“HVUT” Federal Heavy Vehicle Use Tax Update August 24, 2006

“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.


• 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

IRS returns stamped receipt

Registrant provides IRS receipt to register vehicle; State staff verifies stamped receipt

State Departments of Motor Vehicles

Large Fleet Owner

Small Fleet Owner

Fleet owners file paper copies ofIRS Form 2290 and pay taxes

Owner, operator, fleet administrator, tag & title service, leasing company agent, …


• 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


• 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.


• 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 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 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 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 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 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 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 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 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.

17

What the HVUT Automated Payment Process Might Look Like

Large Fleet Owner

Large fleet owner files electronic IRS Form 2290 and pays tax

IRS checks 2290;IRS disseminates payment status

States implement automated processes tocheck payment status

Authorized Tax Service Provider

Small fleet owner files paper copy of IRS Form 2290 and pays tax

Small Fleet Owner

E-HVUT

On-line vehicle registration

Potentially, states provide registration data

State Departments of Motor VehiclesOwner, operator, fleet administrator, tag & title service, leasing company agent, …


• 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?


• 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!


• For more information and updates:– Visit the AAMVA website at www.aamva.org and

go to the MCS Discipline section under committees…..

http://www.aamva.org/

Documents

“HVUT” Federal Heavy Vehicle Use Tax Update August 24, 2006