Controlling a fleet of vehicles comes with different logistical demands including maintenance of vehicles in a fleet and compliance with tax obligations. One of the tax obligations that are most important to fleet managers is the submitting of Form 2290 which is related to the Heavy Vehicle Use Tax (HVUT). Failure to understand and adhere to this obligation can result in penalties and compromise operational efficiency in a fleet. What then are the Filing details of Form 2290? Here is a step-by-step instruction which every fleet manager should be aware of.

What is Form 2290 and What Role Does It Play In HVUT?

Form 2290 is a version of Form 1041 used for Heavy Vehicle Use Tax. Heavy trucks, those with a gross weight of 55,000 lbs or more, are taxed under this specified tax structure. Heavy vehicles are charged this tax since they can undertake more hazardous tasks and can even be considered damaging. In American highways, certain repairs are expected to be paid by taxpayers, but heavy vehicles cause wear and tear, so Vehicle taxes like VMT only apply for those vehicles which contribute to that damage.

Filing Form 2290: Who Qualify?

The form should be submitted by any fleet manager, owner operator or a carriage company that carries highway bulk irrespective of the weight criterion so long as the vehicle qualifies in this regard. This includes the following persons:

• Trucking Companies – Large and small trucking companies that use trucks more than 55,000 lbs are eligible to file this form.
• Owner-Operators – Independent contractors along with heavy truck operators are required to file though they may operate only one truck in most cases.
• Heavy Vehicle Engaging Businesses – Corporations within industries such as agriculture and construction who operate heavy vehicles on highways are also required to comply.

According to Internal Revenue Code (IRC), section 4483, “HVUT applies for any vehicle that is registered for use on public roads for any period during a tax year. Such tax years...”

When to submit Form 2290

The periods when Form 2290 is submitted to the IRS and filed is from July 1 to August 31 every year; the tax year for these filings commences on July 1 until June 30. But if one has added another vehicle within the tax year then the fleet manager will have advocated to the last day of the month after that such vehicle has been used for a month to furnish Form 2290 for that particular vehicle. Adhering to these dates is important if you want to stay clear of late payment fines and penalties from IRS.

Key Information Required for Form 2290

With regard to the completion of Form 2290, relevant information will be required which will include: the following are also required (VN) V numbers, including: manage for all the vehicles with ‘VNs’ they will also be proximate for specific classifications, and:

• Vehicle Identification Number (VIN) – It has to be supplied in application form .
• Gross Taxable Weight – In this instance the percent tax is calculated according to the total weight which encompasses, the weight of the vehicle when it is not loaded with any trailer and the weight of the maximum load that is normally carried.
• First Use Month – It is referred to the month in which the motor vehicle may be used on any public highways for activities other than internal affairs within the tax period stipulated.

Such specifics should be rendered in the Filing so that avoidance of any reason for filing it, would be possible or causing any delay of an aspect level.

HUT Tax Figures

Owing to the gross taxable weight of the vehicles as well as the number of miles which each vehicle has been driven, then the amount of tax that is payable will be distinct for each vehicle. For all vehicles including those used for agriculture that are driven less than five thousand miles, tax is suspended and therefore vehicles are not required to pay taxes for that year but are still required to submit Form 2290 in order to request for this non-taxable status.

For each owner of the vehicles, there is a rate table that the IRS includes in the Form 2290 instructions. This allows fleet managers to range in potential tax burden according to their vehicles' pounds. There is a disparity in rates corresponding to vehicle weight and if there are changes in the weight of the vehicle’s taxable weight then, a change of the return may be needed for that duration of reporting time.

Submitting Form 2290: A Walkthrough

Form 2290, also known as a Heavy Vehicle Use Tax Return, can be filed in two ways -- e-file or file by paper. Note that laws indicate filing by electronic means is a must for companies with 25 or more vehicles.

• E-File: This option is quicker when compared to the traditional way of filing. This method is also secure meaning your documents will be in safe hands throughout the process. Using the e-filing services also allows one to get their IRS Schedule 1 processed and approved faster as compared to any other method. Further, there are several e-filing websites due to which many fleet managers do not find the process of e-filing completely tedious.
• File by Paper: For smaller fleets, or individuals with a fleet of vehicles less than 25 vehicles, filing by way of paper is an option, albeit with the downside of a longer period until the task is completed due to processing time.

The IRS will send you a copy of the Schedule 1 and this piece of paper is simply stamped and is used to confirm the amount of money that has been paid. It is vital when it comes to the renewal of vehicle registration.

Fines of infractions in Form 2290 Filing

The IRS has imposed sanctions for the late submission of Form 2290, something that fleet managers are all too familiar with. For a late submission, the penalty is generally 4.5 percent of the total tax amount outstanding and is levied every month for five months. There is also a penalty for late payment of 0.5 percent monthly. Tax on unpaid amounts also bear interest.

Fleet managers need to be careful to file Form 2290 in good time ahead of the August 31st deadline, or any other deadline applicable for the newly acquired vehicles to avoid these fines.

Exceptions and Special Cases

Although most heavy vehicles must file Form 2290, there are some exceptions:

• Government Vehicles – Vehicles owned by the federal government, state government or local government do not file any returns.
• Non-Profit Organization Vehicles – Some non-profit organizations are exempt from paying the HVUT tax as well.
• Low Mileage Exemption – Vehicles whose mileage do not exceed five thousand in a year or seven thousand five hundred miles in the case of vehicles used for farming may qualify for suspended tax status.

Just like the first, the fleet manager also bears the responsibility to adequately record the mileage and service so as to bolster any applications for exemption tax or suspended tax status.

Record-keeping and Compliance

According to IRS laws, truck fleet operators must hold records of the filing of Form 2290 and the use of the vehicles for not less than three years. Such documents consist of, but are not limited to, copies of returns filed, mileage records of vehicles that do not meet the criteria for exemptions, as well as any documents related to the purchase or sale of the vehicle. Proper record management policies come in handy during an audit process as well as when fleet managers need to calculate expenses incurred with respect to the fleet.

Role of CPAs in Form 2290 Compliance Approach

Form 2290 compliance in relation to fleet managers can be very easily accomplished by peppermint CPAs because of their expertise in fleet management. They also assist in calculating the relevant tax, ensuring that deductions are claimed to the maximum possible and filing the form correctly and most importantly the first time. CPAs’ practice do not end with filing the forms and there are changes in the tax practices which fleet managers need to be made aware and also advise them where there are suitable opportunities for tax savings factoring the fleet size and use.

By conducting business on behalf of the fleet managers in as far as Form 2290 filings and other tax obligations are concerned, this allows the fleet managers to concentrate on operational issues and as a result saving them time and giving them peace of mind.

It is imperative for fleet managers to grasp and follow Form 2290 rules so as to keep their operations within legal standards and remain profitable. Filing deadlines, tax estimates and even criteria for exemptions, every aspect of Form 2290 is quite important for effective operation of the fleet and avoidance of unnecessary penalties. Ensures that both situations are comfortable for the fleet manager – whether the Form 2290 is completed together with a CPA or inhouse then completed in a timely manner so that the main objective of the fleet manager which is keeping the vehicles running is not affected.

Note: For more information, visit IRS website