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New Law Changes Highway Use Tax Rules: Installment Payment Option Eliminated
By: Richard Chapo
The IRS is reminding truckers and other owners of heavy highway vehicles that
the installment option for paying the federal highway use tax will no longer be
available. This change was included in the American Jobs Creation Act of 2004
and applies to filers of Form 2290, Heavy Highway Vehicle Use Tax Return.
Beginning with the Form 2290 for the tax year that begins on July 1, 2005 and
ends on June 30, 2006, the balance due shown on the form must be paid in full by
the due date of the return. In most cases, the deadline for filing the return
and paying any tax due is August 31, 2005. Payment can be made by check, money
order or electronically through electric payment (EFTPS).
In previous years, taxpayers who timely filed Form 2290 could choose to pay the
tax in four equal installments. Ordinarily, these installment payments were due
on the last day of August, December, March and June. About 148,000 taxpayers
chose this option last year in 2004.
In general, the highway use tax applies to trucks, truck tractors and buses with
a gross taxable weight of 55,000 pounds or more. Ordinarily, vans, pick-ups and
panel trucks are not taxable because they fall below the 55,000-pound threshold.
For trucks and other taxable vehicles in use during July, payments are due on
August 31. The tax is based on weight and normally ranges from $100 to $550 per
vehicle. A variety of special rules, discussed in the instructions for Form
2290, apply to vehicles with minimal road use, logging or agricultural vehicles,
vehicles transferred during the year and those first used on the road after
July.
State governments are required to receive proof of payment of the federal
highway use tax as a condition of vehicle registration. Schedule 1 of the Form
2290 is stamped and returned to filers for this purpose. This process remains
unchanged.
The Jobs Act also eliminated reduced tax rates for vehicles registered in Canada
and Mexico. For vehicles with a base registration in either country, the tax
rate was 25% below the regular rate.
In addition, the Jobs Act made electronic filing mandatory for taxpayers who
file highway use tax returns for 25 or more vehicles. The availability of
electronic filing for Forms 2290 is pending. Taxpayers should continue to file
paper returns. The IRS will notify taxpayers when the electronic filing program
is available.
About the Author:
Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax
refunds for small businesses for overpaid taxes. Discovery tax strategies and
deductions in our tax articles section.
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