EXCEPTIONS TO $550 BILL
If you gross over 75,000 pounds, you owe the top rate of the heavy vehicle use tax, $550. The one exception is logging trucks, which max at $412.50. The lowest rate is $100 ($75 for loggers) for 55,000 pounds or less. An IRS schedule prorates fees between 55,000 and 75,000 pounds.
LOW MILES, NO PAY
If your remnant of small-fleet dreams is that old rig waiting under your shed for an engine overhaul, it might be exempt from the heavy vehicle use tax. The fee is suspended for any year with 5,000 miles or less, or 7,500 miles or less for agricultural vehicles.
You can still use an installment plan to pay for that Franklin Mint diecast 1939 Peterbilt or the cubic zirconia ring you bought off QVC. But when it comes to the heavy vehicle use tax, quarterly payments are out. Starting this year, the Internal Revenue Service wants the whole wad – $550 for most Class 8 trucks – up front.
That means for the tax period July 1 to June 30, Form 2290 and its accompanying tax must be paid no later than Aug. 31. It’s not the end of the world if you just missed it, though as with all IRS penalties and interest, the meter’s running at a good clip. Wait an entire year to file, for instance, and it would cost an additional $180 or more, says Russell Coffee of American Truck Business Services in Denver.
A bigger problem could be red tape that, if not resolved, causes downtime. The state must “receive proof of payment of the federal heavy vehicle use tax as a condition of vehicle registration,” Coffee says. Some states have been less picky about this in the past, he says, but it appears the single deadline will make enforcement more uniform. “This is the main way the IRS is able to collect – by being sure states do not issue registration or tags without owners paying it,” Coffee says.
If your tax preparer stays well-versed in trucking matters, you shouldn’t have to worry about forgetting this annual fee. Preparers who are not up on trucking or who don’t subscribe to a tax update service might be unaware of such changes, Coffee says.
There’s another pitfall on the opposite end, and it’s much more expensive than a year’s penalties and interest. If you’re in a lease-purchase, you could wind up paying this tax twice. The first would be the carrier paying it, then deducting it from your settlement. The second would be your getting Form 2290 in the mail, not realizing you’ve already paid, and paying again.
“Make sure the carrier hasn’t paid it,” Coffee says. “We run into that all the time. Clients don’t know who’s paying it.”
If you’re planning to buy a truck soon, don’t think you can wait until August 2006 to pay the tax. “Form 2290 must be filed by the last day of the month following the month of first use,” say IRS instructions. So if you put a newly acquired rig into service this month, for example, have your checkbook handy when the IRS comes trick-or-treating at the end of October.
"Until a formal regulation is established with clear guidelines and borders ...