“HVUT”
Federal Heavy Vehicle Use Tax
Update August 24, 2006
HVUT - Federal Heavy Vehicle Use Tax
• What is HVUT?
– Federal tax paid by commercial vehicle
operators on vehicles registered for 55,000
pounds and over on both inter-state and
intra-state registered vehicles.
HVUT - Federal Heavy Vehicle Use Tax
• Current Process
– Registrant obtains and completes 2290 form
– 2290 form and payment mailed to IRS
– IRS receipts 2290 (Schedule One) and mails receipt
to registrant (minimum of 6 – 8 weeks)
– Registrant presents copy of receipted Schedule One
at time of registration
– State maintains copy with registration record
– No electronic verification process for states exist
– IRS database contains only limited information and
does not include the VIN
Current HVUT Manual Payment Processes
Large Fleet Owner
Fleet owners file paper copies of
IRS Form 2290 and pay taxes
IRS returns stamped receipt
Small Fleet Owner
State Departments of Motor Vehicles
Owner, operator,
fleet administrator,
tag & title service,
leasing company
agent, …
Registrant provides IRS receipt to register vehicle;
State staff verifies stamped receipt
HVUT - Federal Heavy Vehicle Use Tax
• Current Process Issues
– Open to Fraud
– Jurisdictions must maintain hardcopy of
form for audit by FHWA or have other
approved process for verification that they
received proof
– Registrant must file paper form and pay via
check or via the IRS Electronic pay system
– Non uniform/consistent procedures across
the country
HVUT - Federal Heavy Vehicle Use Tax
• Congressional Law Changes
• Electronic filing for large carriers
– In October 2004, HR 4520 (the American Jobs Creation Act of
2004) called for improvements to the HVUT process
including:
– Creation of an electronic filing system that requires carriers
with 25 or more vehicles to file electronically,
– Repealing the quarterly tax payment option which should
improve revenue collections, and
– Creation of a credit policy for sold or replacement vehicles.
• SAFETEA-LU provided funding for the
development of the electronic filing process.
HVUT - Federal Heavy Vehicle Use Tax
• Electronic verification of payment
– SAFETEA-LU also provided funding for the
creation of an information system that will establish
an electronic payment verification process.
– SAFETEA-LU specifies that the system “shall be
made available for use by appropriate State and
Federal revenue, tax, and law enforcement
authorities, subject to section 6103 of the Internal
Revenue Code of 1986.”
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Working Group
– AAMVA and the FMCSA Expanded CVISN
working group joined forces to work with the IRS
and all affected parties to offer input and expertise
in developing a workable solution that will
hopefully be of benefit to all concerns.
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Electronic Filing
– The IRS is currently working to define the data elements
and procedures that will be used to provide electronic
filing to meet the requirement for carriers with 25 or more
vehicles that must file electronically
– The software will be developed by IRS approved third
party software developers (Turbo Tax types) or service
providers
– Carriers will be able to file through a software package
they purchase or in some cases through their own system
developed software
– Currently, the IRS is not expecting or planning to develop
a single web based application
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Electronic Filing (continued)
– Data elements on the e-filing will include all the necessary
fields that currently exist on the paper Form 2290
– The taxpayer will be able to print out some sort of receipt
or validated 2290 for their records and to provide as proof
of payment
– Marketing efforts will be developed to encourage as many
taxpayers, those with less than 25 vehicles, as possible file
electronically
• The timeline is to have this process ready by August
2007.
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Electronic Verification
– Many ideas are being discussed on how to handle
electronic verification with many questions still
unanswered:
• What data is needed to verify proper payment?
• How should the data be provided?
• Will all registration agencies be able to obtain electronic
proof of payment? Are there some interagency agreements
that already exist that states can utilize?
• Should the IRS develop a new stand alone data structure to
house the HVUT data or should they try to utilize a current
national system such as SAFER?
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Electronic Verification
– Current thinking:
• The IRS will develop a data structure for HVUT that is
separate or stand alone
• Access will be done through some sort of subscription
process or through a user ID and PIN process with
system to system interface
• System should be updated in real-time! What real time
really means is a question yet to be answered?
– Are daily updates adequate?
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Electronic Verification
– Data elements:
•
•
•
•
•
•
•
VIN
Category (weight class)
Payment Indicator
Payment Cycle Data (when payment was made)
Time Period for which the payment if valid
EIN/Owner Data?
Event Indicator for historical data
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Electronic Verification
– The thinking is that states do not need nor want
specific data to store or maintain for any other
reason. The only thing registration agencies
really need is a Yes or NO message that is passed
system to system to show if the tax is paid on a
particular VIN.
HVUT - Federal Heavy Vehicle Use Tax
• HVUT Electronic Verification
– Problem:
• The IRS is developing the data structure to provide
electronic verification for those HVUT transactions
that are filed electronically. HVUT filings done via the
paper method will not be included in the data
structure.
– Work will continue to try to get to some sort of
workable solution on this issue, to try to avoid
states having to operate dual processes.
– Timeline for first phase of electronic verification
is to be ready sometime around August 2007.
What the HVUT Automated Payment Process Might Look Like
Large Fleet Owner
E-HVUT
Authorized Tax
Service Provider
Large fleet owner files
electronic IRS Form 2290 and
pays tax
Small Fleet Owner
Small fleet owner files paper
copy of IRS Form 2290 and
pays tax
IRS checks 2290;
IRS disseminates
payment status
Potentially, states
provide registration
data
Owner, operator, fleet
administrator, tag &
title service, leasing
company agent, …
State Departments of Motor Vehicles
On-line vehicle registration
States implement automated processes to
check payment status
17
HVUT - Federal Heavy Vehicle Use Tax
• Working with IRS Representatives to Schedule
Meeting on Regulatory Issues
– To date most of the issues we have worked on revolve around
the electronic filing, but there are several important regulatory
issues that we have, including:
• What name must appear on the Form 2290?
• Can a purchaser or a used vehicle that HVUT has already
been paid for the tax period use the Form 2290 or a copy
from the previous owner/taxpayer as proof of payment?
• How will the credit process work?
• When can the carrier apply for a refund or credit?
• Are states required to verify the weight category on the
2290 matches the registered weight?
HVUT - Federal Heavy Vehicle Use Tax
• Working with IRS Representatives to Schedule
Meeting on Regulatory Issues (continued)
• Does the 60 day rule still apply? If not, in what situations would
it not apply?
• What is acceptable as proof of payment when the carrier pays
their HVUT electronically via the IRS e-payment system?
• Where do the regulations and operating procedures currently
exist?
• Disclosure of information to non-revenue agencies?
• Does the law (SAFETEA-LU) require the IRS to provide the
electronic data structure for verification on only the carriers that
are required to file electronically?
• How do we get to a uniform consistent process so all are doing
the process the same?
HVUT - Federal Heavy Vehicle Use Tax
• So where are we?
– Further along than we have been!
– At the table working with the IRS and other
stakeholders!
– Pushing to try to get a total workable solution!
– Stay tuned!
HVUT - Federal Heavy Vehicle Use Tax
• For more information and updates:
– Visit the AAMVA website at www.aamva.org and
go to the MCS Discipline section under
committees…..