An Operator’s license is needed for every business and the transport industry is not different. There are numerous tax and licensing obligations which a trucking operator must closely follow such as International Registration Plan (IRP), International Fuel Tax Agreement (IFTA) and heavy vehicle use tax return (Form 2290). This blog will discuss and break down the tax components above and guide you on how you can follow the steps toward becoming compliant for the trucking taxes.

What is IRP: International Registration Plan

IRP or International Registration Plan is an agreement that covers the USA states and Canadian provinces which permits commercial vehicles to travel through different states using a single registration plan. Instead of registering separately in each state, trucking businesses pay registration fees based on the miles driven in each jurisdiction. To qualify for such a plan, truckers should keep precise records of the distances they travel in each state or province as well as report these figures yearly. That way, it is possible to make an equitable distribution of the registration fees based on the place of business for the vehicle.

IFTA: International Fuel Tax Agreement

IFTA or International Fuel Tax Agreement) A tax agreement which simplifies revenue collection for the various states and provinces.

Truck businesses with IFTA can file for one fuel tax report instead of having to do one for every state.

Fuel tax collections are done based on miles driven and fuel bought. In order to remain compliant, truckers are required to:

• Log both fuel expenses and mileage for each state separately.
• Submit IFTA returns and pay taxes owed quarterly.
• Maintain precise records to avoid penalties for audits.

Heavy Vehicle Use Tax (HVUT) Form 2290

Owners of vehicles that weigh over 55,000 pounds are obligated to pay Form 2290, an excise federal tax that gets money allocated to highways and their infrastructure.

Important things to know about the tax form 2290 are:

• Filing Period: The cut-off date for submission every year is August 31, which is the tax period starting July 1.
• Process of Filling: Electronic form filing is accepted and makes the entire process easier. When the form is filed, you’ll get a stamped schedule one that proves payment was made and allows for registration of vehicles.
• Rate: Depends on how gross the vehicle is, its weight, and how often the vehicle is being used.

The Interaction Between Taxes and Plans

It is important for truck operators to keep accurate records maintained for two out of the three service points and one filling separate from the other two requirements makes these points more challenging. This means that even though these components serve distinctly different needs, together, IFTA, IRP, and Form 2290 make sure that businesses in the trucking industry pay their dues in terms of taxes, maintenance, and infrastructure funding.

Comprehensively tracking and funding road usage are made seamless for trucking businesses with the aid of registration fees, fuel taxes, and heavy vehicle use taxes.

Meta-compliance requires trucking businesses to strictly maintain records of tax documentations, fuel receipts, and many more. Errors caused by neglecting IFTA report and IRP mileage tracking or Form 2290 can be reduced with the aid of software.

Staying Compliant with IFTA, IRP, and Form 2290

The challenges faced while navigating through the trucking tax trio can be made easier with proper planning. Here are some recommendations:

• Use ELDs to enhance accuracy when reporting mileage for IRP and IFTA billing.
• Avoid filing IFTA returns along with Form 2290 manually to eliminate chances of errors and delays.
• Maintain and safeguard records for fuel consumption, vehicle weight, and mileage logs to save oneself from penalties during auditing.
• Prepare a schedule to avoid the chance for missing filing deadlines.

Being able to understand and comply to IRP, IFTA, and Form 2290 requirements empowers trucking businesses to utilize it as an advantage to avoiding fines, save on resources, and remaining compliant. Whether managing a fleet or owning and operating a single truck, dealing with these taxes is imperative if success in the trucking industry is the ultimate goal.

Note: For more information, visit IRS website