2290 Road Tax - PowerPoint by ney18361

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									S1 Welcome and
   Introduction
S2 State Preliminary Design                          CVISN DESIGN WORKSHOP
   Review
S3 State Work/Discussion
   Sessions
S4 General Discussion of
   issues and questions
                                                                Session 4f
S5 Birds of A Feather design
   discussions                                                 Discussion -
S6 State Program Phase Charts
   Review
S7 State Work Sessions
                                                           Heavy Vehicle Use Tax
S8 State Presentations
S9 Feedback & Next Steps
                                                                                May 10, 2000    --Jim Peter



     CVISN Design Workshop                                     Session 4f - Discussion - HVUT
     The Johns Hopkins University Applied Physics Laboratory   11/22/2010 4:12 PM                 Design Page 4f - 1
                                                  Acknowledgments




            The author is grateful to the state respondents
            for their anecdotes; to Warren Dunham for
            suggestions and document review; to Linda
            Lewis (AAMVA) for policy insight; and to Carol
            Sheets (IRS) for perspective.




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 2
                                Legislative Background (1 of 2)

    • Per reference [4], Section 4481 of the U.S. Code imposes the Federal
      Road Use Tax. This was amended by Section 513 of the Surface
      Transportation Assistance Act (STAA) in 1983; in 1984 the Deficit
      Reduction Act included a revised and reduced schedule of highway use
      taxes for the motor carrier industry. The tax affects vehicles with gross
      taxable weights of 55,000 lb or more. The tax rate is a follows:
          • 55,000-75,000 lb: $100 a year, plus $22 for each 1,000 or fraction
            thereof in excess of 55,000 lb.
          • 75,000 lb or more: Maximum tax of $550.
    • Vehicle owners must report and pay this tax using IRS Form 2290
      (Heavy Vehicle Use Tax filing).
    • There are exceptions for vehicles traveling less than 5000 miles per
      year; a 25% reduction for vehicles registered in Canada or Mexico; and
      some other special cases.



CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 3
                                Legislative Background (2 of 2)


    • Enforcement is via FHWA, which will withhold Federal Aid funding for
      states that do not verify proof of HVUT payment.
    • Therefore, states are mandated to require proof of payment of the
      tax before they may issue a truck registration or license.
    • Reference [1] says that it is the policy of FHWA that each state require
      proof of HVUT payment either:
          • before registering, or
          • within 4 months after registering if a suspension registration system is
            implemented.
    • According to Reference [3], in the year 2000 HVUT is expected to raise
      approximately $800 million.




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 4
                                                Problem Statement

    • As related to electronic credentialing, the problem is the portion of the
      federal law wherein: States are mandated to require proof of payment of
      the tax before they may issue a truck registration or license.
    • The IRS stamps “received” on a copy of Form 2290, indicating receipt of
      the taxes. This stamped copy of Form 2290 has to be produced at the
      time of registration, and is accepted by state registration officials as
      evidence of filing.
    • Of course having to present a piece of paper flies in the face of the
      objective of electronic credentialing.
    • Currently there is no provision to query an IRS database for payment
      status. The high degree of privacy afforded to tax records is a barrier to
      the IRS releasing this information. It has been the IRS’s position that
      registration fees are not taxes (they are fees), and that IRS could not
      release confidential taxpayer information to states for non-taxing
      purposes.


CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 5
                                   Future “Solution” Possibilities

    • Any state should be able to automatically query the IRS using a vehicle
      identification number (VIN) and a taxpayer identification number (TIN or
      EIN). IRS would then confirm (or deny) that HVUT has been paid for
      that vehicle by that taxpayer for the current period, avoiding the need for
      paper credentials and stamps.
    • Every state could send the IRS a file of HVUT-qualified vehicles that are
      registered in that state, and push the compliance burden onto the IRS.
    • States could collect the tax, then pass it on to the IRS. This way the
      state knows that the tax has been paid. (States should be reimbursed
      for doing so.)
    • Alternatively, the cumbersome filing and checking of the Heavy Vehicle
      Use Tax could be replaced with a slight increase in the existing fuel tax
      structure.




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 6
                           The IRS Wants to Automate HVUT


    • The IRS will enable Form 2290 to be submitted electronically, and per a
      recent change of policy will also develop and deploy real-time query
      capability such that a state could verify HVUT payment at the time of
      vehicle registration. Carol Sheets, IRS National Coordinator for HVUT
      (Johnstown, PA office) is leading this new effort.
    • Linda Lewis (AAMVA Vice-President for Government Affairs) and Jay
      Maxwell (AAMVAnet President) are working closely with the IRS on an
      architectural approach.
    • Unfortunately, production capability should not be expected before
      approximately 2002 or 2003, so CVISN states will need work-arounds
      until then.




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 7
                              How are CVISN States Going
                            to Deal with HVUT Electronically?

    • Some states issue a temporary credential until HVUT proof is sent
      in, and only then issue the permanent credential.
    • Some states issue the permanent credential immediately, but
      suspend it 30-60 days later unless the carrier has mailed in a
      confirming paper copy of Form 2290.
    • A few states collect the HVUT on behalf of the IRS. By doing so
      they automatically know that it has been paid and therefore they can
      proceed to issue the permanent credential. They do this as a
      customer service to streamline the process.
    • Some states do nothing until and unless they have a stamped copy
      of Form 2290.




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 8
                            How are CVISN States Going to Deal with HVUT Electronically?

                                               New York Anecdote


    • For a category of “approved” carriers we are giving them
      temporary authority without proof of HVUT payment. Follow-up
      proof must soon be mailed in. These pre-selected carriers have
      a known history of compliance to all rules within the state. Later,
      when we have an interface to the DMV Insurance system, more
      carriers can be added to the list of “approved” carriers. We are
      hoping that an electronic interface to IRS Form 2290 is
      developed. However, until that time we must check
      documentation manually.
        --Dolores Arste, NY CVISN System Architect




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 9
                            How are CVISN States Going to Deal with HVUT Electronically?

                                        Virginia Anecdote (1 of 2)

    • The federal language allows states to use a suspension registration system which
      is what we do in Virginia. When a carrier comes in to register a HVUT qualified
      vehicle in Virginia, the clerk completes an HVUT indicator on our processing
      system. (P = HVUT proof shown. N = no HVUT proof shown. E = HVUT
      exempt.) If an N is entered, our system generates a letter in overnight batch to
      the customer advising him that he has 90 days to provide proof of HVUT
      payment. If he fails to provide proof within this timeframe the system
      automatically initiates a suspension on the customer record and the customer will
      not be able to renew or make any changes to his record until he complies. This
      process has been in place in Virginia since HVUT came about.
    • We are making some changes at this time to accommodate electronic
      credentialing, that will allow us to post proof on a carrier's vehicles prior to the
      registration transaction. This will allow the customer to send us Form 2290 once
      at the beginning of the year and we will go ahead and proof the appropriate
      vehicles. When the electronic registration transaction comes in the system will
      check to see if proof has been shown. If it has great. If it hasn't, then we go
      ahead and process the registration transaction and put the customer in the
      normal HVUT follow-up process where we generate correspondence and a
      suspension if we don't get the proof within 90 days.


CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 10
                            How are CVISN States Going to Deal with HVUT Electronically?

                                        Virginia Anecdote (2 of 2)

    • We are also building an interface between WebCAT and our DMV mainframe
      system to make the checks for HVUT proof at the time of the electronic
      registration transaction.
    • The ultimate solution for Virginia would be to give the IRS a file of the HVUT
      qualified vehicles that are registered in Virginia and to no longer be required to
      monitor proof of compliance.
        --Rena Hussey, VA CVISN Program Manager




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 11
                            How are CVISN States Going to Deal with HVUT Electronically?

                                                      Utah Anecdote


    • In Utah we will accept the initial application and issue a
      temporary permit; however will not issue plates or credentials
      until we have a stamped copy of IRS Form 2290. We do not
      have any work around, the customer must have the form or we
      will not issue the plates or permanent credentials.
        --Kevin Park, UT DMV




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 12
                            How are CVISN States Going to Deal with HVUT Electronically?

                                  Washington Anecdote (1 of 2)

    • Carriers are required to submit proof of HVUT payment prior to
      registration. They send us a copy of their receipted Form 2290.
      With electronic credentialing they will certify they have paid
      HVUT as part of the filing, and the paperwork will follow with the
      other items such as vehicle registration, invoice, and payment. I
      checked with the officers at the roadside and they do not even
      know about the HVUT. They only know that the carrier is
      registered.
    • In the three months before annual HVUT taxes are due, we issue
      registration but keep a “tickler file” indicating that we need to
      follow-up and make sure evidence is sent in. In practice follow-
      up is cumbersome.
        --Tim Erickson, WA CVISN Program Manager


CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 13
                            How are CVISN States Going to Deal with HVUT Electronically?

                                  Washington Anecdote (2 of 2)

    • Before we decide what the ultimate solution would be, exactly what monumental
      problem are we attempting to solve? Does the IRS have any data on the number
      of vehicles they believe are subject to the payment of HVUT, but do not pay? Is
      the current program effective in decreasing incidences of the failure to pay
      HVUT? How would automating the process increase HVUT revenues, or
      decrease incidences of fraud? How many companies operating vehicles which
      qualify for HVUT are audited, and what is the net dollar recovery? We need to
      make sure a proposed solution is not worse the problem, which often becomes
      the case.
    • I would suggest that we allow companies to certify by indicating on a field in the
      electronic application that the HVUT has been paid. This information could be
      forwarded to the IRS on a monthly basis via a simple file.
    • Or, we could transmit the information to the IRP Clearinghouse, and have the IRS
      verify through the Clearinghouse. There are discussions about using the
      Clearinghouse to interface with the IRS going on right now. See US Senate Bill
      1144 which offers funding for the Clearinghouse if the Clearinghouse also would
      support the electronic verification of HVUT.
        --Art Farley, WA Dept of Licensing; CVISN Steering Committee


CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 14
                            How are CVISN States Going to Deal with HVUT Electronically?

                                                 Montana Anecdote


    • Montana's process is totally manual. When a motor carrier wants
      to register or renew a vehicle we required an IRS-certified copy of
      Form 2290 prior to registration. If it is a newly purchased vehicle,
      the carrier is required to complete the Form 2290 and attach the
      check. We make copies and then mail the form and check to the
      IRS.
    • Form 2290 is generally hand written by the motor carrier and if
      they have a lot of vehicles listed it is very time consuming hunting
      through the form for the VIN numbers. If the IRS were to
      automate their process and capture the VIN number, I would like
      to be allowed to query their data base to ensure each vehicle is
      current. This would save time and be more accurate.
        --Marcia Ala, MT

CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 15
                            How are CVISN States Going to Deal with HVUT Electronically?

                                                  Kansas Anecdote


    • We verify HUVT for all vehicles over 55,000 lb. We keep these
      on file and also have an indicator on our registration system and
      until it is set to "Y” credentials cannot be issued.
    • We do accept a completed Form 2290 and a check made
      payable to the US Treasury. We make a copy and forward the
      check to IRS.
        --Al Gerstner, KS Dept of Revenue




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 16
                            How are CVISN States Going to Deal with HVUT Electronically?

                                          South Dakota Anecdote

    • Currently payment of the Heavy Vehicle Use Tax is handled in
      paper form. We either receive a copy of Form 2290 from the
      taxpayer showing the information for registration purposes, or if
      the applicant has not paid the HVUT we can collect it, keep a
      copy, and forward it on to the IRS.
    • There is an easy way to handle this issue and that is to let the
      states collect the tax at the time of registering the vehicle. If this
      was done I’d bet that there would be an increase in revenue to
      the IRS even considering some type of fee that the states would
      be allowed to retain for the collection process. This would allow
      us to develop it as part of the electronic registration process.
        --Debra A. Hillmer, Director, South Dakota DMV




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 17
                            How are CVISN States Going to Deal with HVUT Electronically?

                                                Maryland Anecdote


    • The Maryland Trucking Handbook, published by the MD Dept of
      Transportation, states:
        “The application for registration plates or renewal stickers must
        include a photocopy of tax return Form 2290 Schedule 1, and
        receipts by the IRS or copies of both sides of the canceled
        check.”




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 18
                            How are CVISN States Going to Deal with HVUT Electronically?

                                                  Arizona Anecdote


    • We currently require a copy of Form 2290 prior to issuing
      credentials. We are required to submit an annual statement to
      FHWA that we have collected these and are audited. It is
      definitely an issue with electronic credentialing. It is my
      understanding that the IRS does not keep a database of these
      forms to check against but this would be a good idea. The way it
      stands today, even if we allowed a carrier to file electronically,
      we'd have to have them fax us a copy of Form 2290 for their
      carrier file.
        --Sharon Hansen, AZ CVISN System Architect




CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 19
                                                          References

    1. Federal-Aid Policy Guide 23 CFR Part 669, Enforcement of
       Heavy Vehicle Use Tax. December 9, 1991, Transmittal 1.
       Available at:
       www.fhwa.dot.gov/legsregs/directives/fapg/cfr0669.htm
    2. Federal-Aid Policy Guide NS 23 CFR 669, Non-Regulatory
       Supplement. September 30, 1992, Transmittal 5. Available at
       www.fhwa.dot.gov/legsregs/directives/fapg/0669sup.htm
    3. 1997 Federal Highway Cost Allocation Study, Final Report.
       Published by the U.S. Department of Transportation, Federal
       Highway Administration. Chapter IV, “Trends and Forecasts of
       Highway User Revenues”. Available at:
       www.ota.fhwa.dot.gov/hcas/final/four.htm
    4. Rand McNally Motor Carrier’s Road Atlas 2000. ISBN 0-528-
       84129-7.

CVISN Design Workshop                                     Session 4f - Discussion - HVUT
The Johns Hopkins University Applied Physics Laboratory        11/22/2010 4:12 PM          Design Page 4f - 20

								
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