A heavy vehicle use tax refresher as filing deadline approaches

For commercial motor vehicle owners in the U.S., it’s tax season. While much of America files annual taxes in April, CMV owners face an Aug. 31 deadline each year to file their heavy vehicle use tax (HVUT).

HVUT is a significant contributor to the Highway Trust Fund, adding $1.286 billion in revenue to the fund in 2019. The tax is not required on every vehicle. Consulting with experienced compliance specialists like J. J. Keller & Associates and their 2290online.com service can help alleviate some of the burden and ensure your carrier remains up to date with timely and accurate HVUT filings.

Here is a primer on some of the basics surrounding HVUT.

What is HVUT?

HVUT, also known as IRS Form 2290, is a fee assessed annually on heavy vehicles that operate on public roadways. The HVUT applies to any heavy vehicle with a registered gross weight of at least 55,000 pounds. Nearly 4 million Class 8 trucks, including tractors and straight trucks, were registered in the U.S. in 2020, according to the U.S. Department of Transportation. Many of those are HVUT-taxable, but with exemptions and other available credits, confusion in vehicle eligibility can result in unintended violations.

Do I have to pay HVUT?

Generally, yes. According to the IRS, the tax is due when a highway motor vehicle — including trucks, tractors and buses — meets the gross weight requirement. To determine the gross weight, the IRS uses the following calculation:

• The actual unloaded weight of the vehicle fully equipped for service.
• The actual unloaded weight of any trailers or semitrailers fully equipped for service customarily used in combination with the vehicle.
• The weight of the maximum load customarily carried on the vehicle and on any trailers or semitrailers customarily used in combination with the vehicle.

Owners of qualifying vehicles must pay the HVUT by Aug. 31 for the tax year of July 1 through June 30 of the following year. Yes, the tax is prepaid and is owed on any vehicle that travels a public roadway during the defined tax period.

Carriers must file IRS Form 2290 and Schedule 1 if a taxable highway motor vehicle is registered or required to be registered in their name under any state or District of Columbia, Canadian, or Mexican law at the time of its first use.

How much is HVUT?

The HVUT fee is $100 for vehicles with a gross taxable weight of 55,000 to 75,000 pounds. An additional $22 fee is assessed for every 1,000 pounds over 55,000. So, a vehicle with a gross taxable weight of 60,000 pounds would cost $210. For vehicles over 75,000 pounds, the fee is a flat $550. Vehicles at 54,999 pounds or under are assessed no fees.

The tax is required for each vehicle.

If I don’t pay, how will the IRS even know?

The old saying is that the IRS knows all, so if you don’t pay, it will find you. IRS auditors and Federal Highway Administration compliance reviewers look at a number of criteria to determine if vehicles are registered properly and taxed accordingly.

Auditors look for:

• Vehicles registered at a weight lower than its actual operating weight.
• Vehicles registered as exempt and being used for private or commercial purposes.
• Vehicles stating a use of less than 5,000 miles (7,500 miles for agricultural vehicles) annually.
• Continuous re-titling of vehicles.
• Bribery.
• Failure to remit.
• Falsifying or forging an IRS Form 2290.

State and county vehicle registration data may be used to verify the motor carrier has registered the vehicle at the proper operating weight. Motor carrier enforcement data and International Registration Plan and International Fuel Tax Agreement filings may also be used to verify mileage claims.

Failure to pay the HVUT by the required date could result in an IRS penalty equal to 4.5% of the total tax due assessed on a monthly basis for up to five months. In many states, the registration of vehicles is suspended when proof of HVUT payment has not been provided.

Simply filing late has consequences as well. Late charges include a 0.5% penalty (based on the total tax due) along with possible interest charges of 0.54% per month. Additional penalties, including fines and jail time, are possible for those deemed to be evading the tax payments.

I think my vehicles are exempt from HVUT. Are they?

Some groups and some vehicles are exempt from HVUT. Exempt groups include vehicles operated by federal, state or local governments (including the District of Columbia); American Red Cross; nonprofit volunteer fire departments, ambulance associations and rescue squads; Indian tribal governments when the vehicles are used for tribal government functions; and mass transportation authorities.

Even if a carrier is not part of one of the exempt groups, some of a carrier’s vehicles may be exempt. Exempt commercial vehicles include:

• Those traveling fewer than 5,000 miles annually or agricultural vehicles traveling fewer than 7,500 miles. A suspension of the HVUT can be filed for vehicles expected to meet this criteria during the reporting period. If the suspended vehicle exceeds the mileage use limit during the reporting period, the tax becomes due.
• Vehicles not considered highway motor vehicles — e.g., mobile machinery for nontransportation functions, vehicles specifically designed for off-highway transportation, and nontransportation trailers and semitrailers.
• Qualified blood collector vehicles used by qualified blood collector organizations.

Exempt carriers are still required to file Form 2290 but will not owe any tax payment for these vehicles. They may also need to notify local motor vehicle departments when they plan to claim an exempt status.

I sold 3 trucks and bought a new one this year. Will I get an HVUT refund?

Maybe. The IRS HVUT takes into consideration vehicles that are added or subtracted from a fleet in a given tax period. For instance, if you add a new vehicle to the fleet on Nov. 1, you would be required to pay a prorated portion of the yearly tax based on when the vehicle first was used on a public roadway. That payment would be due by the end of the following month, in this case, Dec. 31.

If a vehicle is sold, a claim for refund can be made, but that may have to wait until the tax period has ended. This credit would also apply to any vehicle that didn’t travel more than 5,000 miles (7,500 for an agricultural vehicle) or was stolen or destroyed.

Carriers that participate in an approved state vehicle replacement program may also be eligible for a credit.

How do I file my HVUT?

The HVUT should be filed by Aug. 31 for each vehicle that uses a public roadway for the tax period that covers July 1 through June 30 of the following year.

Filers must file Form 2290 (first and second pages must be completed) along with both pages of Schedule 1. An established employer identification number is required to file Form 2290.

Electronic filing is encouraged for all but is required for anyone filing for 25 or more vehicles.

Proof of payment is required by most states in order to register a vehicle. A stamped copy of Schedule 1 is usually sufficient for this purpose. A stamped copy is also required for any Canadian or Mexican vehicle looking to cross the border into the U.S.

J. J. Keller advises maintaining all records of taxable highway vehicles, including all returns and schedules, for three years after the date the tax is due or paid.

Conclusion

Commercial motor vehicle operators face a large compliance burden. The HVUT, while not one of the more complicated tax scenarios they face, nonetheless requires a certain attention to detail. The tax is part of a complicated regulatory environment that can be more easily managed with the help of compliance specialists like J. J. Keller & Associates, who offer multiple options for filing including the 2290online.com service.

Click for more articles by Brian Straight.

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Editor: Brian Straight