When the stakes are high, noncompliance can be costly

The Heavy Vehicle Use Tax (HVUT) is a significant source of transportation funding in the U.S. In 2019 alone, the HVUT generated more than $1.285 billion in revenue for the Federal Highway Trust Fund (HTF). That revenue represented approximately 3.4 percent of total revenue deposited in the Highway Account of the Federal HTF.

With that much money at stake, federal and state officials are not lax about enforcement of the requirements.

How HTF money is used

The Federal HTF protects the nation's investment in transportation infrastructure. In 2018 alone, receipts topped $42.6 billion, with $37.2 billion dedicated to the HTF's Highway Account.

The fund finances a broad spectrum of transportation investments, including:

• Highway improvements (e.g., land acquisition and other right-of-way costs, preliminary and construction engineering, construction and reconstruction, resurfacing and restoration costs of roadways and bridges);
• Highway and bridge maintenance activities;
• Highway law enforcement;
• Safety programs (e.g., driver education and training, vehicle inspection programs, enforcement of vehicle size and weight limits);
• Congestion relief projects;
• Debt service; and
• Administrative costs (e.g., research, engineering).

Investment in highway infrastructure helps:

• Save lives, time, and money;
• Reduce the number and severity of crashes for all kinds of vehicles;
• Enhance the ability of the entire community of emergency responders;
• Lower fuel and insurance costs;
• Increase mobility;
• Ease congestion;
• Decrease energy consumption;
• Boost air quality;
• Improve the efficient movement of goods;
• Raise business productivity; and
• Strengthen the nation's economic productivity.

Enforcement and penalties

Since the majority of funds contributed by states to the Federal HTF are returned through highway fund apportionments, there is direct incentive for agencies to ensure HVUT compliance. The result? Penalties for HVUT non-compliance can be costly for motor carriers.

The penalty for failing to file IRS Form 2290 by August 30th is equal to 4.5 percent of total tax due, assessed monthly for up to five months. Late filers not making an HVUT payment also face an additional monthly penalty equal to 0.5 percent of total tax due. Additional interest charges of 0.54 percent per month accrue as well. Based on these rates, an HVUT liability that was originally $550 would climb to over $700 by the end of the five-month period of delinquency.

In addition to these federal penalties, many states suspend the registrations of vehicles for which proof of HVUT payment has not been provided.

HVUT evasion penalties can be even more significant, resulting in fines and incarceration. In one example, the owner of a small trucking company was found guilty of HVUT evasion through the continuous re-titling of his vehicle. For this crime, the owner was sentenced to serve four months in prison and an additional four months of electronically monitored home confinement. He was also ordered to pay a $2,000 fine.

With the annual tax for a heavy vehicle maxing out at $550, compliance is clearly the least costly option.