This is the accessible text file for GAO report number GAO-11-120R 
entitled 'Applying Agreed-Upon Procedures: Fiscal Year 2010 Airport and 
Airway Trust Fund Excise Taxes' which was released on November 4, 2010. 

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November 4, 2010: 

The Honorable Calvin L. Scovel III: 
Inspector General: 
U.S. Department of Transportation: 

Subject: Applying Agreed-Upon Procedures: Fiscal Year 2010 Airport and 
Airway Trust Fund Excise Taxes: 

Dear Mr. Scovel: 

We have performed the procedures described in the enclosure to this 
letter, which we agreed to perform and with which you concurred, solely 
to assist your office in ascertaining whether the net excise tax 
revenue distributed to the Airport and Airway Trust Fund (AATF) for the 
fiscal year ended September 30, 2010, is supported by the underlying 
records. As agreed with your office, we evaluated fiscal year 2010 
activity affecting excise tax distributions to the AATF. 

We conducted the engagement in accordance with U.S. generally accepted 
government auditing standards, which incorporate certain financial 
audit and attestation standards established by the American Institute 
of Certified Public Accountants. 

You are responsible for the adequacy of these agreed-upon procedures to 
meet your objectives, and we make no representation in that respect. 
The procedures we agreed to perform were related to (1) transactions 
that represent the underlying basis of amounts distributed from the 
general fund to the AATF during fiscal year 2010, (2) the Internal 
Revenue Service's (IRS) quarterly AATF excise tax receipt 
certifications prepared during fiscal year 2010, (3) the U.S. 
Department of the Treasury's Financial Management Service adjustments 
to AATF excise tax distributions during fiscal year 2010, (4) the U.S. 
Department of the Treasury's Office of Tax Analysis's (OTA) estimates 
of excise tax amounts to be distributed to the AATF for the fourth 
quarter of fiscal year 2010, (5) adjustments to the AATF for tax on 
kerosene used in aviation during fiscal year 2010, and (6) the amount 
of net excise taxes distributed to the AATF during fiscal year 2010. 
The enclosure provides more detail on the agreed-upon procedures and 
our results. 

We were not engaged to perform, and did not perform, an examination, 
the objective of which would have been to express an opinion on the 
amount of net excise taxes distributed to the AATF during fiscal year 
2010. Accordingly, we do not express such an opinion. Had we performed 
additional procedures, other matters might have come to our attention 
that we would have reported to you. We completed the agreed-upon 
procedures on October 27, 2010. 

We provided a draft of this letter, along with the enclosure, to IRS 
and OTA officials for review and comment. IRS agreed with the results 
and findings presented in the enclosure. OTA agreed with the results 
and findings presented in the enclosure relating to its 
responsibilities, that is, the procedures performed in the estimation 
process for the quarter ended September 30, 2010. 

This report is intended solely for the use of the Office of Inspector 
General of the U.S. Department of Transportation and should not be used 
by those who have not agreed to the procedures or have not taken 
responsibility for the sufficiency of the procedures for their 
purposes. However, the report is a matter of public record, and its 
distribution is not limited. The report is available at no charge on 
the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you have any questions concerning this report, please contact me at 
(202) 512-3406 or sebastians@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. 

Sincerely yours, 

Signed by: 

Steven J. Sebastian: 

Director: 

Financial Management and Assurance: 

Enclosure:

Airport and Airway Trust Fund Excise Tax Procedures and Results: 

I. Procedures on Transactions That Represent the Underlying Basis of 
Amounts Distributed to the Airport and Airway Trust Fund (AATF) in 
Fiscal Year 2010: 

A. Nonstatistical selection of tax returns from the quarters ending 
June 30, 2009,[Footnote 1] and September 30, 2009[Footnote 2] 

1. For each of the quarters ending June 30, 2009, and September 30, 
2009, select the 30 largest excise tax returns containing excise taxes 
related primarily to the AATF and the Highway Trust Fund (HTF) on the 
basis of total tax liability amount[Footnote 3] from the Internal 
Revenue Service's (IRS) master file.[Footnote 4] 

Description of Findings and Results: 

We selected the 30 largest excise tax returns related primarily to the 
AATF and the HTF from each of the two quarters for testing. The 
selection was based on the total tax liability amount and type of taxes 
owed for each return from IRS's master file. 

The total tax liability amount related to the 30 returns from the 
quarter ended June 30, 2009, was approximately $9.1 billion or 72 
percent of the total recorded tax liability amount of $12.7 billion for 
all excise tax returns for the quarter. Of these 30 returns, 9 
contained primarily AATF-related tax liabilities and 21 contained 
primarily HTF-related tax liabilities. 

The total tax liability amount related to the 30 returns from the 
quarter ended September 30, 2009, was approximately $9.2 billion or 71 
percent of the total recorded tax liability amount of $12.9 billion for 
all excise tax returns for the quarter. Of these 30 returns, 9 
contained primarily AATF-related tax liabilities and 21 contained 
primarily HTF-related tax liabilities. Of the 60 returns selected from 
these two quarters, 18 contained primarily AATF-related tax 
liabilities, and 42 contained primarily HTF-related tax liabilities. 

2. For each of the returns related primarily to the AATF, perform the 
following procedures: 

(a) Compare the assessment amounts for tax on transportation of persons 
by air, tax on use of international air travel facilities, and tax on 
transportation of property by air, abstracts[Footnote 5] 26, 27, and 28 
respectively, from the tax return to IRS's master file for agreement. 

Description of Findings and Results: 

The assessment amount for tax on transportation of persons by air, tax 
on the use of international air travel facilities, and tax on 
transportation of property by air, abstracts 26, 27, and 28 
respectively on the tax return, agreed with the master file for all 18 
returns containing primarily AATF-related tax liabilities. 

(b) Calculate the assessment amounts on the tax return for the selected 
abstracts to determine whether they are mathematically correct. 

Description of Findings and Results: 

The taxpayers' calculations for the selected abstracts were 
mathematically correct on all 18 returns containing primarily AATF- 
related tax liabilities. 

(c) Calculate the prorated collection amount[Footnote 6] for the 
selected abstracts based on information from IRS's master file and 
compare this amount to the amount in IRS's Collection Certification 
System audit files[Footnote 7] for agreement. 

Description of Findings and Results: 

The independently calculated prorated collection amounts for the 
selected abstracts agreed with amounts in IRS's Collection 
Certification System audit files for all 18 returns containing 
primarily AATF-related tax liabilities. 

B. Statistical selection of attribute and monetary unit samples (MUS) 
from the quarters ended December 31, 2009, and March 31, 2010: 

1. Sampling and other procedures: 

(a) Compare excise tax collections from IRS's master file with excise 
tax collections from IRS's Collection Certification System audit files 
for the first two quarters of fiscal year 2010 to determine if they 
materially agree.[Footnote 8] 

Description of Findings and Results: 

Excise tax collections from IRS's master file materially agreed with 
IRS's Collection Certification System for the first two quarters of 
fiscal year 2010. 

(b) Compare excise tax collections from IRS's master file with excise 
tax collections from IRS's general ledger for the first 9 months of 
fiscal year 2010 to determine if they materially agree.[Footnote 9] 

Description of Findings and Results: 

Excise tax collections from IRS's master file materially agreed with 
IRS's general ledger for the first 9 months of fiscal year 2010. 

(c) Select a random attribute sample of 78 excise tax returns from 
IRS's master file.[Footnote 10] Compare assessment and receipt 
information for each return from IRS's master file to IRS's Collection 
Certification System for agreement. 

Description of Findings and Results: 

For all 78 returns, assessment and receipt information from IRS's 
master file agreed with the information in IRS's Collection 
Certification System. 

(d) Sum the prorated collections for selected abstracts[Footnote 11] 
from IRS's Collection Certification System audit files and compare 
these amounts to amounts in the Report of Excise Tax 
Collection[Footnote 12] to determine if the Collection Certification 
System properly summarized the prorated collections. 

Description of Findings and Results: 

The Collection Certification System properly summarized the prorated 
collections for all of the selected abstracts. Prorated collections 
from the audit files for the selected abstracts agreed with the 
corresponding amounts in the Report of Excise Tax Collection. 

(e) Separate the total population of prorated collections from IRS's 
Collection Certification System audit files into the following distinct 
populations: (1) AATF, (2) HTF, and (3) other excise tax abstracts. Use 
MUS to select a sample of prorated excise tax collections from the AATF 
population using a confidence level of 80 percent, a tolerable 
misstatement of $106 million, and an expected aggregate error amount of 
$32 million.[Footnote 13] 

Description of Findings and Results: 

Use of MUS with a confidence level of 80 percent, a tolerable 
misstatement of $106 million, and an expected aggregate error amount of 
$32 million resulted in a sample of 66[Footnote 14] prorated 
collections for the AATF for the first two quarters of fiscal year 
2010. 

(f) Select samples of prorated excise tax collections from the two non-
AATF populations. Use MUS to select a sample of prorated excise tax 
collections from the HTF population using a confidence level of 80 
percent, a tolerable misstatement of $349 million, and an expected 
aggregate error amount of $105 million.[Footnote 15] Select a random 
attribute sample of 45 items from the population of prorated tax 
collections related to all excise taxes other than the AATF and the 
HTF.[Footnote 16] 

Description of Findings and Results: 

Use of MUS with a confidence level of 80 percent, a tolerable 
misstatement of $349 million, and an expected aggregate error amount of 
$105 million resulted in a sample of 94[Footnote 17] prorated 
collections for the HTF for the first two quarters of fiscal year 2010. 

A random attribute sample of 45 items was selected from the population 
of prorated tax collections related to all excise taxes other than the 
AATF and the HTF. 

2. Procedures on transactions: 

For each prorated excise tax collection sampled from the AATF 
population: 

* Compare the assessment amount for the sampled item from the tax 
return to IRS's master file for agreement. 

Description of Findings and Results: 

The assessment amount on the tax return agreed with the assessment 
amount recorded in IRS's master file for each of the 66 sampled items. 

* Calculate the assessment amount on the tax return for the sampled 
item to determine whether it is mathematically correct. 

Description of Findings and Results: 

The assessment amount on the tax return was mathematically correct for 
each of the 66 sampled items. 

* Calculate the prorated collection amount for the sampled item based 
on information from IRS's master file and compare this amount to the 
amount in IRS's Collection Certification System audit files for 
agreement. 

Description of Findings and Results: 

The independently calculated prorated collection amount agreed with the 
amount in IRS's Collection Certification System audit files for each of 
the 66 sampled items. 

(b) Inspect the tax returns and master file information for the two 
samples of prorated collections from the non-AATF populations to 
determine if they contain any AATF excise tax collections. 

Description of Findings and Results: 

The two samples of prorated collections from the non-AATF populations 
did not contain any AATF excise tax collections. 

(c) Evaluate the results of conducting steps (a) and (b). 

Description of Findings and Results: 

For the first two quarters of fiscal year 2010, the net most likely 
error was $0 with an upper error limit of $61 million at the 80 percent 
confidence level. 

II. Procedures on IRS's Quarterly AATF Excise Tax Receipt 
Certifications: 

Perform the following procedures on IRS's AATF excise tax receipt 
certifications for the quarters ended September 30, 2009, December 31, 
2009, March 31, 2010, and June 30, 2010: 

A. Inspect the certification letters for authorizing signatures. 

Description of Findings and Results: 

The certification letters for all four quarters had authorizing 
signatures. 

B. Inspect the certification letters and supporting worksheets to 
determine if evidence exists that they were reviewed by the supervisor 
or another analyst. 

Description of Findings and Results: 

There was evidence that the supervisor or another analyst reviewed the 
certification letters and supporting worksheets for all four quarters. 

C. Calculate the totals on the certification letters to determine if 
they are mathematically correct. 

Description of Findings and Results: 

The totals on the certification letters for all four quarters were 
mathematically correct. 

D. Trace the certified amounts for tax on transportation of persons by 
air (abstract 26), tax on the use of international air travel 
facilities (abstract 27), tax on transportation of property by air 
(abstract 28), and tax on kerosene for use in commercial aviation 
(abstract 77)[Footnote 18] from the certification letters back to the 
Report of Excise Tax Collection[Footnote 19] and the Treasury 90 
Report[Footnote 20] for agreement. 

Description of Findings and Results: 

The certified amounts for tax on transportation of persons by air 
(abstract 26), tax on the use of international air travel facilities 
(abstract 27), tax on transportation of property by air (abstract 28), 
and tax on kerosene for use in commercial aviation (abstract 77) from 
the certification letters agreed with the related Report of Excise Tax 
Collection and the Treasury 90 Report for all four quarters. 

E. Compare the distribution rates used by IRS for tax on transportation 
of persons by air (abstract 26), tax on the use of international air 
travel facilities (abstract 27), tax on transportation of property by 
air (abstract 28), and tax on kerosene for use in commercial aviation 
(abstract 77) for agreement with the applicable laws. 

Description of Findings and Results: 

The distribution rates used by IRS for tax on transportation of persons 
by air (abstract 26), tax on the use of international air travel 
facilities (abstract 27), tax on transportation of property by air 
(abstract 28), and tax on kerosene for use in commercial aviation 
(abstract 77) agreed with the applicable laws in effect during all four 
quarters. 

F. Inspect the Report of Excise Tax Collection used in the 
certification to determine if it contains significant[Footnote 21] 
collections from prior quarters. 

Description of Findings and Results: 

The Report of Excise Tax Collection used in the certification for all 
four quarters did not contain significant collections from prior 
quarters. 

G. For the quarter ended June 30, 2010, only, inquire with IRS whether 
any excise tax returns from its list of the largest excise taxpayers 
were omitted from the certification.[Footnote 22] For any such returns 
that were omitted but were subsequently received by IRS, report the 
total amount of AATF-related tax collections from these tax returns. 
For any such returns that were omitted and where IRS has not yet 
received these, report the average amount of AATF-related tax 
collections from the taxpayer(s) based on the previous four quarters. 

Description of Findings and Results: 

According to IRS, no tax returns from its list of the largest excise 
taxpayers were omitted from its certification for the quarter ended 
June 30, 2010. 

III. Procedures on Financial Management Service Adjustments: 

Perform the following procedures on the Financial Management Service 
(FMS) adjustments to AATF excise tax distributions for the quarters 
ended: 

September 30, 2009, December 31, 2009, March 31, 2010, and June 30, 
2010: 

A. Calculate the FMS adjustment amounts based on the Office of Tax 
Analysis (OTA) transfer forms[Footnote 23] and IRS certification 
letters to determine if they are mathematically correct. 

Description of Findings and Results: 

The FMS adjustment amounts for all four quarters were mathematically 
correct. These amounts were[Footnote 24] 

* ($68,270,000) for the quarter ended September 30, 2009; 

* ($147,428,000) for the quarter ended December 31, 2009; 

* $53,720,000 for the quarter ended March 31, 2010; and: 

* $211,151,000 for the quarter ended June 30, 2010. 

IV: Procedures on Excise Tax Distributions to the AATF for the Quarter 
Ended September 30, 2010: 

A. Determine if OTA prepares a tax rate table to capture information 
concerning tax rates, tax basis, accounts, and deposit rules in effect 
during the quarter ended September 30, 2010, and whether OTA uses this 
rate table in its trust fund estimates[Footnote 25] for the quarter. 

Description of Findings and Results: 

OTA prepared a tax rate table to capture information concerning tax 
rates, tax basis, accounts, and deposit rules in effect during the 
quarter. OTA used the rate table in preparing the five semimonthly 
estimates that affect fiscal year 2010 distributions to the AATF. 

B. Inspect the transfer forms and supporting schedules to determine if 
there is evidence of review. 

Description of Findings and Results: 

There was evidence that another OTA economist reviewed the transfer 
forms and supporting schedules affecting distributions from the general 
fund to the AATF for the quarter ended September 30, 2010. 

C. Calculate the totals on the transfer forms to determine if they are 
mathematically correct. 

Description of Findings and Results: 

The totals on the transfer forms affecting distributions to the AATF 
for the quarter ended September 30, 2010, were mathematically correct. 

D. Trace the transfer amounts for tax on transportation of persons by 
air (abstract 26), tax on the use of international air travel 
facilities (abstract 27), tax on transportation of property by air 
(abstract 28), and tax on kerosene for use in commercial aviation 
(abstract 77)[Footnote 26] from the transfer forms back to the related 
source documents[Footnote 27] for agreement. 

Description of Findings and Results: 

The transfer amounts for tax on transportation of persons by air 
(abstract 26), tax on the use of international air travel facilities 
(abstract 27), tax on transportation of property by air (abstract 28), 
and tax on kerosene for use in commercial aviation (abstract 77) from 
the transfer forms agreed with the related source documents for the 
quarter ended September 30, 2010. 

V. Other Procedures: 

A. Determine if IRS and OTA made adjustments to the AATF for tax on 
kerosene used in aviation during fiscal year 2010, and calculate the 
adjustment amounts to determine if they were mathematically 
correct.[Footnote 28] 

Description of Findings and Results: 

Adjustments to the AATF for tax on kerosene used in aviation were made 
during fiscal year 2010 and were mathematically correct. These amounts 
were[Footnote 29] 

* $98,700,000 for the quarter ended September 30, 2009; 

* $43,210,000 for the quarter ended December 31, 2009; 

* $46,099,000 for the quarter ended March 31, 2010; 

* $39,764,000 for the quarter ended June 30, 2010; and: 

* $86,866,000 for the quarter ended September 30, 2010. 

B. Using IRS's quarterly certifications, OTA's estimated distributions, 
and any adjustments, compile and report the amount of net excise taxes 
distributed to the AATF in fiscal year 2010. 

Description of Findings and Results: 

Based on a compilation of IRS's quarterly certifications, OTA's 
estimations, and adjustments, the amount of net excise taxes that 
should have been distributed to the AATF in fiscal year 2010 was 
$10,612,953,000. 

(196215): 

[End of section] 

Footnotes:  

[1] In October 2009, the Internal Revenue Service (IRS) completed its 
certification of excise tax distributions to the AATF for the quarter 
ended June 30, 2009, and the U.S. Department of the Treasury's 
Financial Management Service (FMS) recorded the corresponding 
adjustment to transfer funds between the general fund and the trust 
fund. Administrators of the Federal Aviation Administration (FAA) 
recorded the adjustment amount on FAA's financial statements, which 
include AATF data, for fiscal year 2009. 

[2] The IRS certification of excise tax distributions and corresponding 
FMS adjustment for the quarter ended September 30, 2009, were completed 
in February 2010, and thus affected distributions to the AATF during 
fiscal year 2010. 

[3] Although the certifications are based on amounts collected, we used 
the tax liability amounts to identify the taxpayers paying the largest 
amounts of excise taxes. These taxpayers generally pay their excise 
taxes in full each quarter. 

[4] The master file is a detailed database containing taxpayer 
information. 

[5] The abstract numbers identify the tax type (e.g., gasoline and 
ticket tax) and are used as the basis for determining the distribution 
of the excise taxes to the various trust funds. Abstract numbers are 
preprinted on the Form 720, Quarterly Federal Excise Tax Return, and 
are used by the taxpayer to report excise tax assessments. If the 
return was related to the AATF, we selected (1) tax on transportation 
of persons by air (abstract 26), (2) tax on the use of international 
air travel facilities (abstract 27), and (3) tax on transportation of 
property by air (abstract 28). If the return was related to the HTF, we 
selected (1) diesel fuel tax (abstract 60) and (2) gasoline tax 
(abstract 62). The tax amounts related to the selected abstracts for 
each trust fund are the largest tax amounts reported on the taxpayer's 
excise tax return and made up over 92 percent of the total amount 
certified to the AATF and over 87 percent of the total amount certified 
to the HTF for each of the quarters ended June 30, 2009, and September 
30, 2009, respectively. 

[6] These procedures encompassed approximately $3.8 billion in prorated 
collections affecting distributions to the AATF. IRS certifies to trust 
funds the amount of excise taxes collected. Because taxpayers have 
sometimes not fully paid their tax liability, IRS must allocate the 
amount of payments actually received among the different excise taxes 
reported on the taxpayers' returns. IRS's Collection Certification 
System prorates a taxpayer's payments proportionately among all taxes 
reported as owed on the tax return. For example, if a corporation 
reports that it owes $4 million for gasoline tax, $2 million for diesel 
fuel tax, and $1 million for kerosene tax on its Form 720, Quarterly 
Federal Excise Tax Return, but has paid IRS only $3.5 million at the 
time IRS performs its certification, the program prorates the $3.5 
million in the following manner: $2 million to gasoline tax, $1 million 
to diesel fuel tax, and $500,000 to kerosene tax. 

[7] The Collection Certification System produces what IRS refers to as 
audit files. These audit files contain the individual prorated 
collections by abstract and taxpayer identification number. The 
certified amounts to the trust funds are calculated by subtracting 
credits from prorated collections and then multiplying the difference 
by the applicable trust fund distribution rates. 

[8] For the purpose of this procedure, "material" is defined as 1 
percent of the excise tax collections for the quarters ended December 
31, 2009, and March 31, 2010. 

[9] This is a reconciliation of all excise tax collections that posted 
to the master file and general ledger during the first 9 months of 
fiscal year 2010 and is not limited to the first two quarters. For the 
purpose of this procedure, "material" is defined as 1 percent of the 
excise tax collections for the first 9 months of fiscal year 2010. 

[10] For this sample, if one or no errors were found in our comparison 
of the 78 items, we would be 90 percent confident that the error rate 
in the population would not exceed 5 percent. 

[11] The selected abstracts are (1) tax on transportation of persons by 
air (abstract 26), (2) tax on the use of international air travel 
facilities (abstract 27), (3) tax on transportation of property by air 
(abstract 28), (4) tax on kerosene for use in commercial aviation 
(abstract 77), (5) diesel fuel tax (abstract 60), and (6) gasoline tax 
(abstract 62). The tax amounts for the four AATF-related abstracts made 
up over 97 percent of the total amount certified to the AATF, and the 
tax amounts for the two HTF-related abstracts made up over 92 percent 
of the total amount certified to the HTF for the quarters ended 
December 31, 2009, and March 31, 2010. 

[12] The Report of Excise Tax Collection contains prorated collections, 
classified by abstracts, that serve as the basis for IRS's quarterly 
trust fund certifications. 

[13] The $106 million tolerable misstatement represents approximately 1 
percent of the net excise tax revenue distributed to the AATF in fiscal 
year 2009. The expected aggregate error amount of $32 million 
represents approximately 30 percent of the tolerable misstatement 
amount. 

[14] The planned sample size using MUS was 133 items. MUS selects 
dollars versus specific transaction items by dividing the population of 
prorated excise tax collections by dollar intervals. The dollar 
interval for AATF was $38 million. Accordingly, any item with a dollar 
value equal to or exceeding the interval would be selected, whereas 
items less than the interval might not be selected. For example, an 
item of $78 million would cover two dollar intervals, but represent one 
sample item. Because large-dollar items cover more than one interval, 
the 66 unique sampled transactions selected represented 133 dollar 
intervals. 

[15] The $349 million tolerable misstatement represents approximately 1 
percent of the net excise tax revenue distributed to the HTF in fiscal 
year 2009. The expected aggregate error amount of $105 million 
represents approximately 30 percent of the tolerable misstatement 
amount. 

[16] For this sample, if no errors were found in performing procedures 
on the 45 items, we would be 90 percent confident that the error rate 
in the population would not exceed 5 percent. 

[17] The planned sample size using MUS was 142 items. As explained in 
footnote 14, MUS selects dollars instead of specific transaction items 
by dividing the population of prorated excise tax collections by dollar 
intervals. The dollar interval for HTF was $127 million. Because large- 
dollar items cover more than one interval, the 94 unique sampled 
transactions selected represented 142 dollar intervals. 

[18] The certified amounts for tax on transportation of persons by air 
(abstract 26), tax on the use of international air travel facilities 
(abstract 27), tax on transportation of property by air (abstract 28), 
and tax on kerosene for use in commercial aviation (abstract 77) made 
up over 96 percent of the total amount of excise tax receipts certified 
by IRS to the AATF for each quarter in fiscal year 2010. 

[19] The Report of Excise Tax Collection is produced by the Collection 
Certification System. Collections are classified by abstract on the 
report when the related Form 720 tax return has been posted to IRS's 
master file during the processing interval covered by the report. IRS 
uses data from three of these reports, covering sequential processing 
intervals, for each quarterly certification. The three reports used may 
contain collections related to prior quarters that IRS certifies as 
part of the current quarter's collections because the related return 
was not posted to the master file until the processing intervals 
covered by these reports. 

[20] The Treasury 90 Report summarizes excise tax credit information 
and is produced quarterly by IRS service center campus systems. IRS has 
six service center campuses that receive and process tax returns and 
payments. 

[21] For this procedure, "significant" is defined as $55 million. This 
represents approximately 2 percent of the total amount of excise tax 
receipts IRS certified to the AATF for each quarter of fiscal year 
2010. 

[22] IRS maintains a listing of approximately 150 taxpayers that 
comprise its largest excise taxpayers. To help ensure that tax return 
data for the largest excise taxpayers are included in each quarterly 
excise tax certification, IRS tracks the receipt of these returns and 
contacts these taxpayers when necessary. 

[23] The transfer forms denote the amounts estimated by OTA for 
transferring excise taxes to the trust funds. 

[24] A positive amount indicates that the FMS adjustment increased 
excise taxes distributed to the trust fund. A negative amount, shown in 
parentheses, indicates that the FMS adjustment decreased excise taxes 
distributed to the trust fund. 

[25] OTA makes semimonthly estimates of excise tax collections for 
transfer to trust funds. There are five semimonthly estimates for the 
quarter ended September 30, 2010, which affect fiscal year 2010 
distributions to the AATF. 

[26] The OTA estimated transfer amounts for tax on transportation of 
persons by air (abstract 26), tax on the use of international air 
travel facilities (abstract 27), tax on transportation of property by 
air (abstract 28), and tax on kerosene for use in commercial aviation 
(abstract 77) made up over 96 percent of the total amount transferred 
to the AATF for the fourth quarter of fiscal year 2010. 

[27] The source documents include the IRS report of excise taxes used 
to derive the percentages applied to reported receipts, the Daily 
Treasury Statement, the Monthly Treasury Statement, and the excise tax 
rate table. 

[28] Section 11161 of Pub. L. No. 109-59 (Aug. 10, 2005), Treatment of 
Kerosene for Use in Aviation, taxes all kerosene taxpayers at the 
standard kerosene rate, unless a taxpayer had removed the kerosene from 
a refinery or terminal directly into an aircraft's fuel tank and thus 
qualified for the lower aviation kerosene tax rate. Amounts received 
under the standard kerosene tax are initially deposited in the HTF. If 
a taxpayer subsequently used the kerosene in aviation, the taxpayer is 
eligible for the lower tax rate associated with aviation kerosene and 
can request a refund. The amount of the kerosene tax collected from the 
taxpayer, net of refunds, is transferred from the HTF to the AATF. 

[29] The adjustments for the quarters ended September 30, 2009; 
December 31, 2009; March 31, 2010; and June 30, 2010, were included in 
the IRS receipt certifications, and the adjustment for the quarter 
ended September 30, 2010, was included in the OTA estimates. The 
adjustment amounts represent excise taxes transferred to the AATF from 
the HTF. 

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