The heavy vehicle use tax (HVUT) is a tax assessed annually on certain heavy vehicles exceeding 55,000 lbs. that operate on public highways. This is an expense that disproportionately affects commercial truck drivers and agricultural vehicle drivers hauling heavy loads. This blog article will explain who is liable to pay the HVUT, who is exempt from HVUT, and when the HVUT must be paid.
WHO IS LIABLE TO PAY THE HEAVY VEHICLE USE TAX?
The tax imposed on the use of any “highway motor vehicle” which (together with the semitrailers and trailers) has a “taxable gross weight” specified as follows under 26 U.S.C. §4481(a):
- Under 55,000 lbs. – no tax imposed.
- At least 55,000 lbs. but not over 75,000 lbs. – $100 per year plus $22 for each 1,000 pounds (or fraction thereof) in excess of 55,000 lbs.
- Over 75,000 lbs. – $550.00 per year.
“Highway motor vehicle” means “[a] vehicle propelled by means of its own motor, whether such motor is powered by gasoline, diesel fuel, special motor fuels, electricity, or otherwise” that is designed to carry loads over public highways even if designed for other functions. 26 CFR §41.4482(a)-1(a). This generally covers trucks, truck tractors and buses.
“Taxable gross weight” means the sum of the actual unloaded weight of the highway motor vehicle with the semitrailers and trailers (all fully equipped for service) plus the weight of the maximum load customarily carried on the highway motor vehicle with the semitrailers or trailers of the same type. 26 U.S.C. §4482(b).
The HVUT must be paid by the person in whose name the highway motor vehicle is, or is required to be, registered under the law of the state or foreign country where the vehicle is or is required to be registered. 26 U.S.C. §4481(b). The taxpayer can be a individual, limited liability company, corporation, partnership or any other type of organization.
If the taxable gross weight of a vehicle increases during the month in which the vehicle is first used in a taxable one-year period, the tax for the vehicle for the taxable period is computed on the basis of the increased weight (e.g. additional tax must be paid). 26 CFR §41.4481-1(c)(3). However, the computation of the HVUT is not affected by a decrease in taxable gross weight, discontinued use, or converted use for the taxable one-year period. 26 CFR §41.4481-1(c)(5).
WHO IS EXEMPT FROM PAYING THE HEAVY VEHICLE USE TAX?
The following highway motor vehicles are exempt under the Internal Revenue Code from paying the HVUT:
- Highway motor vehicles owed by any state or any political subdivision of any state. 26 U.S.C. §4483(a).
- Highway motor vehicles owed by the federal government. 26 U.S.C. §4483(b).
- Certain transit-type buses. 26 U.S.C. §4483(c).
- Commercial trucks used for less than 5,000 miles per year on public highways. 26 U.S.C. §4483(d)(1).
- Agricultural trucks used for less than 7,500 miles per year on public highways. 26 U.S.C. §4483(d)(5).
- Mobile machinery (any vehicle which consists of a chassis to which there has been permanently mounted machinery or equipment to perform a construction, manufacturing, processing, farming, mining, drilling, timbering or similar operation if the operation of the machinery or equipment is unrelated to transportation on or off the public highways). 26 U.S.C. §4483(g).
- Qualified blood collection vehicles. 26 U.S.C. §4483(h).
In addition, trucks used exclusively for logging during the year are entitled to a 25% reduction in the HVUT assessed. 26 U.S.C. §4483(e).
HOW AND WHEN IS THE HEAVY VEHICLE USE TAX PAID?
Taxpayers responsible for the HVUT must file Form 2290 (Heavy Highway Vehicle Use Tax Return) with the Internal Revenue Service with payment. Form 2290 must be filed in the first month the taxable highway motor vehicle meets any of the following:
- At the time of the first use of the vehicle on public highways during the taxable period. 26 CFR §41.4481-2(a)(A).
- At the time the use on the public highways during the taxable period exceeds 5,000 miles for commercial vehicles (7,500 miles for agricultural vehicles). 26 CFR §41.4481-2(a)(B).
- At the time that an increase in the taxable gross weight of the vehicle results in an additional tax liability if the increase occurs after the month in which the vehicle was first used in the taxable period. 26 CFR §41.4481-2(a)(C).
- At the time of any use during the taxable period that is after the first use during the period, but only to the extent that the tax has not previously been paid. 26 CFR §41.4481-2(a)(D).
The “taxable period” for a vehicle begins on the first day of the month where the vehicle is put into use and lasts for the following year. For example, if you purchase and use a taxable vehicle on a public highway on June 15, 2022, then the “taxable period” begins on June 1, 2022 and continues to May 31, 2023. Form 2290 must be filed by the LAST DAY OF THE MONTH FOLLOWING THE MONTH OF FIRST USE. If the first use was June 15, 2022, then Form 2290 is due by July 31, 2022. The next taxable period for that vehicle begins on June 1, 2023, and Form 2290 for that year is due by July 31, 2023.
For taxpayers with multiple vehicles, highway motor vehicles that were put into use on public highways in the same month during the taxable period can be put on the same Form 2290. If additional vehicle are put into use in later months during the taxable period, then a separate Form 2290 must be filed. Any taxpayer who files returns in a taxable period with respect to 25 or more vehicles must file the returns electronically. 26 U.S.C. §4481(e).
When the first use of the highway motor vehicle occurs after the first month in the taxable period, “the tax shall be reckoned proportionately from the first day of the month in which such use occurs to and including the last day in such taxable period.” 26 U.S.C. §4481(c)(1).
“If in any taxable period a highway motor vehicle is sold, destroyed, or stolen before the first day of the last month in such period and not subsequently used during such taxable period, the tax shall be reckoned proportionately from the first day of the month in such period in which the first use of such highway motor vehicle occurs to and including the last day of the month in which such highway motor vehicle was sold, destroyed, or stolen.” 26 U.S.C. §4481(c)(2)(A). A highway motor vehicle is considered “destroyed” of such vehicle is “damaged by reason of an accident or other casualty to such an extent that it is not economic to rebuild.” 26 U.S.C. §4481(c)(2)(B).
OUR TAX PROFESSIONALS ARE AVAILABLE TO ASSIST YOU
Federal taxation laws can be confusing, and the rules regarding HVUT tax are no different. Many states require proof of compliance with HVUT (usually by producing a completed Form 2290 return) to register heavy vehicles at the local department of motor vehicles. Our lawyers can help you ensure compliance with your federal taxation obligations.
If you have further questions or need help filing your taxes, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.