HIGHWAY USE TAX EVASION PROJECTS.

SEC. 1114. HIGHWAY USE TAX EVASION PROJECTS. (a) In General.— Section 143 of title 23, United States Code, is amended to read as follows: “§ 143. Highway use tax evasion projects. “(a) State Defined.— In this section, the term ‘State’ means the 50 States and the District of Columbia. “(b) Projects.— “(1) In general.— The Secretary shall carry out highway use tax evasion projects in accordance with this subsection. 112 STAT. 153 “(2) Allocation of funds.— Funds made available to carry out this section may be allocated to the Internal Revenue Service and the States at the discretion of the Secretary. “(3) Conditions on funds allocated to internal revenue service.— The Secretary shall not impose any condition on the use of funds allocated to the Internal Revenue Service under this subsection. “(4) Limitation on use of funds.— Funds made available to carry out this section shall be used only— “(A) to expand efforts to enhance motor fuel tax enforcement; “(B) to fund additional Internal Revenue Service staff, but only to carry out functions described in this paragraph; “(C) to supplement motor fuel tax examinations and criminal investigations; “(D) to develop automated data processing tools to monitor motor fuel production and sales; “(E) to evaluate and implement registration and reporting requirements for motor fuel taxpayers; “(F) to reimburse State expenses that supplement existing fuel tax compliance efforts; and “(G) to analyze and implement programs to reduce tax evasion associated with other highway use taxes. “(5) Maintenance of effort.— The Secretary may not make an allocation to a State under this subsection for a fiscal year unless the State certifies that the aggregate expenditure of funds of the State, exclusive of Federal funds, for motor fuel tax enforcement activities will be maintained at a level that does not fall below the average level of such expenditure for the preceding 2 fiscal years of the State. “(6) Federal share.— The Federal share of the cost of a project carried out under this subsection shall be 100 percent. “(7) Period of availability.— Funds authorized to carry out this section shall remain available for obligation for a period of 3 years after the last day of the fiscal year for which the funds are authorized. “(8) Use of surface transportation program funding.— In addition to funds made available to carry out this section, a State may expend up to ¼ of 1 percent of the funds apportioned to the State for a fiscal year under section 104(b)(3)on initiatives to halt the evasion of payment of motor fuel taxes. “(c) Excise Fuel Reporting System.— “(1) In general.— Not later than April 1, 1998, the Secretary shall enter into a memorandum of understanding with the Commissioner of the Internal Revenue Service for the purposes of the development and maintenance by the Internal Revenue Service of an excise fuel reporting system (in this subsection referred to as the ‘system’). “(2) Elements of memorandum of understanding.— The memorandum of understanding shall provide that— “(A) the Internal Revenue Service shall develop and maintain the system through contracts; “(B) the system shall be under the control of the Internal Revenue Service; and “(C) the system shall be made available for use by appropriate State and Federal revenue, tax, and law 112 STAT. 154enforcement authorities, subject to section 6103 of the Internal Revenue Code of 1986. “(3) Funding.— Of the amounts made available to carry out this section for each of fiscal years 1998 through 2003, the Secretary shall make available sufficient funds to the Internal Revenue Service to establish and operate an automated fuel reporting system.”. (b) Conforming Amendments.— (1) The analysis for chapter 1 of such title is amended by striking the item relating to section 143 and inserting the following: “143. Highway use tax evasion projects.”. (2) Section 1040 of the Intermodal Surface Transportation Efficiency Act of 1991 (23 U.S.C. 101 note; 105 Stat. 1992) is repealed. (3) Section 8002 of the Intermodal Surface Transportation Efficiency Act of 1991 (23 U.S.C. 101 note; 105 Stat. 2203) is amended— (A) in the first sentence of subsection (g) by striking “section 1040 of this Act” and inserting “section 143 of title 23, United States Code,”; and (B) by striking subsection (h).