimbursed

Attribution A process that (1) uses State-reported motor fuel tax revenue data,

estimates missing data, and adjusts the data as required to determine

on-highway use of motor fuels within each State; (2) uses this

determination to find the proportion of each State’s usage in

comparison to all other States; and (3) attributes the Federal Highway

Trust Fund receipts to highway users in each State

Authorization An Act that allows a program to start and establishes a level of funds

that may be used

Ethanol An alcohol (CH5OH) distilled from renewable sources such as grain,

sugar crops, or almost any starchy plant

Gasohol A blend of unleaded gasoline and alcohol (ethanol or methanol); the

percentage of alcohol content varies

Highway Trust Fund An account established by law to hold Federal tax revenues dedicated

for highway and transit purposes

Methanol An alcohol (CH2OH) produced from coal and organic wastes, especially

waste-wood products

Minimum Guarantee Funding provided to ensure that States receive a certain share of the

total Federal-aid highway program, that they receive a minimum return

on their contributions to the Highway Account of the Highway Trust

Fund, and that no State receives less than $1 million per year in

minimum guarantee funds

State For purposes of apportioning funds under Sections 104 and 105 of Title

23, U.S. Code, any of the 50 States plus the District of Columbia

Trust Funds Accounts established by law to hold receipts collected by the Federal

Government and earmarked for financing special purposes

and programs

Definitions in this list were derived from the following sources: Financing Federal -Aid

Highways, FHWA-PL-99-015, August 1999; Primer, Highway Trust Fund, Federal Highway

Administration, Office of Policy Development, http://www.fhwa.gov/policy/primer98.pdf,

November 1998; Microsoft Encarta Online Encyclopedia 2001, http://encarta.msn.com.
31

APPENDIX C. FORMS FOR REPORTING STATE DATA

Copies of the two forms used by States to report motor fuel use are attached. FHWA-551M

reports a monthly consumption of motor fuel (2 pages) and FHWA-556 (2 pages) reports

annual tax receipts, on the basis of a State’s fiscal year.
32

The public report burden for this information collection is estimated to average 6 hours

State Name

Year

MONTHLY MOTOR-FUEL CONSUMPTION

Month of Sale or Transfer

Units (check one)

 Gallons

 Liters

 Private and Commercial

 Item Line Gasoline Gasohol Highway Highway Total

No. Diesel Liquefied Petroleum Gases

(1) (2) (3) (4) (5)

1. Gross Volume Reported 01

2. Fully a. Losses-Flat % 21

 Tax b. Losses-Actual 22 

 Exempt c. Federal 23

d. 24

e. 25

f. 26

g. 27

h. 28

i. 29

j. Total (a. thru i.) 30 

3. Gross Volume Taxed (1.-2.j.) 40

4. Fully a. Agriculture 51 

 Refunded b. Aviation 52

c. Industrial/Commercial 53

d. Construction 54

e. Marine 55

f. 56

g. 57

h. 58

i. 59

j. 60

k. 61

l. 62

m. 63

n. 64

o. 65

p. 66

q. 67

r. 68

s. 69

t. Total (a. thru s.) 70 

5. Net a. At Full Rate 81

 Volume b. Aviation 82 

 Taxed c. 83

d. 84

e. 85

f. 86

g. 87

h. 88

i. 89

j. Total (a. thru i., 3.-4.t.) 90 

6. Source a. Agency Preparing this Report

b. Compiled under Direction of

Form FHWA-551M (Rev. 3/96)
33

State Name

0

NOTES AND TECHNICAL INFORMATION Year

0

Month

0

1. Rate of tax at end of month, in cents per gallon or liter.

 (If tax is ad valorem, post percentage, and briefly explain basis

below.)

Rate Effective

(cents) Date

a. Gasoline 0 mm/dd/yy

b. Gasohol 0 mm/dd/yy

c. Diesel 0 mm/dd/yy

 d. LPG 0 mm/dd/yy

e. CNG 0 mm/dd/yy

f. M85 0 mm/dd/yy

 g. E85 0 mm/dd/yy

h. LNG 0 mm/dd/yy

i. 0 mm/dd/yy

 j. 0 mm/dd/yy

2. Computation of gross volume reported (page1, item1.)

Gasoline Special Fuels

Gross sales from sellers' returns 0 0

Plus: IFTA fuel used in State (from users' returns) 0 0

Less: IFTA fuel purchased tax paid in State (from users' returns 0 0

= Gross consumption in State (Enter on page 1, item 1.) 0 0

Interstate motor-carrier (fuel use tax) fuel volume shown above covers period:

 (Specify month or months covered)

3. Stratification of Gasohol by Blend Ratio

The gasohol volume shown on page 1, column (2) includes:

 (Show actual/estimated volume or percentage shares)

Percent Volume Percentage Share

Alcohol

5.7-7.6% 0 0.0%

7.7-9.9% 0 0.0%

 10 + % 0 0.0%

4. Notes and Comments

Form FHWA-551M (Rev. 3/96) 2
34

The public report burden for this information collection is estimated to average 12 hours. FORM APPROVED OMB NO. 2125-0032

STATE NAME:

STATE MOTOR-FUEL TAX RECEIPTS AND

INITIAL DISTRIBUTION BY COLLECTION AGENCIES YEAR ENDING (mm/yy):

VOLUME TAXES

OTHER

ITEM GASOLINE SPECIAL FUELS RECEIPTS TOTAL

(A) (B) (C) (D)

1. Receipts for Year

a. (1) Gross collections by distributor

Volume (2) Less: distributor allowance for collection expense

Tax (3) Gross receipts by State (1) - (2) 

Collections (4) Less: refunds and credits

(5) Net receipts (3) - (4) 

b. (1) Distributor and dealer licenses

All Other (2) Motor-fuel inspection fees

Receipts (3) Fines, penalties, and interest

Under Motor- (4) Motor-carrier fuel tax registration (decals)

Fuel Tax (5) Alternative fuel tax decals (inlieu of volume tax)

Laws (6)

(7)

(8) 

(9)

(10) Total (1) thru (9) 

c. Net Total Receipts a. + b. 

2. Nonhighway a.

Dedications of b.

Volume Tax c.

from Nonhighway d.

Gasoline e. Total a. thru d. 

3. Adjusted Total Receipts 1 - 2 

4. Deductions a. Expense of Collecting & Administering Volume Taxes

by State b. Expense of Inspecting Motor Fuel

Collecting c.

Agency _ d. Total a. + b. +c. 

5. Net Proceeds Available for Distribution 3. - 4. 

6. Balance Undistributed at End of Previous Year

7. Total Funds Available for Distribution 5. + 6. 

8. Amounts Distributed (Specify Fund or Purpose)

a.

b.

c.

d.

e.

f.

g.

h.

i.

j.

k. Total a. thru j. 

9. Balance Undistributed at End of Year 7. - 8. 

_ If collecting agency activities are funded by another revenue source, note this fact and provide the actual collection and administrative expenses

in a footnote.

Form FHWA-556 (Rev 07-2000) PREVIOUS EDITIONS OBSOLETE Excel (Next page)
35

STATE NAME:

STATE MOTOR-FUEL TAX RECEIPTS AND 0

INITIAL DISTRIBUTION BY COLLECTION AGENCIES YEAR ENDING (mm/yy):

0

RECONCILIATION BETWEEN FHWA-551M VOLUME AND FHWA-556 COLLECTIONS MAY BE SHOWN HERE, OR IN AN ATTACHMENT.

INTERSTATE MOTOR-CARRIER FUEL TAX (FUEL USE TAX) RECEIPTS:

Gasoline Special Fuels

 IMC fuel tax receipts

 Less: IMC refunds and credits

 Net IMC fuel tax receipts 

Notes and Comments:

COLLECTING AGENCY:

INFORMATION FROM RECORDS OF:

COMPILED UNDER DIRECTION OF:

Form FHWA-556 (Rev. 12-96)
36

FEDERAL HIGHWAY-USER FEES 1/

OCTOBER 2001 TABLE FE-21B

DISTRIBUTION OF TAX

HIGHWAY TRUST FUND

USER FEE TAX EFFECTIVE HIGHWAY MASS GENERAL

RATE DATE ACCOUNT TRANSIT FUND

ACCOUNT

LEAKING

UNDERGROUND

STORAGE

TANK

TRUST FUND

Fuel Taxes (Cents per Gallon)

Gasoline 18.3 01/01/96 12 2 - 4.3

18.4 10/01/97 1 5.44 2.86 0.1 -

Diesel and Kerosene fuel 24.3 01/01/96 18 2 - 4.3

24.4 10/01/97 2 1.44 2.86 0.1 -

Special fuels 2/ 3/ 18.3 01/01/96 12 2 - 4.3

 Liquefied Petroleum Gas 13.6 10/01/97 1 1.47 2.13 - -

 Liquefied Natural Gas 11.9 10/01/97 1 0.04 1.86 - -

 Other Special Fuels 18.4 10/01/97 1 5.44 2.86 0.1 -

Neat alcohol (85% alcohol) 3/ 4/ 9.25 10/01/97 7.72 1.43 0.1 -

Compressed natural gas 5/ 4.3 10/01/93 - - - 4.3

4.3 10/01/97 3.44 0.86 - -

Gasohol 6/

 10 percent gasohol made with 12.9 01/01/96 3.4 2 0 7.5

 Ethanol 13 10/01/97 6.94 2.86 0.1 3.1

13.1 01/01/01 7.64 2.86 0.1 2.5

 7.7 percent gasohol made with 14.142 01/01/96 5 .242 2 0 6.9

 Ethanol 14.242 10/01/97 8 .782 2.86 0.1 2.5

14.319 01/01/01 8 .859 2.86 0.1 2.5

 5.7 percent gasohol made with 15.222 01/01/96 6 .322 2 0 6.9

 Ethanol 15.322 10/01/97 9 .862 2.86 0.1 2.5

15.379 01/01/01 9 .919 2.86 0.1 2.5

Other Taxes - All Proceeds to Highway Account

Tires 0-40 pounds, no tax

Over 40-70 pounds, 15 cents per pound in excess of 40

Over 70-90 pounds, $4.50 plus 30 cents per pound in excess of 70

Over 90 pounds, $10.50 plus 50 cents per pound in excess of 90

Truck and trailer sales 7/ 12 percent of retailer's sales price for tractors and trucks over 33,000 pounds gross vehicle weight

(GVW) and trailers over 26,000 pounds GVW

Heavy vehicle use Annual tax:

Trucks 55,000-75,000 pounds GVW, $100 plus $22 for each 1,000 pounds (or fraction thereof) in

 excess of 55,000 pounds

Trucks over 75,000 pounds GVW, $550

1/ Source: Office of Hig hway Policy Information, Federal Highway Administration.

2/ Special fuels include benzol, benzene, naphtha, liquefied petroleum gas, casing head and natural gasoline, or other liquid used fuel in a

motor vehicle except diesel, kerosene, gas oil, fuel o il, or a product taxable under the gasoline tax provisio ns. Prior to October 1, 1997, most

special fuels were taxed at a single rate. Exceptions were LPG, which was not subject to the LUST tax, and neat alcohols, which are taxed at

various rates depending on type and source of alcohol. Beginning October 1, 1997, LPG and LNG are taxed based on their energy content

relative to gasoline. Other special fuels, with the exceptio n of neat alcohols, are taxed at the basic special fuels rate.

3/ Neat alcohol made with alcohol derived from petroleum products (M85) is taxed as a special fuel.

4/ In 1996, only $166,000 was collected by Internal Revenue Service for taxes on neat alcohol and some other miscellaneous sources. There

is no accurate way to distribute miscellaneous taxes to specific funds or accounts.

5/ Compressed natural gas is taxed 48.54 cents per thousand cubic feet (MCF), with the Mass Transit Account receiving 9.7 cents per MCF

and the Highway Account receiving 38.83 cents per MCF. Roughly converting these amounts to cents per gallon results in the entries in the

table above.

6/ Section 1920 of the Energy Policy Act of 1992 expanded the definition of gasohol effective January 1, 1993. Prior to the Act, gasohol was

defined as a blend of gasoline and at least 10 percent fuel alcohol (by volume), and blends containing less than 10 percent alcohol were taxed

as gasoline. Under the Act, the product now called 10 percent gasohol corresponds to the old definition. Two additional types of gasohol are

also defined. The term 7.7 percent gasohol includes gasoline-alcohol blends where the alcohol content is at least 7.7 percent but less than 10

percent. The term 5.7 percent gasohol includes gasoline-alcohol blends where the alcohol content is at least 5.7 percent but less than 7.7

percent.

7/ Section 1401 of the Taxpayer Relief Act of 1997 replaced a mechanism by which the fair market value of tires exceeding 40 pounds was

deducted from the fair market value of a truck and replaced it with a credit for the excise tax paid . This provision was effective January 1,

1998.

APPENDIX D. FEDERAL HIGHWAY USER FEES