It’s a word that scares most businesses because being penalized is not just a financial liability but also a reputational liability. Businesses try their best to not be associated with this word and put their best efforts forward to comply with the IRS.
It is essential to understand that there are different types of penalties and not all penalties necessarily put an end card for your business.
The penalties assessed by the IRS for delayed 2290 filings vary according to the intent, cause of the delay, tax liability, and other factors.
But what’s the scope of penalty for delayed HVUT filings?
How much does your business have to pay should you be penalized?
And what’s the applicable interest rate?
Learn all about this and more as we take you through the subject.
What Are Form 2290 Penalties?
Just like any other penalty, HVUT Form 2290 late filing penalties are assessed and imposed by the IRS on the HVUT tax you owe. These penalties are assessed when you miss the annual deadline to file your HVUT forms.
The taxpayer (individuals and entities alike) is required to pay these penalties and interests in order to stay compliant. When ignored, the penalties + interest rates will continue to pile up and the IRS will be forced to take more severe measures per the tax laws of the state.
The penalty and the measures taken by the IRS will differ depending on the severity of the case.
Why does the IRS penalize for late filing, you ask? The answer is pretty simple – Noncompliance.
When a business fails to file its tax forms or delays the filing (by months and years), it sends a message that the business is trying to hide the income and evade taxes.
However, it is essential to note that late filing by a few days or weeks will be accepted by the IRS with reasonable causes and evidence. But when a company or an individual willfully delays filing in order to hide income or evade taxes, there are consequences.
What Is The Penalty For Late Filing of Form 2290?
Some businesses in the past had to pay as much as $3 Million in penaltiesand the business owners were imprisoned on the account of tax evasion and tax fraud.
While this is an extreme case; trucking businesses that aim to comply with the IRS must strive to file their 2290 HVUT forms before or by the deadline specified by the IRS.
Here’s a quick bullet list to understand the penalty + interest system followed by the IRS for delayed 2290 filings and missed filings.
Penalty will start accruing a day after the due date
Penalty for delayed filing would be 4.5% of the unpaid tax (assessed every month for 5 months after the due date)
Penalty for failure to filing would be 5% of the unpaid tax that you owe to the IRS (assessed every month after the due date until you file)
The interest is levied upon each return that you failed to file before the due date
The penalty and interest will continue to pile up until you file the forms to the IRS
Form 2290 Extension To Avoid Penalties
If you miss the deadline, expect the IRS to assess inevitable penalties. However, the IRS makes an exception for taxpayers that have requested an extension in advance and does not penalize such taxpayers for delayed filings.
Further, taxpayers that are claiming a refund from the IRS will not be penalized by the IRS.
Do note that the IRS is only excusing the penalties in such cases, not the actual tax you owe.
Learn more about late filing and penalty rules from the IRS here
You can request an extension of the deadline and provide a valid reason for the delay in the filing by writing a letter to the IRS at the following address:
Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0031
First-Time Penalty Abatement For Form 2290
If you have been penalized for the first time and if you have not been penalized in the last 3 years and have a clean tax compliance history, you can request the IRS to waive off your penalty with the IRS Penalty Abatement Form 843.
Taxpayers have to fill the form with some basic information, followed by providing a valid explanation for the delay or failure to filing Form 2290 before or by the deadline.
If the IRS agrees that your explanation is valid and in good faith, it will waive off the penalty in part or whole (depending on the severity of the case).
If you have a history of delayed filings or being penalized by the IRS, an abatement request may not work in your favor.
However, if you have a clean tax history, your chances of abatement approvals are higher.
Due Date For HVUT Form 2290 In 2021
Businesses and self-employed truckers alike have to submit their HVUT Form 2290 to the IRS by August 31st of the current filing period (2020-2021).
The current tax period for HVUT filing begins on July 1, 2020, and ends on June 30, 2021.
For newly purchased vehicles, businesses have to file the HVUT Form 2290 by the end of the successive month of first use.
For example, if you purchased a vehicle in Jan 2021 and started using it in Jan 2021, then you must file HVUT Form 2290 by the end of February 2021.
EZ2290, Powered by Zenwork, Inc., is an IRS-Approved eFile provider for Form 2290 filings. This blog provides informative articles on Form 2290 compliance, expert tips, insights, engaging stories related to truck drivers and trucking regulations.