Instructions for Form 2290 (7/2006)

Instructions

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

What's New

Electronic Filing (Pending) for Taxpayers Reporting 25 or More Vehicles

Electronic filing is required for taxpayers reporting 25 or more vehicles. We will notify taxpayers when the program is available. Continue to file Form 2290 as described under Where To File on page 7.

Reminders

Repeal of Installment Payment

You must pay the tax in full with your Form 2290. The option to pay in installments has been eliminated.

Reduced Rate for Canadian/Mexican Vehicles No Longer Applies

The reduced rate of tax for Canadian/Mexican vehicles no longer applies. Taxpayers reporting the tax on Canadian or Mexican vehicles must use column (a) when completing the Tax Computation on page 2 of Form 2290.

Credit for Vehicles Sold During the Tax Period

If you sell a vehicle during the tax period, you can claim a credit on line 5 of your next Form 2290. See Line 5. Credits on page 5.

Tax on Used Vehicles Acquired During the Tax Period

If you acquire a used vehicle during the tax period, you figure and pay the tax due for the remaining months of the period. See Used vehicle on page 2.

Purpose of Form

Use Form 2290 to:

Figure and pay the tax due on highway motor vehicles used during the period with a taxable gross weight of 55,000 pounds or more.
Figure and pay the tax due on a vehicle for which you completed the suspension statement on another Form 2290 if that vehicle later exceeded the mileage use limit during the period. See Suspended vehicles exceeding the mileage use limit on page 5.
Figure and pay the tax due if during the period the taxable gross weight of a vehicle increases and the vehicle falls into a new category. See the instructions for line 3 on page 4.
Claim suspension from the tax when a vehicle is expected to be used 5,000 miles or less (7,500 miles or less for agricultural vehicles) during the period.
Claim a credit for tax paid on vehicles that were destroyed, stolen, sold, or used 5,000 miles or less (7,500 miles or less for agricultural vehicles).
Report acquisition of a used taxable vehicle for which the tax has been suspended.
Figure and pay the tax due on a used taxable vehicle acquired and used during the period. See Used vehicle on page 2.

Use Schedule 1 (Form 2290):

To report all vehicles for which you are reporting tax (including an increase in taxable gross weight) and those that you are reporting suspension of the tax by category and vehicle identification number (VIN).
As proof of payment to register your vehicle(s) in any state. Use the Schedule 1 stamped and returned to you by the IRS for this purpose.

Use Form 2290-V, Payment Voucher, to accompany your check or money order. Form 2290-V is used to credit your heavy highway vehicle use tax payment to your account.

Who Must File

You must file Form 2290 and Schedule 1 for the July 1, 2006, through June 30, 2007, period if a taxable highway motor vehicle (defined below) is registered, or required to be registered, in your name under state, District of Columbia, Canadian, or Mexican law at the time of its first use during the period and the vehicle has a taxable gross weight of 55,000 pounds or more. See the examples under When To File on page 3.

You may be an individual, limited liability company (LLC), corporation, partnership, or any other type of organization (including nonprofit, charitable, educational, etc.).

Dual registration. If a taxable vehicle is registered in the name of both the owner and another person, the owner is liable for the tax. This rule also applies to dual registration of a leased vehicle.

Dealers. Any vehicle operated under a dealer's tag, license, or permit is considered registered in the name of the dealer.

Used vehicle. If you acquire and register or are required to register a used taxable vehicle in your name during the tax period, you must keep as part of your records proof showing whether there was a use of the vehicle or a suspension of the tax during the period before the vehicle was registered in your name. The evidence may be a written statement signed and dated by the person (or dealer) from whom you purchased the vehicle.

If the vehicle was first used during the tax period while registered in the name of the previous owner, the previous owner is liable for the tax only for the months the vehicle was used by the previous owner. You are liable for the tax for the remaining months of the tax period if you use the vehicle on public highways. You must file Form 2290 and pay the tax by the last day of the month after the month you use the vehicle. See Line 2. Tax Computation on page 4.

If the previous owner does not pay the tax and you use the vehicle before the end of the tax period, you are also liable for the total tax for the entire tax period to the extent not paid by the previous owner. In that case, you must file Form 2290 and pay the tax by the last day of the month after the month notification is received from the IRS that the tax has not been paid in full by the previous owner.

Logging vehicles. A vehicle qualifies as a logging vehicle if:

It is used exclusively during the period to transport products harvested from a forest,
The products are transported to and from a point within the forest, and
It is registered as a highway motor vehicle used in the transportation of harvested forest products under the laws of the state in which the vehicle is, or is required to be, registered. A special tag or license plate identifying the vehicle as used in the transport of harvested products is not required for the vehicle to be considered a logging vehicle.

Products harvested from the forested site may include timber that has been processed for commercial use by sawing into lumber, chipping, or other milling operations if the processing occurs prior to transportation from the forested site.

Logging vehicles are taxed at reduced rates. See Logging vehicles on page 4.

Taxable Vehicles

Highway motor vehicles that have a taxable gross weight of 55,000 pounds or more are taxable.

A highway motor vehicle includes any self-propelled vehicle designed to carry a load over public highways, whether or not also designed to perform other functions. Examples of vehicles that are designed to carry a load over public highways include trucks, truck tractors, and buses. Generally, vans, pickup trucks, panel trucks, and similar trucks are not subject to this tax because they have a taxable gross weight less than 55,000 pounds.

A vehicle consists of a chassis, or a chassis and body, but does not include the load. It does not matter if the vehicle is designed to perform a highway transportation function for only a particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer), or a special kind of cargo, goods, supplies, or materials. It does not matter if machinery or equipment is specially designed (and permanently mounted) to perform some off-highway task unrelated to highway transportation except to the extent discussed below under Vehicles not considered highway motor vehicles.

Use means the use of a vehicle with power from its own motor on any public highway in the United States.

A public highway is any road in the United States that is not a private roadway. This includes federal, state, county, and city roads.

Exemptions. To be exempt from the tax, a highway motor vehicle must be used and actually operated by:

The Federal Government,
The District of Columbia,
A state or local government,
The American National Red Cross,
A nonprofit volunteer fire department, ambulance association, or rescue squad,
An Indian tribal government but only if the vehicle's use involves the exercise of an essential tribal government function, or
A mass transportation authority if it is created under a statute that gives it certain powers normally exercised by the state.

Also exempt from the tax is mobile machinery that meets the specifications for a chassis as described under item 1 below.

Vehicles not considered highway motor vehicles. Generally, the following kinds of vehicles are not considered highway vehicles.

Specially designed mobile machinery for nontransportation functions. A self-propelled vehicle is not a highway vehicle if all the following apply.
1. The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways,
2. The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation, and
3. The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load.
Vehicles specially designed for off-highway transportation. A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired.

To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway.
Nontransportation trailers and semi-trailers. A trailer or semi-trailer will not be treated as a highway vehicle if it is specially designed to function as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle.

When To File

Form 2290 must be filed for each month a taxable vehicle is first used on public highways during the current period. The current period begins July 1, 2006, and ends June 30, 2007. Form 2290 must be filed by the last day of the month following the month of first use (as shown in the chart below). The filing rules apply whether you are paying the tax or reporting suspension of the tax. The following examples demonstrate these rules.

Example. John uses a taxable vehicle on July 1, 2006. John must file Form 2290 by August 31, 2006, for the period beginning July 1, 2006, through June 30, 2007. To figure the tax, John would use the amounts on Form 2290, page 2, column (1).

Example, continued. John purchases a new taxable vehicle on January 3, 2007. The vehicle is required to be registered in his name. The vehicle is first used in January. John must file another Form 2290 reporting the new vehicle by February 28, 2007, for the period beginning July 1, 2006, through June 30, 2007. To figure the tax, John would use Table I on page 9.

IF, in this period, the vehicle is first used during ...	THEN, file Form 2290 and make your payment by...¹	and enter this date on Form 2290, line 1
July	August 31	200607
August	September 30	200608
September	October 31	200609
October	November 30	200610
November	December 31	200611
December	January 31	200612
January	February 28	200701
February	March 31	200702
March	April 30	200703
April	May 31	200704
May	June 30	200705
June	July 31	200706
¹ File by this date regardless of when state registration for the vehicle is due.

If any due date falls on a Saturday, Sunday, or legal holiday, file by the next business day.

Extension of time to file. You may request an extension of time to file your return by writing to the Internal Revenue Service Center, Cincinnati, OH 45999-0031. In your letter, you must fully explain the cause of the delay. Except for taxpayers abroad, the extension may be for no more than 6 months. An extension of time to file does not extend the time to pay the tax. If you want an extension of time to pay, you must request that separately.

Penalties and Interest

The law provides penalties for failing to file returns or pay taxes when due. There are also penalties for filing false or fraudulent returns. These penalties are in addition to the interest charge on late payments. The penalty for filing a return late or paying the tax late will not be imposed if you can show reasonable cause for not filing (or paying) on time. If you file after the due date (including extensions), attach an explanation to the return to show reasonable cause.