Do you own and operate your own trucking company? If so, it is crucial that you have the proper accounting system in place to protect your financial interests. Running a trucking company can be complicated—especially when it comes to tax matters. The Heavy Highway Vehicle Use Tax is one of the most important taxes that you need to know about. In this article, our trucking accounting professionals provide an overview of the heavy highway vehicle tax and explain the key things that truck company owners need to know about tax matters.
Heavy Highway Vehicle Tax: Know the Basics
The federal government has imposed some road taxes on commercial trucks that are based on the weight of the vehicle. If you are an owner-operator truck driver, you will hear this tax referred to by many different names, including the heavy highway vehicle tax, the heavy highway vehicle use tax, the 2290 tax, and simply the road tax. As explained by the Office of Highway Policy Information, this tax is “assessed annually on heavy vehicles operating on public highways at registered gross weights equal to or exceeding 55,000 pounds.” The weight is based on the actual weight of the vehicle plus the weight of a maximum load customarily carried by the vehicle when it has a fully loaded trailer. The current heavy highway vehicle tax rates are as follows:
- Less than 55,000 Pounds: No heavy vehicle tax fee.
- 55,000 Pounds to 75,000 Pounds: $100, plus $22 for every 1,000 pounds over 55,000.
- More than 75,000 Pounds: $550 per year.
The heavy vehicle tax for large commercial trucks is dealt with through IRS Form 2290. If you own and operate a registered motor vehicle that weighs more than 55,000 pounds, you must complete and submit Form 2290 each year. The IRS imposes financial penalties against individuals and businesses that fail to file and/or file to pay the proper amount of tax due.
Note: The IRS requires all states to obtain proof that trucking entities paid the heavy highway vehicle tax. If you fail to file and pay the tax, you could run into issues with a state trucking authority. A state can suspend the registration of a truck if the federal heavy vehicle tax is not paid.
What is the Deadline to File My Heavy Highway Use Tax?
The heavy vehicle highway use tax is subject to different deadlines than other types of state and federal taxes. For this specific industry tax, the year begins on July 1st and ends on June 30th. An owner-operator truck driver should file their heavy vehicle tax form within the first month that a specific vehicle is used on a public highway. Once again, it is important to emphasize that there are strict sanctions for non-compliance. If you fail to file the right paperwork with state and federal authorities, your trucking registration could be suspended. It is an issue that you do not want to be stuck dealing with. Be proactive: file and pay your heavy vehicle tax on time.
Note: The heavy vehicle highway use tax is an annual tax that should be paid at the beginning of the “trucking year.” If you end up only operating a specific large truck for part of the year—perhaps because you transferred ownership to another entity—you can claim a prorated refund from the IRS.
You Can Write Off Industry Taxes as a Business Expense
Industry-specific taxes are a business expense. All large commercial trucks that weigh more than 55,000 pounds when hauling their maximum customary load are subject to federal heavy vehicle use taxes. In other words, these taxes are simply a standard expense that comes along with operating this type of business entity. You have the right to write off these taxes as a business expense when you file your personal or professional income tax return each year.
When you pay the heavy highway vehicle use tax as an owner-operator truck driver, you will do so by submitting Form 2290 to the IRS. Make sure you keep a copy of that form and record exactly how much money you paid to the IRS. The amount you paid on Form 2290 can be taken as a business deduction on Schedule C. The business you operate as a truck driver—including your limited liability company (LLC)—can write off that tax as a business expense.
Managing Your Business: You Need the Proper Tax and Accounting System in Place
Self-employed truck drivers can often earn a higher hourly rate than employee truck drivers. Still, working as an owner-operator can be challenging. The heavy vehicle highway use tax is an illustrative example of one of the many business and accounting challenges that comes with owning and operating your own trucking company. It is essential that you have the right tax and accounting system in place. You will want to make sure that you:
- Pay the proper amount of heavy vehicle use tax each year;
- Take advantage of the business deduction for that tax; and
- File the appropriate compliance paperwork with the state trucking authority.
You do not have to deal with all of the tax and accounting issues on your own. An experienced truck industry business consultant can help you put the right system in place, so that all of your taxes are paid, your expenses are tracked, and the right paperwork is filed with the right state and federal authorities.
Get Help From Our Trucking Accountants Today
At Williams Accounting & Consulting, we are proud to provide the highest level of personalized, confidential business accounting and consulting services to clients in the trucking industry. With a specialization in complex tax matters, our team is here to help you find the best solutions. If you have any questions about the heavy highway vehicle tax or any related tax issue, we are here as a resource. Contact us now for an initial consultation. With offices in Atlanta and New Orleans, our business accounting team is well-positioned to serve trucking companies throughout the Southeast.