Certainly, vehicles that weigh 55,000 pounds or more are liable to pay the 2290 tax i.e.,the Heavy Vehicle Use Tax. The Internal Revenue Services suggests its registered taxpayers file HVUT tax by the due date i.e., August 31st. But what happens if the owner forgets to file Form 2290 on or before the deadline? Well, there are penalties imposed by the IRS for not filing the returns or paying the tax on time. These penalties are also accompanied by late payment interests.
The Internal Revenue Service (IRS) charges a penalty when the registered user fails to file form 2290 return or pays the HVUT tax on time. If the vehicle owner has a reasonable cause for not filing the return before the deadline, then he can apply for an extension by stating the reason to the IRS. If the reason seems acceptable to the authority, then the user will be granted permission to e-file form 2290 and receive the stamped Schedule 1 copy without requiring to pay the late payment penalty.
Calculating penalty for form 2290 late filing
If the owner surpasses the due date of Aug 31st, then he becomes liable to pay a penalty which is 4.5% of the total tax due.
Example- If John had to make his HVUT tax payment of $350 but could not file the form and pay the tax amount before the due date, then his penalty for non-filing and payment would be:
$350 X 4.5% = 15.75
Therefore, John’s total tax payment would be $365.75
Calculating Interest rate for late Payment
There is an additional penalty that the owner has to pay in the form of interest for late filing of the form and payment of the tax. He is obliged to pay an additional monthly penalty of 0.5% on the total tax amount due and an additional interest of 0.54% per month will also accrue.
Henceforth, the non-filing of form 2290 and payment of HVUT tax would result in the increased costs which would be around 5% of the total tax liability due. So, to stay safe from incurring penalties, it is advisable to fill the form and pay the tax amount well on time.
Moreover, some states can also suspend the registration of the truck if they could not find the HVUT payment proof. IRS issues stamped Schedule 1 to those who have filed and paid the tax.
Relief from the HVUT Penalty
As discussed earlier, a person can get relief from the tax penalty if he has a reasonable cause for not filing the return on time. The declaration of the cause can provide the penalty relief. The person has to attach the statement of reasonable cause along with the filing if it is done after the due date which also includes the extension period.
Requesting extension for the filing of Form 2290
The owner can also request the extension period of the filing of Form 2290 before the due date of the return.
For this, he has to write a letter in which the cause of the delay of the same has to be clearly stated. The IRS would allow an extension of a maximum of 6 months. Extension permission does not give you the right to have extended time for the payment of tax. It only applies to the procedure of filing the return. However, the owner can request an extension for the payment of tax by writing it separately to the IRS.
Non-compliance penalty for States
If the state does not provide the compliance review because of the non-compliance on the part of the payer, then the secretary of the transportation holds up to 25% of the Interstate maintenance funds.
Abatement of the first time penalty
Based on the clean compliance history of the vehicle owner, the IRS allows the removal of certain penalties from the account of the person. This abatement is supposed to aid the taxpayer who comes across a sudden compliance issue. It is not at all based on the cause of the issue.
To qualify yourself for the abatement of the first-time penalty, the person first has to have clean compliance history.
In addition to this, he must be able to prove that he had no record of any penalty added or removed from his account for three years. Moreover, he also has to prove that he has been keeping himself up to date with all the due filings and payments of the tax amounts.
In conclusion, although the jam-packed schedule can let anyone forget about the basic tax payment duties considering the relative consequences as to the cost of penalty it would be right to say that the form 2290 due date should be given timely attention to save yourself from unnecessary complications.