Fuel Smarts

Millions In Tax Credits May Go Begging

October 28, 2000

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Truck owners trading in their rigs may be missing out on millions of dollars in federal Heavy Vehicle Use Tax (HVUT) credits as the number of used trucks in dealer lots grows.

Jim Barnhard, excise tax specialist for the Internal Revenue Service, believes many truckers selling to a dealer may not be aware that HVUT of up to $550 annually is paid in advance and can be claimed back if the traded truck is not used for some time thereafter. Trucks are exempt from HVUT if they are driven less than 5,000 miles a year, or if they are stolen or scrapped.
With an anticipated glut of 60,000 to 80,000 used trucks over the next year and beyond, many more traded trucks will be off the road for extended periods of time and the amount of overpaid taxes due the former owners is expected to rise.
Claiming the credits is tricky, though and even if they are aware that they can claim credits, many truck owners may not want to bother with the complex refund process.
Unlike other taxes, HVUT is assessed over a fiscal year (July 1 to June 30). So if a truck owner trades a truck in July, a year’s worth of HVUT has been paid up and is due back to the owner if the truck is driven less than 5,000 miles or is scrapped in the ensuing 12 months.
The challenge for the former owner is keeping track of the truck’s status after it has been traded or sold and filing all the right paperwork to claim the refund.
This complexity of HVUT has been sore point for the nation’s used truck dealers for some time. Barnhard told dealers at the inaugural annual meeting of the Used Truck Assn. last week that the IRS is working towards simplification, but changes may not be implemented for four or five years.
The IRS currently requires a stamped copy of Form 2290 as proof that HVUT has been paid. A truck cannot be reregistered by a new owner without the form. Dealers say they often do not receive this document from the former owner when they acquire a vehicle. To obtain more information, they must go through a tedious process of filing with the IRS. “The reality is, a lot of us end up paying the HVUT ourselves,” UTA president and used truck manager for Stoops Freightliner, Steve “Bear” Nadolson, told Barnhard.
Dealers want a simple, computerized method based on a truck’s Vehicle Identification Number to track the status of HVUT on a vehicle they are purchasing or selling.
Barnhard said the IRS has plans to have such a system in place by 2002. But he said there were challenges with funding and logistics and it would be more realistic to expect it by 2005 or 2006.
“If you want it to happen faster, talk to your congressman,” he told the used truck dealers. “The powers that be in the IRS don’t listen to me.”

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