Issues in Estimating State Motor Fuel Tax Evasion

This paper summarizes some findings from part of a National Cooperative Highway Research Program (NCHRP) project to identify and quantify rates of state motor fuel tax evasion. The objective of the overall research project is to develop and demonstrate a methodology for identifying and quantifying state-level fuel tax evasion. The first phase was to determine methods of evasion and factors that might influence the magnitude of evasion. This paper provides a summary of the major findings from the first phase of the project. Issues were identified and a set of interviews were conducted to determine tax administrator and industry perspectives on some of the issues relating to the methods of fuel tax evasion at the state level and some of the state characteristics and actions that are likely to influence the amount of evasion. These findings will be used in developing the methodology to estimate fuel tax evasion at the state level.