The Importance Of VIN In HVUT Compliance

The Importance Of VIN In HVUT Compliance

Here’s how a vehicle identification number plays a huge role in ensuring HVUT compliance for your trucking business.

The Importance Of VIN In HVUT Compliance
The Importance Of VIN In HVUT Compliance

As businesses dive into the 2290 filing season, they keep important HVUT checklists by their side to stay compliant with the IRS. Like any good business practice, keeping a follow-through checklist for VINs is a good idea. 

However, what is even more important than just reporting the vehicle and tax information is to validate the said information. Unvalidated reports mean you’re unsure of the information that is being reported. 

And these inaccurate reports increase the risk of noncompliance, which will be flagged by the IRS and may even lead to penalty assessments for VIN discrepancies. 

To avoid such unpleasant situations, trucking businesses need to check their vehicle identification numbers and the tax records associated with that number. This practice helps businesses avoid inaccurate reports and stay compliant. 

That’s not all.

A vehicle identification number has a greater significance than a primary identity metric for vehicles. It protects your business from the additional tax burden, liability assessments, accelerates 2290 reporting, and does much more. 

Today, we will be discussing the significance a VIN holds in HVUT compliance.

Tax History Associated With VIN

IRS, insurance companies, lending companies, and buyers use vehicle identification numbers to track the associated tax history. This means, if you did not file your truck tax for a year or if you have been penalized in the past for noncompliance, it can be tracked with the help of a vehicle identification number. 

Unlike VIN lookup tools that taxpayers use, IRS, insurance, and banking institutions validate your VINs against authorized databases, which help them view the entire tax history and transactions associated with the VIN.  

Further, VINs help the lending companies and federal authorities understand if the vehicle owner has been compliant with the HVUT tax regimes. 

HVUT Tax Liability Assessment

If your truck has been wrongfully taxed, one of the reasons could be that the previous owner did not pay their truck taxes and proceeded to sell their truck to you at a “really good” price point.

Most likely the seller was planning on transferring the tax burden to you, which increases your tax liability and if left unaddressed, gets worse.

This is why 2290 reporting requires the owners of used trucks to report the month in which they first started using the truck in the HVUT form. The month of first use, along with the vehicle identification number and tax information must be reported. 

This information is used to track the associated tax history and tax liability, based on which the IRS can assess penalties on the original owner and reduce the tax liability on the new owner.  

Tax Suspension

HVUT is levied upon trucking businesses that own trucks weighing 55,000 pounds or more and utilize the federal highways to operate their trucks. However, if your truck no longer meets this criterion, you can request for suspension of tax on your vehicle. 

To do this, you will need the vehicle identification number, which allows the IRS to identify the vehicle and the tax history associated with it. If the IRS observes that the reporting history is compliant and the vehicle no longer meets the HVUT criterion, then your vehicle will be suspended from HVUT taxes. 

HVUT 2290 Reporting 

Vehicle identification numbers are essentially used to identify the trucks that are using the federal highways. The IRS cross-validates the HVUT tax history associated with the VIN for all the previous and current owners of the vehicle. This way, every owner of the same vehicle is liable to pay their share of the HVUT truck tax per their tax periods. 

But wait, there’s more. When vehicle owners want to request a transfer of title, or when they want to claim certain tax credits from the IRS on the excise tax paid, or when a trucking business wants to claim the insurance on a vehicle that has been destroyed, damaged, or stolen, the vehicle identification number is one of the most important identifiers, which enables all parties to take the necessary steps to address refund claims and transactions.

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