Tax Help

Sales

If you sell a vehicle while under suspension, a statement must be given to the buyer and must show the seller's name, address, and EIN; VIN; date of the sale; odometer reading at the beginning of the period; odometer reading at the time of sale; and the buyer's name, address, and EIN. The buyer must attach this statement to Form 2290 and file the return by the last day of the month following the month the vehicle was purchased.

If, after the sale, the use of the vehicle exceeds the mileage use limit (including the highway mileage recorded on the vehicle by the former owner) for the period, and the former owner has provided the required statement, the new owner is liable for the tax on the vehicle. If the former owner has not furnished the required statement to the new owner, the former owner is also liable for the tax for that period.

Penalties and Interest

The law provides penalties for failing to file returns or pay taxes when due. There are also penalties for filing false or fraudulent returns. These penalties are in addition to the interest charge on late payments. The penalty for filing a return late or paying the tax late will not be imposed if you can show reasonable cause for not filing (or paying) on time. If you file after the due date (including extensions), attach an explanation to the return to show reasonable cause.

The penalty for failing to file IRS Form 2290 by August 31st is equal to 4.5 percent of total tax due, assessed on a monthly basis up to five months. Late filers not making an HVUT payment also face an additional monthly penalty equal to 0.5 percent of total tax due. Additional interest charges of 0.54 percent per month accrue as well. An HVUT liability that was originally $550 would climb to over $700 by the end of the five-month period of delinquency. In addition to these federal penalties, many states suspend the registrations of vehicles for which proof of HVUT payment has not been provided.

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)] if it fails one of its periodic compliance reviews.

Proof of payment for state registration

Generally, states will require verification of payment of the tax for any taxable vehicle before they will register the vehicle. Use the stamped copy of Schedule 1 as proof of payment when:

• Registering vehicles with the state, or
• Entering a Canadian or Mexican vehicle into the United States.

If you do not have the stamped copy, you may use a photocopy of Form 2290, Schedule 1, and both sides of your canceled check as proof of payment.

Recordkeeping

Keep records for all taxable highway vehicles registered in your name for at least 3 years after the date the tax is due or paid, whichever is later. They must be available at all times for inspection by the IRS. Also keep copies of all returns and schedules you have filed. Keep your records even if a vehicle is registered in your name for only a portion of a period. If the tax is suspended on a highway motor vehicle for a period because its use on public highways during the period did not exceed 5,000 miles (7,500 miles for agricultural vehicles), the registrant must keep the records at least 3 years after the end of the period to which the suspension applies.

Records for each vehicle should show all of the following information.

• A detailed description of the vehicle, including the VIN.
• The weight of loads carried by the vehicle in the same form as required by any state in which the vehicle is registered or required to be registered.
• The date you acquired the vehicle and the name and address of the person from whom you acquired it.
• The first month of each period in which a taxable use occurred and any prior month in which the vehicle was used in the period while registered in your name, with proof that the prior use was not a taxable use.
• The date the vehicle was sold or transferred and the name and address of the purchaser or transferee. If it was not sold, the records must show how and when you disposed of it.
• If the tax is suspended for a vehicle, keep a record of actual highway mileage. For an agricultural vehicle, keep accurate records of the number of miles it is driven on a farm.

Disregarded entities and qualified subchapter S subsidiaries

Qualified subchapter S subsidiaries (QSubs) and eligible single-owner disregarded entities are treated as separate entities for excise tax and reporting purposes. QSubs and eligible single-owner disregarded entities must pay and report excise taxes, register for excise tax activities, and claim any refunds, credits, and payments under the entity's employer identification number (EIN). These actions cannot take place under the owner's taxpayer identification number (TIN). Some QSubs and disregarded entities may already have an EIN. However, if you are unsure, please call the IRS Business and Specialty Tax line at 1-800-829-4933.

Generally, QSubs and eligible single-owner disregarded entities will continue to be treated as disregarded entities for other federal tax purposes (other than employment taxes).

Dual registration

If a taxable vehicle is registered in the name of both the owner and another person, the owner is liable for the tax. This rule also applies to dual registration of a leased vehicle.

Dealers

Any vehicle operated under a dealer's tag, license, or permit is considered registered in the name of the dealer.

Used vehicle

If you acquire and register or are required to register a used taxable vehicle in your name during the tax period, you must keep as part of your records proof showing whether there was a use of the vehicle or a suspension of the tax during the period before the vehicle was registered in your name. The evidence may be a written statement signed and dated by the person (or dealer) from whom you purchased the vehicle.

CAUTION

If you acquire a vehicle and use it on the public highways in any month other than July, you are liable for the tax for the prorated tax period. You must file Form 2290 and pay the tax by the last day of the month after the month you use the vehicle.

If there is an unpaid tax liability for the months before you acquire and use the vehicle during the tax period, you are liable for the total tax for the entire period, to the extent not paid. In that case, you must file Form 2290 and pay the tax by the last day of the month after the month notification is received from the IRS that the tax has not been paid in full.

Paper

Mail Form 2290 to the address shown under Where To File. If you did not pay the tax using the Electronic Federal Tax Payment System (EFTPS), mail Form 2290-V and your check or money order with Form 2290.

Where to File

If you are not filing electronically, mail Form 2290 to:

Private Delivery Services

You can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. These private delivery services include only the following.

• DHL Express (DHL): DHL Same Day Service.
• Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.
• United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.
The private delivery service can tell you how to get written proof of the mailing date.

CAUTION

Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.