GASOLINE TAX EVADERS managed to duck an estimated $1 billion worth of federal taxes last year by swapping titles to the fuel while it sat in terminals prior to retail delivery. Fraudulent transactions among dummy companies obscure the ownership of the gasoline, giving the Internal Revenue Service headaches as it seeks to identify who is liable for the tax.
But the House Ways and Means Committee has given tentative approval to a plan to improve collection of the excise fee by moving the point of taxation farther up the distribution chain. If the measure becomes law, gasoline would be taxed when it leaves a refinery gate or arrives at a distribution terminal, rather than upon its shipment from the terminal to an individual gasoline station or wholesale customer.Rep. Thomas Downey, D-N.Y., who has long recommended such a measure, notes that gasoline tax fraud has been widespread in California, Florida and Ohio as well as in the Northeast. Imported gasoline seems particularly susceptible to fraud.
The Treasury will not be the only beneficiary. Honest gasoline dealers will no longer face unfair competition from tax-dodging distributors who have enjoyed bigger margins by engaging in "daisy chain" title swaps.