Reporting oil overcharge refunds to the Internal Revenue Service

Technical Report · Thu Sep 17 04:00:00 EDT 1992

OSTI ID:7243501

Monies collected from firms for alleged petroleum pricing violations are put in escrow from which refunds are made to those claiming overcharge during the period of price controls. Payment of refunds to recipients who are not tax exempt must be reported to the Internal Revenue Service (IRS) on Form 1099. By issuing Form 1099, the Department of Energy (DOE) alerts both the recipient and the IRS to potential taxable income. The purpose of our audit was to determine whether DOE was complying with IRS regulations when issuing 1099's for oil overcharge refunds. In calendar year 1991 Form 1099 was not issued for approximately $1.3 million in oil overcharge refunds of between $10 and $600 because the Department was unable to accurately determine the amount of interest included in the refunds. Thus, recipients may not have reported overcharge refunds as taxable income. In addition, about 30 percent of refund recipients identified as tax exempt could not provide support for their exempt status because they misunderstood Departmental instructions or were unaware of IRS regulations in this regard. In some instances, DOE had identified the recipients as exempt, due to the amount of the refund. As a result, 1099's were not issued for as many as 2,700 refund recipients who received refunds of approximately $2.7 million in potentially taxable income. Management agreed with our recommendations (1) to issue appropriate IRS reporting forms to nonexempt refund recipients and (2) to require all recipients claiming exempt status to identify the basis for exemption and provide documentation for their withholding status.

• Research Organization: USDOE Office of Inspector General, Washington, DC (United States). Capital Regional Audit Office
• Sponsoring Organization: DOE; USDOE, Washington, DC (United States)
• OSTI ID: 7243501
• Report Number(s): CR-B-92-1; ON: TI93001472
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
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29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
AUDITS
CHARGES
COMPLIANCE AUDITS
ENERGY SOURCES
EVALUATION
FOSSIL FUELS
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INDUSTRY
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PETROLEUM INDUSTRY
PRICING REGULATIONS
RECOMMENDATIONS
REGULATIONS
US DEPARTMENT OF TREASURY
US DOE
US DOE INSPECTOR GENERAL
US IRS
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