Trucking is a heavy highway motor vehicle operation; if you're a trucker, anyone put it plainly, you must know these tax obligations to stay within the bounds of law.
Heavy Highway Vehicle Use Tax is for excise duty practicable yearly, filed with the IRS on Form 2290. Truckers often find themselves in situations where they may not owe the complete annual amount of this tax; this is where we start talking about the prorated 2290 tax.
Prorated tax means the reduced amount of tax calculated under HVUT for a heavy vehicle, because the vehicle was operative on public highway after commencement of the regular tax period.
The regular tax period for HVUT runs for a full 12 months, from July 1 to June 30 of the next calendar year. If the vehicle subject to tax (taxable gross weight: 55,000 pounds or more) is first operated on a public highway in any month other than July, you have to pay the tax only for the months remaining in that particular tax year. This reduced requirement, therefore, is the partial-period tax, or prorated tax.
The prorated Form 2290 must be filed when a taxable vehicle is first used by the owner upon a public highway in a month, other than July. This usually happens when:
You buy a brand-new heavy commercial truck and put it in service midway through the year.
You take a vehicle that had been previously suspended (not running for less than 5,000 miles) out of suspension into taxable service.
Time lapses: The IRS, for its sake, clearly defines the latest date for prorated 2290 filing. Form 2290 and prorated tax must be filed and paid within one month following the month the vehicle is first used on a public highway. For example, if a brand-new truck is put to use in November, the last date for filing would be December 31.
A note on filing: All vehicles that are put into service during the same month may be reported on one single prorated Form 2290.
To determine your prorated liability, you must calculate the partial-period tax using the official calculation method. The two main things that the prorated 2290 tax calculation depends on are:
It goes without saying that taxes are levied on a monthly basis until the end of the tax year: June 30 of the following year. It is most gratifying that the IRS has provided tax tables in its Form 2290 instruction to facilitate your quick lookup of the exact prorated amount owed according to a given weight category and starting month. When making this calculation, one must remember that it starts with the month 'the vehicle was first put on the road and not the date' it was purchased.
Non-filing by the deadline set forth for prorated Form 2290 could mean a disaster financially for trucking companies and owner-operators. The IRS collects a hefty fine and interest for both late filing and late payment. These penalties are calculated monthly and accumulate fast; therefore, timely HVUT compliance is so critical for the smooth registration and working of the trucks.
There are several pieces of information useful for you e-filing or filing a paper return for your Prorated Heavy Highway Vehicle Use Tax return:
Filing properly and fast gives you stamped Schedule 1 required for your state registration or tag renewals.
Note: For more information, visit IRS website
