Waynes World - June 2005

REQUIREMENTS FOR SETTING UP A GOOD
VEHICLE INSPECTION PROGRAM AND...

YOUR FEDERAL HEAVY
VEHICLE USE TAX IS DUE
By Wayne Schooling

A: Your question is very timely because it is that time of the year again – when federal highway use tax on heavy motor vehicles that are operated on public highways must be paid to the Internal Revenue Service by the motor carrier or owner. The tax applies to highway motor vehicles having a taxable gross weight of 55,000 pounds or more and includes trucks, truck tractors and buses. A highway motor vehicle includes any self-propelled vehicle designed to carry a load over public highways, whether or not also designed to perform other functions. A public highway is any road in the United States that is not a private roadway. This includes federal, state, county and city roads. Generally, vans, pickup trucks, panel trucks and similar types of trucks are not subject to the tax because they have a taxable gross weight of less than 55,000 pounds. The taxable gross weight of a bus is its actual unloaded weight, fully equipped for service, plus 150 pounds for each seat provided for passengers and the driver.

You must file Form 2290 and a Schedule 1 for the period of July 1st of one year through June 30th of the next, if a taxable highway motor vehicle is registered, or required to be registered, in your name, under any state, District of Columbia, Canadian, or Mexican law at the time of its first use during the period. You may be an individual, corporation, partnership, or any other type of organization (including non-profit charity, education, etc). The Schedule 1 is used to list all reportable vehicles by their category and the vehicle’s identification numbers (VIN).

Proof of payment of this tax is required in order to register your vehicle in any jurisdiction, both for the first time and at renewal time. Proof of payment consists of a receipted Schedule 1 of Form 2290 “Heavy Highway Vehicle Use Tax Return” stamped and returned to the taxpayer by the IRS after the taxpayer has paid the tax on the vehicle. Form 2290 is used to figure and pay any tax due on heavy vehicles, or to claim exemptions from the tax when such vehicles are expected to be used on public highways 5,000 miles or less (7,500 miles or less for agricultural vehicles) during the period. Additional returns must also be filed if the taxable gross weight of a vehicle increases during the tax period.

The tax period begins on July 1st and ends the following June 30th, and you must pay the full year’s tax on all vehicles that you have in use during the starting month of July. The tax can be paid in a single payment with your return or in four equal installments. Returns must be filed by the last of the month following the month of the vehicle’s first taxable use in the tax period, even if you are filing the return just to suspend the tax for a vehicle. They also must be filed in accordance with the instructions applicable to the form on which the return is made.

Canadian and Mexican registered vehicles that operate in the United States must also pay the tax. These vehicles, which are registered in Canada or Mexico and not in the United States (other than a proportional registration under the IRP program), pay a lower rate. The tax rate is reduced by 25% for any vehicle registered in Canada or Mexico. The reduced tax applies whether or not the vehicles are also required to be registered in the United States.

Records must be kept for all taxable highway vehicles registered in your name and stored for at least three years after the date the tax is due or paid. You should also keep copies of all returns and schedules you have filed. Full instructions attached to Form 2290 show who must file, where to file, exemptions from filing, how to pay the tax, record keeping requirements, determining the taxable gross weight and other information.

Q: I want to set up the best program for my vehicle inspections. What can you suggest?

A: The regulations require that commercial motor vehicles operated in interstate or foreign commerce pass an inspection at least once a year. However, California requires trucks to pass quarterly inspections. Most data shows that vehicles inspected on a quarterly basis are much safer than those only inspected annually. The periodic inspection criteria can be found in Appendix G of Part 396. Don’t be fooled - this section is often and incorrectly confused with the out-of-service criteria used by law enforcement and DOT officials while conducting roadside inspections.
The inspection requirements of Part 396 may be met through periodic inspection programs administered by individual states or by a self-inspection, a roadside inspection, or an inspection performed by a commercial garage or similar commercial business, so long as the inspection complies with federal standards or compatible state standards. The motor carrier that has possession of the vehicle is responsible for the inspection. If the vehicle has not been inspected according to the federal standard or if there is no proof of inspection, the carrier may not place it into service.

A motor carrier self-inspection must be undertaken by a qualified inspector, whether the inspector works directly for the carrier or a third party, such as a truck stop, repair shop, or an inspection business. The inspector qualification requirements can be found in Section 396.19. Evidence of the inspector’s qualifications must be documented.

~ The NTA is a nationwide transportation benefits association established to provide services, benefits and information to owner operators, trucking companies and private fleets. For more details call (562) 279-0557 in CA or (800) 805-0040 nationwide, or visit us online at www.ntassoc.com. Until next month, “Drive Safe - Drive Smart!”