The processing of heavy highway vehicle use tax (HVUT) Form 2290 can be said to be one of the more demanding tasks expected from you as a CPA who providently oversees trucking clients. Since this tax is applicable to vehicles that are fifty five thousand pounds or over, Form 2290 is quite important to your trucking clients in ensuring their IRS compliance. In the hopes of even greater reduction of unorganized submission of Form 2290, we suggest the following ways.

Know the Filing Deadline

The IRS states every form 2290 should be filed every year for all the qualifying trucks over the weight criteria. The filing period starts on July 1 and ends on June 30 and tax payment is January 31 of every year for trucks that were used during the previous year. For newly acquired vehicles or for used vehicles which are put into use for the first time after July 1, the form will be filled in and submitted by the last day of the month which follows after the first month of its operational use.

Key Points:

The filing so commences on July 1 every year.

August 31 is the tax payment cut off date for all trucks that were working on or before July 1.

For the new vehicles, Form 2290 must be completed by the end of the month following the first usage of the vehicle.

Gather Necessary Information in Advance

In order to avert procrastination, ensure that the necessary information is in hand before the submission of Form 2290. The following details are particularly necessary:

• Employer Identification Number (EIN): This number is needed when completing Form 2290. You cannot use a Social Security Number (SSN) for this purpose with the IRS.
• Vehicle Identification Number (VIN): The VIN is a critical figure, be careful to ensure that every filing is done with the correct number to prevent delays.
• Taxable Gross Weight of the Vehicle: Determine to what class of weight the practical vehicle tax falls.

Classify Exempt Vehicles Properly

All vehicles are not liable for the HVUT. Do your best to furnish the necessary details of exempt vehicles in order not to suffer loss from tax by unjustified fillings. Examples of exempted vehicles that are frequently presented are:

• Agricultural Vehicles: These vehicles are used exclusively for farming activities and should not be driven for over 7500 miles in a year if they are to qualify for exemption from the HVUT.
• Logging Vehicles: These different types of vehicles are used for forestry product-related transportation only and they can also fit into lower HVUT tax.

Use E-Filing for Speed and Accuracy

Clients, who own or operate 25 or more vehicles, are required to e-file form 2290. Still, for worked with less than those fleets, e-filing would definitely be a better option because of time. The e-filing system which has been recommended by the IRS makes real time confirmation of the filing and improves efficiency than working with paper forms.

Benefits of E-Filing:

Validation of forms is undertaken promptly and fewer amounts of time are utilized during processing.

There are little or no problems in monitoring, editing, or requesting copies of the forms.

Faster Schedule 1 has been put forward, which is useful in the truck registration process.

Track Schedule 1 for Proof of Payment

The IRS will provide Schedule 1 upon filing Form 2290 and paying the HVUT, which shows the tax has been assessed and paid. This documentation is very important to trucking clients since, in order to renew vehicle registrations, they have to submit this document to state vehicle department. And do not forget to collect and send out Schedule 1 to your customers once it becomes available in due course.

Key Steps:

Once customers have received Schedule 1, confirmation is made that it is correctly filled.

It should be done as soon as possible as the Schedule aims to facilitate the registration of the vehicle with the Department of Motor Vehicles (DMV).

Recognize the Consequences of Not Meeting the Deadline

Late-filing of Form 2290 makes the trucking clients liable to pay penalties and interest. Shear penalty for omission to file a return is 4.5 percent of the total tax liability and this penalty accrues monthly for a maximum of 5 months. A one-half percent of the total tax due accrues every month until the balance is paid.

Penalty Management Tips:

Set deadlines on calendar or notify your clients within reach. In that instance where the due date arrives and the tax remains unpaid by the client, regardless of the authentic intention it is advisable to file Form 2290 to avoid likely penalties for late filing.

Determine Availability of Low Mileage Credit

If any of your client's trucks have been used for less than five thousand miles (7,500 for agricultural vehicles) during the taxable periods, they may qualify for HVUT credit or a refund. This is crucial in determining the mileage credit for construction vehicles which attracts this limit, and this, therefore, requires filing of Form 8849 to effect the refund.

Steps to Claim the Credit:

Get the mileage of the truck and ensure it is creditable for the claim.

Complete the form 8849 with the relevant documentary evidence and apply for the refund.

Help Clients with Changes.

If there is any amendment in the weight of the vehicle, the mileage, or the taxable status, you will have to prepare an amended Form 2290. For instance, it is necessary to go back and amend the OEM Form 2290 if a snowplow fitted truck which had previously been submitted as a ‘suspended vehicle’ begins to get more mileage than allowable.

Situations Requiring an Amended Form 2290:

Increase in taxable gross weight: Amend when the truck's weight classification changes. Mileage over the limit: Amend when the distance on nonagricultural vehicles reaches five thousand miles or when an agricultural vehicle reaches seven thousand five hundred miles.

Get Ready for Vehicle Sale or Assignment.

If a client disposes of or transfers ownership of their truck appeal, then please make sure that the tax liabilities are properly addressed. In case of the middle of the year sale of a vehicle, the buyer will be charged for the HVUT, but your customer may get back part of the tax year which elapsed unused.

Some things to do before selling the vehicle:

State the precise date for the sale or transfer, or where applicable, the two events took place.

If the relevant measures are applicable, help with the rest of the process which is required for claiming a credit or refund.

Be Aware of Changes in IRS Rules and Regulations

It is apparent that the IRS regularly changes the regulations on Form 2290 and the heavy vehicle use tax. For example, as a Certified Public Accountant, you do not sit on the last rules because your customers’ business is not exposed to use the non-compliance risks due to fines. Subscribe to IRS alerts and publications for any changes on trucking tax regulations.

Helpful Resources:

Instruction and Update on IRS Form 2290.

IRS Trucking Tax Center for tax issues relevant to the industry.

Forums and updates of tax professionals to keep abreast.

Dealing with Form 2290 filings on a periodic basis for the trucking clients is complicated, however, it is overly simplistic than most practitioners’ as only requiring some few pointers. It would be ideal if you understand the filing deadlines, how to e-file, how to track Schedule 1, and follow up IRS rules to serve better your trucking clients and maintain compliance on HVUT obligations.

Note: For more information, visit IRS website