IRS' Administration of the Crude Oil Windfall Profit Tax Act of 1980

Gao ID: GGD-84-15 June 18, 1984

In response to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) administration of the Crude Oil Windfall Profit Tax Act of 1980.

GAO noted that the crude oil tax was designed to tax the difference between the free market price of a barrel of oil and its controlled price under Department of Energy regulations. Although IRS received no supplemental staffing or funding to administer this lengthy and complex act, IRS moved quickly to establish a compliance program. GAO found that IRS has made good progress toward establishing an examination program for the windfall profit tax. Difficulties encountered by the IRS Examination Division include: (1) deciding which properties should be subject to IRS examination; (2) ensuring that the tax is assessed on the initial sale of oil; and (3) examining tax refund claims to ensure that the tax is levied only on barrels of oil that yield a profit. GAO noted that the IRS Collection Division's effectiveness depends on structuring a long-term compliance program to identify delinquent windfall profit taxpayers.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Jennie S. Stathis Team: General Accounting Office: General Government Division Phone: (202) 512-5407


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