Thursday, April 29, 2010

Process involved before getting your truck on road

Before you can legally operate your big rig in interstate commerce, you must: file Form 2290, Heavy Vehicle Use Tax, with the IRS, register the truck with IRP,register the truck with SSR, and register with IFTA.
Vehicle Registration. The Intermodal Surface Transportation Act of 1991 created the International Registration Plan (IRP), which is a streamlined system for truck registration and fuel tax reporting. Every state is a member of IRP, and your base (home) state's motor vehicle division is responsible for the licensing and registration of motor carriers under the IRP and the International Fuel Tax Agreement (IFTA).
Although you must register in every state you operate your truck, and each state collects vehicle registration fees and various taxes, under IRP you fill out one form indicating the states you will drive through and pay the registration fee to your base state. Only one license plate and one cab card is issued for each vehicle registered under IRP. The vehicle is known as an apportionable vehicle. Your cab card lists the states where your vehicle is apportioned. If you have to drive through a state where your truck is not registered, you can obtain a temporary registration.
In addition to IRP, you also need Single State Registration System(SSRS), which gives you the authority to use your truck and trailer to transport freight in these states. Once again, your truck must be registered under SSR in every state you operate your truck. Only 40 states participate in SSR. If your base state is not a member, you must choose a participating state in which to obtain your SSRS credentials. Kentucky, New Mexico, New York, and Oregon require additional tax credentials.

The Federal Highway Use Tax must be filed for heavy vehicles if your truck's taxable gross weight exceeds 55,000 pounds. The tax period runs from July 1 to June 30, and the tax is due on August 31 each year. However, when you buy a truck, you must file this form and pay the tax to the IRS by the last day of the month following the month you made the purchase. You can pay the tax in one annual payment or in quarterly installments.
If you fail to pay the tax on time, the IRS will assess penalties and late fees.

After the IRS has processed your Form 2290, you will receive a stamped copy for your records. Also keep the canceled check as proof of payment with your records.
The IRS provides Form 2290, Heavy Vehicle Use Tax Return, and it is self-explanatory. However, if you prefer, your accountant or a permit service can file the form for you.
The International Fuel Tax Agreement (IFTA) regulates the administration of road and fuel taxes among member jurisdictions. The purpose of IFTA is to establish and maintain the concept of one fuel use license and administering base jurisdiction for each licensee. A qualified motor vehicle is a motor vehicle used, designed, or maintained for transportation of persons or property and:
  • Having two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds; or
  • Having three or more axles regardless of weight;
  • or is used in combination, when such combination exceeds 26,000 pounds. Source: Arizona Motor Carrier Services.
The Owner-Operator (licensee) receives one fuel tax license, which is issued by the base state and authorizes travel in all IFTA jurisdictions. The IFTA license is valid for a calendar year, from January 1 to December 31, requiring annual renewals. You (the licensee) must file quarterly fuel tax returns reporting all miles accumulated by your truck in each jurisdiction (member state) to your base (home) state. The report must show all miles traveled and fuel purchased and consumed in each IFTA jurisdiction. Your base (home) jurisdiction will collect and transmit fees to other member jurisdictions or will issue a refund if you overpaid. Fuel tax audits are only performed by the base state.
Under this system, you must carefully plan and document your fuel usage and purchases and miles traveled in each state. For example, if you purchase 100 gallons of fuel but only use 50 in that jurisdiction, you are due a fuel tax credit. If you used 100 gallons but purchased only 50 gallons of fuel in that jurisdiction, you owe tax.
You can efile your form 2290 at and have your schedule-1 in minutes.

Friday, April 2, 2010

Roles and Responsibilities in HVUT Collection and Administration

The code of federal regulations establishes a framework for HVUT enforcement in 23 CFR 669 and assigns responsibilities to multiple federal and state agencies.

Internal Revenue Service
The IRS is responsible for HVUT collections and taxpayer audits.

States are required to obtain proof of payment when registering heavy trucks subject to the tax. Further, 23 CFR 669.11 requires that the Governor of each state certify HVUT compliance prior to July 1 of each year. In so doing, the Governor or his or her designee must submit a letter with text prescribed in 23 CFR 669.9 and contained within Form FHWA-1563 certifying that the state is obtaining proof of payment as a condition of registering heavy trucks subject to the HVUT.

Federal Highway Administration
FHWA is required under 23 U.S.C. 669.21 to periodically review the state's procedures for complying with HVUT requirements. This review must include the inspection of registration records and other supporting documentation. Part 699 of the Federal-aid Policy Guide requires FHWA to conduct HVUT compliance reviews at least once every three years for each state in the nation. Responsibility for conducting these reviews falls to the division offices.

If a state fails one of the periodic compliance reviews, the Secretary of Transportation has the authority to withhold up to 25 percent of the state's Interstate Maintenance funds [23 U.S.C. 104(b)(5)]. A finding of non-compliance could, therefore, cost the state millions in lost highway funding. Thus, it is imperative that states take measures to ensure HVUT compliance.

More Information

Link to 23 CFR 669.11:
Link to 23 U.S.C. 669:;sid=33be34f2784b538a5c0ef4b46f81ca3b;rgn=div5;view=text;node=23%3A1.;idno=23;cc=ecfr makes it easy to file Highway use tax. YTT is IRS approved efile service provider for tax form 2290 and 8849. You can also amend your tax 2290 with simple steps.

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Procedures for Paying the HVUT

IRS Form 2290 is used when paying the HVUT. The Internal Revenue Service (IRS) is responsible for collecting the tax, so all payments are made to the IRS. Payments made in 2007 cover the period from July 1, 2007 to June 30, 2008. For new vehicles, IRS Form 2290 must be filed by the last day of the month following the month of first use.

Once the carrier has paid the tax, proof of payment must be submitted with their registration renewal to relevant state authorities. Proof of payment may generally be provided either in the form of a receipted and stamped Schedule 1 from IRS Form 2290 or a copy of a completed IRS Form 2290 with a front and back copy of the canceled check used to make the payment. This process is illustrated in the image shown below.

For large carriers with 25 or more vehicles, electronic filing is accomplished using a credit card or other means of electronic payment. When presenting proof of payment, the taxpayer must have the original electronic receipt or a copy of the receipt and a credit card or other bank statement showing evidence of the transaction.

In the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), Congress took action to enhance HVUT enforcement through several provisions:

  • Mandating that HVUT taxpayers with 25 or more vehicles file taxes electronically
  • Repealing the option to pay the HVUT on a quarterly basis
  • Funding the development of an electronic system for the filing process
Due to these provisions, the procedures for paying the HVUT will be changing in the coming years. How that process might ultimately look is presented in the final module of this training course.

File your heavy vehicles usage tax @

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Why Is the HVUT Important?

The Federal HTF protects the nation's investment in our transportation infrastructure. In 2007 alone, Federal HTF receipts topped $39.9 billion, with $34.9 billion dedicated to the HTF's Highway Account. The Federal HTF finances a broad spectrum of transportation investments, including:

  • Highway improvements (e.g., land acquisition and other right-of-way costs, preliminary and construction engineering, construction and reconstruction, resurfacing and restoration costs of roadways and bridges)
  • Highway and bridge maintenance activities
  • Highway law enforcement
  • Safety programs (e.g., driver education and training, vehicle inspection programs, enforcement of vehicle size and weight limits)
  • Congestion relief projects
  • Debt service
  • Administrative costs (e.g., research, engineering)

Investment in our nation's highway infrastructure helps:

  • Save lives, time and money
  • Reduce the number and severity of crashes for all kinds of vehicles
  • Enhance the ability of the entire community of emergency responders
  • Lower fuel and insurance costs
  • Increase mobility
  • Ease congestion
  • Decrease energy consumption
  • Boost air quality
  • Improve the efficient movement of goods
  • Raise business productivity
  • Strengthen the nation's economic productivity
Since the vast majority of all funds contributed by states to the Federal HTF are returned through highway fund apportionments, there is a direct incentive for state agencies to take necessary measures to enhance HVUT compliance.

More Information

Link to 2007 Urban Mobility Report:
Link to Status of the Nation's Highway Bridges, and Transit: Conditions and Performance:


E-File IRS Form 2290 @

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How Much Revenue Is Raised Through the HVUT?

The HVUT is a significant source of transportation funding in the U.S. In 2006 alone, the HVUT generated more than $1.4 billion in Federal Highway Trust Fund (HTF) revenue.

The figure shown below documents historic collections associated with the HVUT. The figure highlights three time periods of interest: 1984-85, 2001 and 2006. In 2001, HVUT receipts slumped due to the sagging economy and its impact on the motor carrier industry. In recent years, the HVUT has rebounded due to economic growth and the incentive to pre-buy or purchase trucks prior to 2007 to avoid the new EPA emissions rule. In 2006, HVUT revenue represented approximately 4.2 percent of total revenue deposited in the Highway Account of the Federal HTF.

The figure also underscores the importance and potential payoff associated with strong enforcement. On July 1, 1984, HVUT rates were raised to their current levels. Not surprisingly, fiscal year (FY) 1985 HVUT revenues grew by nearly $200 million. On October 1, 1985, States were required to verify proof of payment as a condition of registering heavy trucks subject to the HVUT. In the year following introduction of this enforcement measure, HVUT revenues grew by an additional $154 million, representing an increase of nearly 41 percent.

More Information

Link to Highway Statistics, Table FE-9:


File and print Schedule-1 for Form 2290 @

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What Is the HVUT and Who Must Pay It?

The heavy vehicle use tax or HVUT is a fee assessed annually on heavy vehicles operating on public highways at registered gross weights equal to or exceeding 55,000 pounds. The gross taxable weight of a vehicle is determined by adding:

  • 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, and
  • the weight of the maximum load customarily carried on the vehicle and on any trailers or semitrailers customarily used in combination with the vehicle
If the gross taxable weight is from 55,000 to 75,000 pounds, the HVUT is $100, plus $22 per 1,000 pounds over 55,000 pounds. For over 75,000-pound vehicles, the maximum HVUT is $550 per year. The table below illustrates these categories.

There are a number of groups that receive exemptions from the HVUT, including:

  • The Federal Government
  • State or local governments, including the District of Columbia
  • The American Red Cross
  • Nonprofit volunteer fire departments, ambulance associations or rescue squads
  • Indian tribal governments (for vehicles used in essential tribal government functions)
  • Mass transportation authorities
There are also a number of vehicles exempted from the HVUT:

  • Commercial vehicles traveling fewer than 5,000 miles annually
  • Agriculture vehicles traveling fewer than 7,500 miles annually
  • Vehicle not considered highway motor vehicles — e.g., mobile machinery for non-transportation functions, vehicles specifically designed for off-highway transportation, and non-transportation trailers and semi-trailers
  • Qualified blood collector vehicles used by qualified blood collector organizations
Exempt carriers may be required to file tax forms with the IRS or notify the local department of motor vehicles (DMV) of the exempt status being claimed.

More Information

Link to IRS Form 2290:
Link to IRS Form 2290 Instructions:

E-File Tax 2290 @

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