Don’t panic.

Net deposits in the federal Highway Trust Fund dropped by 90 percent in April versus the month before – from March’s $2.8 billion down to a mere $253.3 million in April.

However, the drop has nothing to do with the real-world conditions of the motor fuels or trucking markets last month. Rather, the drop was a result of COVID-vaccinated Internal Revenue Service employees being able to get back to work and open a year’s worth of hard copy tax returns filed by oil companies, truck and tire manufacturers, and trucking companies.

Most Highway Trust Fund taxes are paid electronically, twice a month, on an estimated basis. Those taxes are automatically appropriated from the general fund to the Trust Fund on that estimated basis whenever they are received.

The taxpayers then file quarterly returns that correct the estimated tax payments. Once the IRS processes those returns, Treasury will adjust the Trust Fund deposits to reflect the quarterly filings. This is known, colloquially, as a “true up” or “true down” adjustment.

Due to COVID, the IRS got several quarters behind schedule in opening and processing those excise tax returns. As a result, the fiscal 2020 tax receipts did not fully reflect the drop in demand for motor fuels that took place at the peak of COVID.

The IRS appears to have opened and processed several quarters worth of returns and made those adjustments in April 2021. Gasoline tax receipts, for example, were $2.12 billion in gross estimated deposits, but then an adjustment of $1.87 billion reduced the net to just $250 million. For some taxes (truck-trailer sales, and heavy vehicle use), the negative April 2021 adjustment exceeded the April amount of estimated payments.

In millions of dollars, here is how the month shaped up:

Some kind of large true-up has long been expected. In its February 2021 baseline forecast, the Congressional Budget Office projected a one-time, $3.3 billion “timing adjustment” for fiscal year 2021 that would reduce total tax deposits in the Highway Trust Fund from $40.2 billion to $36.9 billion on the year, before rebounding back to $42.7 billion in fiscal 2022.

Even with that timing adjustment, CBO still projects the Trust Fund to remain solvent in both its accounts until very late in fiscal year 2022.