- 21.7.8.4 Excise Tax Procedures
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PL 110-343, HR 1424, Section 114 of the Energy Improvement and Extension Act of 2008, allows coal producers and exporters to file refund claims for the section 4121 coal tax that was paid on coal exported on or after October 1, 1990, and before October 3, 2008. Processing procedures were as follows:
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The refund was retroactive to tax year 1990 thru October 3, 2008. To allow for an adjustment on IDRS, the statute year was reopened for a 30 day period to allow coal producers and coal exporters to file claims for coal exported between October 1, 1990 and October 3, 2008.
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The taxpayer had 30 days from the date of enactment, October 3, 2008, to file a claim. Claims had to be postmarked by November 3, 2008 to be considered timely. Any claim that was received after the due date, but had a postmark/metered date on or before Nov. 3, 2008, was deemed to be filed on the date of the postmark/post meter. See IRM 25.6.1.6.15, When A Document Is Treated As Filed Under the IRC.
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Claims had to be mailed to IRS Cincinnati, OH 45999 and received at the Cincinnati Campus in Receipt and Control (R&C) Operations. R&C routed the claims to Centralized Excise Operations (CEO).
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Claims were sorted in CEO by the EIN, name, tax periods, amount of claim, and date received. This information was recorded in a database developed by Excise Policy and provided a cover sheet that included the taxpayer's name, EIN, tax period, received date and the amount of the claim. The cover sheet also showed if the taxpayer had filed a claim under the Tucker Act or was a Synfuel producer or exporter. The cover sheet had to remain with the claim until the case was closed and updated as the case file moved through CEO processing.
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After the input into the data base, claims were routed to the tax technician teams to perform initial research. Claims reporting less than $5,000 per quarter were routed to the tax examining teams for processing.
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Claims had to be filed on Form 8849, Schedule 6, and have "Coal Export Claim" written at the top of the claimant's Form 8849. The claims could not be filed electronically.
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≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ After reviewing the claim, the Campus Excise Revenue Agents had to forward the claims not selected for the field to the tax examining teams to close. Selected claims were forwarded to the Policy Revenue Agents. Other criteria that had to go CAT-A are as follows:
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All Exporter Claims
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Producer Claims over 1 million dollars (aggregate or total claim amount)
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Claims from any Synfuel Producers
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Claims previously disallowed
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Claims currently being disallowed
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Claims identifying judgments
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First time claim filers
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Single quarter claims
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Prior audits with disallowances (290.00 and blocking series 98 or 99)
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Any post 199812 claim
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Credit claimed is more than the amount of tax reported on Form 720
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Claims with a previous DOJ (Department of Justice) adjustment (Could be determined by a TC 520/521 and an adjustment with CRN 036, 037, 038 and/or 039 on the tax module)
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Claims filed by "successors"#
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Claims had to be reviewed before adjusting the account for the coal producer for the following criteria:
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Claims had to be timely mailed within 30 days of the date of enactment, post marked no later than November 3, 2008.
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The claim had to have a valid signature.
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Claims had to have a statement that the claim was a coal producer claim and the correlating Credit Reference Number (CRN) used was CRN 382.
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Coal Producers had to have filed a Form 720, Quarterly Federal Excise Tax Return, reporting and paying the exportation tax on coal using either IRS Nos. 36, 37, 38, or 39, to file a claim for refund. Refunds for amounts more than the tax reported could not be paid.
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Claims had to have the date and the amount of the tax paid.
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The claimant had to provide a statement that in their possession they had proof of exportation for the coal covered by the claim or have a favorable judgment of a court of competent jurisdiction within the United States that related to the constitutionality of any tax paid on exported coal under IRC section 4121.
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The claimant had to provide a statement that the claimant had no knowledge of any other entity claiming and/or receiving a credit or refund of the tax paid on the exported coal.
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Claims had to be reviewed before adjusting the account for the coal exporter for the following criteria:
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Claims had to be timely mailed within 30 days of the date of enactment, post marked no later than November 3, 2008.
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The claim had to have a valid signature.
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A statement that the claim was a coal exporter claim and the correlating Credit Reference Number (CRN) used was CRN 385.
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Coal Exporter's had to have an income tax return filed. If the exporter did not file a Form 720, Quarterly Excise Tax Return, for the tax period reported on the claim, a "dummy" Form 720, had to be filled out and sent to Submission Processing. The case was suspended until the return posted to Master File, and then the adjustment was input using IDRS. The due date of the tax period was used as the received date on the dummy Form 720. (Refunds for more than 82.5 cents per ton exported could not be paid.)
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Claimant had to report the amount of coal exported for each quarter.
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Claims had to have the date and the amount of tax paid.
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The claimant had to provide a statement that the exporter had proof of exportation for the coal that was the subject of the claim.
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The claimant had to provide proof that the exporter filed a tax return on or after October 1, 1990, and on or before October 3, 2008.
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The claimant had to provide a statement that the exporter had no knowledge of any other entity claiming and/or receiving a credit or refund of the tax paid on the exported coal.
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Exporters could not be Coal Producers.
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If the claim could be processed after review, the adjustment was input on IDRS as follows:
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The Coal Producer claim was adjusted on MFT 03, using 290.00 with CRN 382.
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The Coal Exporter claim was adjusted on MFT 03, using 290.00 with CRN 385. Refunds for more than 82.5 cents per ton exported could not be paid.
Note:
Credit Reference Numbers (CRN's) were not used on the accounts that had to be brought back from the retention register, 1990, etc. The old accounts used IRS Nos. (Abstract Nos.). Master File identified the CRN's used for the adjustment as a new activity and allowed the CRN's.
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Claims had to be postmarked by November 3, 2008, to be considered timely. Because the statute was reopened for coal exports only, the RSED was not updated on IDRS. Adjustments had to have the RFSCDT and Override CD fields input. The RFSCDT had to be 1 day prior to the RSED date on the first page of TXMOD and the Override code had to be S.
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Accounts reactivated from the retention register had a TC 370 and TC 340. The TC 340 restricted the interest and had to be addressed when inputting the adjustment. If a TC 340.00 was input on the adjustment, the date of the previous TC 340.00 for the "debit interest to date" on REQ 54 had to be used.
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If credit interest was manually computed, the date the credit interest was figured to as the "credit interest to date" on REQ54 was used.
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IDRS was reviewed to determine if prior claims for the same tax had been allowed. If prior claims had been processed, they were routed to the Excise Revenue Agents.
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The thirty day window for filing the claims reopened the statute of limitations on the tax/credit, but not the penalties and interest associated with the tax. If the statute was still opened on a penalty (FTD, FTP, FTF and/or debit interest) they were adjusted using normal procedures for the coal claim credit. If the statute was no longer opened based on the original assessment and payment activity, the penalty and/or interest (statute expired) was not abated. If the adjustment action caused the penalties and interest to decrease, they had to be restricted to prevent an erroneous abatement.
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Accounts reactivated from retention do not carry the GATT indicator on CC TXMOD. The GATT indicator must be on any Corporation account (except S-Corps, GATT does not apply) for the computer to calculate the credit interest accurately. If the indicator is not present, the computer will calculate the credit interest using the federal non-corporate rate. The following procedures were used for accounts reactivated from retention:
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If the account was reactivated from retention, and the entity was a non-corporate entity, the GATT indicator was not present on the tax module. The claim was processed and the computer figured the interest.
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If the account was reactivated from retention, and the entity was a corporate entity, the GATT indicator was not present. A manual computation had to be done for the credit interest. Credit interest was figured to 9 days prior to the 23C date.
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Accounts that had not been reactivated from retention reflected the GATT indicator. The entity and GATT indicator were checked to ensure they matched. If it was accurate, the computer generated the credit interest and refund.
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Accounts established by Dummy Returns reflected the GATT indicator. The accounts were reviewed for accurate processing and posting to IDRS. The accounts were reviewed for the following:
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The return received date and CRD date were accurate for posting.
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The GATT indicator was correct.
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If all was accurate, then IDRS was released to generate the credit interest and refund.
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A claim was returned if it was filed and was missing any of the above information to the taxpayer by sending a 916C, No Consideration letter. The letter had to advise the taxpayer of the information missing from the claim and gave the claimant 30 days from the date of the letter to reply with the missing information. The case had to be suspended for 45 days. If the information was not received, formal disallowance procedures were used.
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If the taxpayer disagreed with a claim that was fully or partially disallowed, the taxpayer had appeal rights or could file a suit in court. To disallow a claim, a TC 290.00 was input on IDRS using blocking series 98/99 and a 105C letter was written giving appeal rights or the option to file a suit in court. The 105C letter included an explanation of why the claim was being disallowed. The cover sheet was updated with the reason the claim was being disallowed and returned to the Excise clerk.
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Any claim postmarked after the 30th day (November 3, 2008) had to be formally disallowed using a TC 290.00 with blocking series 98/99 and a 105C letter.
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Form 720X, Amended Quarterly Federal Excise Tax Return, is used to report adjustments to tax liability reported for previous quarters.
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Form 720X, Amended Quarterly Federal Excise Tax Return, line 2, must be used for any adjustments to IRC section 4051(d), tire credit. A tax credit may be taken equal to the amount of tax that has been imposed on each tire that is sold on, or in connection with, the first retail sale of a taxable vehicle reported on IRS No. 33. Form 720X, must show an adjustment to IRS No. 33 on line 1 to allow the credit. Adjust the credit using CRN 366.
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A claimant must be registered to file a claim Form 720 (Schedule C), for an alternative fuel credit and/or an alternative fuel mixture credit. If the claimant is not registered, they must apply for registration on Form 637, Application for Registration. Form 720X, line 2, must be used to report any adjustment to IRC section 6426, fuel credits. The claimant must have first used Form 720, Schedule C, to reduce their IRC section 4041 or IRC section 4081 fuel liability. (See Form 720 X instructions, line 2.) The claimant must use a separate line for each adjustment. See the table below for applicable types of credit, CRN's and credit rates.
Credit CRN Credit Rate Alcohol fuel mixtures containing ethanol 393 $.45 Alcohol fuel mixtures containing alcohol (other than ethanol) 394 $.60 Biodiesel (other than agri-biodiesel) mixtures 388 $1.00 Agri-biodiesel mixtures 390 $1.00 Renewable diesel mixtures 307 $1.00 Liquefied petroleum gas (LPG) 426 $.50 "P Series" fuels 427 $.50 Compressed natural gas (LPG) 428 $.50 Liquefied hydrogen 429 $.50 Any liquid fuel derived from coal (including peat through the Fixscher-Tropsch process 430 $.50 Liquid hydrocarbons 431 $.50 Liquefied natural gas (LNG) 432 $.50 Liquefied gas derived from biomass 436 $.50 Compressed gas derived from biomass 437 $.50 Note:
Form 720X, line 6, must be completed and provide a detailed explanation of each adjustment and the computation of the amount. The computation must include the number of gallons and credit rate per gallon. Any certificates or statements required for Schedule C lines, 12, 13, and 14, must also be attached.
See Form 720X for additional information.
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The IRC section 6415 conditions for claim allowance on Form 720X apply to IRS Nos. 22, 26, 27, and 28. The claimant must have repaid the amount of the tax to the person from whom it was collected or have the consent of that person for the allowance of the adjustment.
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The IRC section 6416(a) conditions for claim allowance on Form 720X apply to all other IRS Nos. except 18, 19, 20, 21, 29, 30, 31, 51, 64, 98, and 115, 116 and 117; or if tax is based on use of IRS Nos. 61, 71, 79, and 112, 118, 120-124, and 101. IRS Nos. 61 and 101 can only be adjusted for periods ending before October 1, 2006. The claimant must not have included the tax in the price of the article and has not collected the tax from the purchaser or has the written consent of the ultimate purchaser for the allowance of the adjustment.
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For each adjustment reported on line one of Form 720X, a statement must be attached, or line 6 can be used for providing:
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A detailed description of each adjustment
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A computation of the amount claimed
Note:
The supporting evidence is not required to be submitted with the claim.
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Input an adjustment on MFT 03 for the quarter in which the tax was originally reported, or should have been reported, using TC 291 for a tax decrease or TC 290 for a tax increase, using the appropriate IRS No. Interest is allowable.
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If the box on line 5b of Form 720X is checked, the overpayment is shown on line 7 of Form 720. Line 6 of Form 720 should include the amount from line 7, if any, as an overpayment from a previous quarter.
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Input an adjustment on MFT 03 for the quarter in which the tax was originally reported, or should have been reported, using TC 291 for a tax decrease or TC 290 for a tax increase on MFT 03 and appropriate IRS No. See IRM 20.1.4.8, Form 720 Reporting Requirements, if a failure to deposit penalty may apply.
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For tax increases, input the tax increase on the appropriate prior tax period.
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If you cannot determine there is an overpayment from the current period to satisfy the tax increase:
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Wait for the TC 150 to post on the current quarter.
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If there is an overpayment on the current quarter, apply the overpayment to the prior quarter being adjusted, using TC 820/700.
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Use the date the overpayment became available, which would be the due date/received date (whichever is later) of the current quarter.
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Do not restrict interest.
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Address the late deposit penalty and assess if applicable.
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For tax decreases, see chart below:
If Then Decrease is over ≡ ≡ ≡ ≡ Send Category A. Decrease is over ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Use expedite procedures and send Category A. Claim (Form 720X) allowed 1. Input the tax decrease on tax period being corrected.
2. If the taxpayer is using the overpayment against their tax liability on the current quarter, apply credit using TC 820/700. NOTE: On the 820 side, use the RDD of the tax period you are adjusting as the date the overpayment became available. On the 700 side, use the RDD of the current quarter.Transferring resulting credit to current quarter 1. Compute interest from the RDD of the quarter being adjusted to the RDD of quarter where the overpayment is being used.
2. Let credit interest refund.Refund is requested Use amended claims date. Taxpayer does not check either box Let refund.
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To figure credit interest for overpayments on Form 720X, see chart below:
If Then Credit interest before 1/1/99 Compute on COMPAC. Credit interest after 1/1/99 Compute on COMPAD. The overpayment is over $10,000 and the account has corporate filing requirements NOTE: Overpayments include amounts, refunded, offset or applied as credit elect. To determine if the threshold has been met, add all previous overpayments for the tax module to the amount you are currently processing. The reduced GATT rate applies. The overpayment is over $10,000 and the account does not have corporate filing requirements Compute entire overpayment using COMPAD or COMPAC, as appropriate. Total is less than or equal to $10,000 Use COMPAD or COMPAC, as appropriate. Total is over $10,000 Overpayment over $10,000 is subject to GATT interest. Use COMPAG. NOTE: Add the COMPAD/COMPAC (first $10,000) with the GATT interest (over $10,000) for the total interest allowed. Inputting a TC 291 adjustment Also, input a TC 770 for the credit interest allowed.
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Form 8725 Excise Tax on Greenmail, is used to report and pay the 50% excise tax imposed under IRC section 5881, on the gain or other income realized on the receipt of greenmail.
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Form 8725 is not attached or part of Form 720.
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The term "greenmail" means any amount a corporation (or any person acting in concert with a corporation) pays to a shareholder to directly or indirectly acquire its stock. Send Form 8725 to the Non-Master File Unit for processing.
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A CP 183 is generated and issued to the taxpayer when the taxpayer does not indicate an IRS No. on an original Form 720. In these cases:
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The returns are processed with IRS No. 80.
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The CP 183 requests the taxpayer to furnish a breakdown of the reported tax liability by IRS No.
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If taxpayer replies:
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Determine the correct IRS No. from taxpayer's correspondence.
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Input TC 290 in the appropriate blocking series.
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Adjust IRS Nos. by inputting the IRS No. 80 originally used with a minus (-) amount and inputting the correct IRS No. for the same amount.
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Adjust any penalties and/or interest as needed. Pay particular attention to FTD penalties which may need to be adjusted. (IRS Nos. 20, 41, 42, 44, 51, 64, 106, 110, 114, and 117; net tax liability of less than $2,500; or one time filings on gas guzzler and luxury tax do not require deposits.)
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If taxpayer fails to reply:
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Reject back to the taxpayer for correct IRS No.
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If information is received by telephone, see (2) above.
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Form 720-TO, Terminal Operator Report, is an information return used by terminal operators to report their monthly receipts and disbursements of all liquid products to and from all approved terminals.
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Form 720-CS, Carrier Summary, is an information return used by bulk transport carriers who receive liquid product from an approved terminal or deliver liquid product to an approved terminal to report their monthly receipts and deliveries.
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Form 720-TO and Form-720-CS must be filed monthly. The report is due the last day of the month following the month in which the transaction occurs.
Example:
The first month for reporting was April, 2009. The return had to be filed by May 31, 2009.
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Form 720-TO and Form 720-CS are worked by a specific group in Excise Operations. Forward all returns/correspondence to:
Centralized Excise
Mail Stop 5701 G
Cincinnati, OH 45999
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After December 31, 2007, qualified subchapter subsidiaries (QSubs) and eligible single-owner disregarded entities are treated as separate entities for excise tax and reporting purposes. QSubs and eligible single-owner disregarded entities must pay and report excise tax activities (other than IRS Nos. 31, 51, and 117), register for excise tax activities, and claim any refunds, credits, and payments under the entity's employer identification number (EIN). These actions cannot take place under the owner's taxpayer identification number (TIN). Some QSubs and disregarded entities may already have an EIN. If the taxpayer is unsure if they have an EIN, they may call the IRS Business and Specialty Tax line at 1-800-829-4933.
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Generally, QSubs and eligible single-owner disregarded entities will continue to be treated as disregarded entities for other federal tax purposes (other than employment taxes). Example: Taxpayers filing a Form 4136, Credit for Federal Tax Paid on Fuels, with Form 1040, Individual Income Tax Return, can use the owner's TIN.
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Electronic filing for Form 720, Quarterly Federal Excise Tax Return is available through an electronic return originator (ERO), transmitter, and/or intermediate service provider (ISP) participating in the IRS e-file program for excise taxes. The ERO, ISP and Transmitter can be separate entities; however, most of the electronic filed returns will be filed using a web based service provider. Excise Tax e-File and Compliance (ETEC) information is available at:
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ETEC information for service providers, etc., can be found at URL (Uniform Resource Locator): http://www.irs.gov/efilearticle/0,,id=170570.00.html.
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The MeF system allows two alternative signature options for business taxpayers and the Electronic Return Originator (ERO) to sign electronic returns filed via MeF. The taxpayer must decide whether they want to enter their own Personal Identification Number (PIN) to sign the return or whether they authorize the ERO to enter the PIN chosen by the ERO. The filer can choose to sign the applicable Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, that must be scanned and attached to the return when transmitted. A paper copy of the scanned Form 8453, should not be mailed to the IRS. The business filer can also choose the Practitioner PIN Option, using the applicable Form 8879, e-file Signature Authorization, that is retained by the ERO as part of the taxpayer's record and is not sent to the IRS. An electronic return will be rejected if the required signatures are not present. See IRM 3.42.4, IRS e-file For Business Income Tax Returns, for additional information.
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"Share Point" is a restricted access website which allows Centralized Excise Operations, (CEO) to update, store, and monitor Form 720, line 4 classification, (GAO recommendation), determinations for an e-filed Form 720. Local procedures correlating with "Share Point" must be used by CEO to process Form 720, line four adjustments, and/or million dollar returns.
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Form 2290, Heavy Highway Vehicle Use Tax Return, is used to figure and pay the tax due on highway motor vehicles with a taxable gross weight of 55,000 pounds or more used on public highways during the taxable period.
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A highway motor vehicle includes any self-propelled vehicle designed to carry a load over public highways, whether or not also designed to perform other functions.
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A public highway is any road in the United States that is not a private roadway. This includes federal, state, county, and city roads. See Form 2290 instructions for Form 2290 exemptions.
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The MFT is 60 and the tax class is 4.
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The taxable period begins each July 1 and ends the following June 30.
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For vehicles first used in July of the taxable period, Form 2290 is due by August 31.
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For vehicles first used after July of the taxable period, Form 2290 for that period is due by the last day of the month following the month of first use.
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Some taxpayers file several Form 2290's for one tax period. This is usually done because they have several offices and each office needs its own Schedule 1. Do not send a 673C letter in these situations.
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A person must file a Form 2290 if the vehicle is registered, or required to be registered, in the person's name under state, District of Columbia, Canadian or Mexican law.
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At the time of the vehicle's first use on public highways during the period
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At the time the vehicle's mileage use limit (5,000 miles or less, 7,500 miles for agricultural vehicles) is exceeded; or
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At the time that an increase in the taxable gross weight of the vehicle results in an additional tax liability
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A Form 2290 must also be filed by a person who acquires a vehicle that is registered, or required to be registered, in the person's name for which the tax had been suspended.
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Generally, a stamped copy of Schedule 1 is required as proof of payment when registering vehicles with a state.
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The return has two copies of this Schedule.
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Code and Edit verifies the Schedules, stamps one copy "Received at Service Center" and returns it to the taxpayer.
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If Schedule 1 is not received or additional information is needed, a letter is sent to the taxpayer requesting the information.
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If there is no reply in the suspense period, the return is sent to Processing.
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When a subsequent reply is received, it is sent to the Excise Tax Function.
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A copy of the unstamped Schedule 1 and Form 2290 with Vehicle Identification Numbers (VINs) and a copy of the cancelled check, if the tax is not suspended, may also be used as proof of payment to register the vehicle.
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A vehicle may be registered without proof of payment (Schedule 1) if the person registering the vehicle presents a copy of the bill of sale showing that the vehicle was purchased either new or used within the last 60 days. Employees answering the Excise toll-free number and Taxpayer Assistant Centers should use the instructions in the chart below.
If ... And ... Then ... First Owner States they need a Schedule 1 so they can register their vehicle Ask if they have purchased the vehicle within the last 60 days: If yes they do not need a Schedule 1 to register the vehicle; however, they must still file a return and pay the tax. The State will register the vehicle with a Bill of Sale or photocopy of the Bill of Sale. If no (more than sixty days), they need to file a return and pay the tax to receive a stamped Schedule 1 for registration. Example: Taxpayer states the vehicle was not registered because it has been under restoration. Tell them the state needs the Schedule 1 as proof of payment for registration if the vehicle is not registered within 60 days of purchase. Figure the tax for the tax year from the first month the vehicle was used on public highways to June 30th. Use the tax rate table in the Form 2290 instructions to figure tax. Second Owner Second owner is inquiring if they need to file Form 2290 and pay the tax on their vehicle 1. Tell the second owner they must file Form 2290 and are liable for the tax for remaining months the vehicle is used by them (second owner) on public highways to June 30th. If the vehicle is suspended for the taxable period, the second owner may continue the suspension on the return they file. The return and tax are due by the last day of the month following the month the vehicle was first used on a public highway by the second owner, and 2. They can use the Bill of Sale or photocopy of their Bill of Sale within the first 60 days the vehicle was purchased for registration purposes. If the vehicle is suspended for the taxable period, the second owner may continue the suspension on the return they file.
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Use the chart below for the established Form 2290 (after the first year) filer. The chart is for employees answering calls on the Excise toll-free telephone number and Taxpayer Assistance Centers.
If Taxpayer And Then Has not filed return and paid tax This is an emergency Direct taxpayer to nearest Taxpayer Assistance Center, to file return, pay tax, and have Schedule 1 stamped. Has not filed return and paid tax This is not an emergency Help taxpayer prepare Form 2290. Instruct taxpayer to send payment and voucher to address in instructions for Form 2290. Filed return timely Schedule 1 was not returned See next box. Has a copy of Schedule 1 This is an emergency situation If taxpayer has photocopy of Form 2290 and both sides of the cancelled check, this can serve in lieu of the stamped Schedule 1. If not:
1. Advise him or her to mail/fax a copy of the Schedule 1 to you.
2. Verify tax has been paid in full.
3. Stamp the Schedule 1 with the official IRS "Received" or " Received with Remittance" date stamp, using the date of the payment shown on CC BMFOL, or, if no tax was due, the date the return was filed. Fax or mail the Schedule 1 to the taxpayer.Did not keep a copy of Schedule 1 Taxpayer can provide you with VIN(s) and this is an emergency situation 1. Prepare a new Schedule 1 for taxpayer.
2. Verify tax paid.
3. Stamp the Schedule 1 with the official IRS " Received" or "Received with Remittance" date stamp, using the date of the payment shown on CC BMFOLT, or, if no tax was due, the date the return was filed.
4. Advise taxpayer the Excise Tax Function will pull his or her original return and match VIN numbers of vehicles with those shown on Schedule 1 submitted by taxpayer. If VIN Numbers do not match, Excise Tax Function assesses additional tax due and taxpayer receives a notice of balance due. (TAC employees can fax or mail the Schedule 1 to Centralized Excise.)Taxpayer filed Form 2290 and did not receive stamped Schedule 1 This is not an emergency situation 1. Request return.
2. Copy Schedule.
3. Stamp the Schedule 1.
4. Send the Schedule 1 to taxpayer.
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Taxpayer payment must show EIN (not SSN) and date the tax period begins.
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There are two methods of payment:
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By Electronic Federal Tax Payment System (EFTPS), or
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By check or money order using the payment voucher
Note:
The installment privilege was eliminated effective July 1, 2005.
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Using EFTPS is voluntary. For the EFTPS payment to be timely, the taxpayer must make the transaction one business day before the payment is due. See IRM 21.7.8.4.2.12, Form 2290, Electronic Filing For Taxpayers Reporting 25 Or More Vehicles.
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The Form 2290 filer is entitled to have an installment agreement (I/A), per IRC section 6159, to pay their tax. However, they cannot receive their Schedule 1 to register their vehicle until the total tax is paid in full. If the taxpayer elects to have an installment agreement, after payments are received and the total tax is paid in full, the taxpayer needs to notify Centralized Excise to receive their stamped Schedule 1. Centralized Excise, at that time will request the return from Files, check the return for accuracy, and mail or fax the Schedule 1 to the taxpayer.
Reminder:
The installment agreement (Status 60) is not the same as the previously allowed installment privilege (Status 20). Before it was repealed, the installment privilege allowed the Form 2290 filer to pay the tax in four equal payments and receive a stamped Schedule 1 with the filing of the return and one-fourth of the tax paid. The installment agreement (Status 60) is permitted if it is determined that the agreement will facilitate full or partial collection of such liability. The taxpayer cannot receive their Schedule 1 until the total tax is paid in full.
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Form 2290 contains a taxable gross weight "Tax Computation" table for Categories A–V and full year’s tax due in each category (vehicle in use during July); and Category W for tax-suspended vehicles.
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Refer to Form 2290 instructions, Partial Period Tax Tables, Table 1, for the amount of prorated tax due for vehicles first used after July.
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The tax rate for logging vehicles is reduced by 25%. This reduction is reflected in the annual tax and partial period tax tables. Beginning July 1, 2005, the reduced rate of tax for Canadian and Mexican vehicles was repealed per the American Jobs Creation Act, HR 4520. Taxpayers reporting Canadian or Mexican vehicles must use column (1) (a) of Form 2290, "Tax Computation" table to figure their annual tax.
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Statement in Support of Suspension of Tax, Part II of Form 2290, must be completed if taxpayer expects to use a vehicle on public highways 5,000 miles or less (7,500 miles or less for agricultural vehicles) during the tax period.
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Tax on that vehicle is suspended for the tax period if the mileage use limit is not exceeded.
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If vehicle is transferred while the suspension in effect, the suspension of tax continues until vehicle is used more than 5,000 miles (7,500 for agricultural vehicles), during taxable period. This includes miles vehicle was used by seller for portion of taxable period prior to transfer.
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Once vehicle use exceeds 5,000 miles (7,500 for agricultural vehicles), new owner is liable for tax for taxable period.
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Seller (transferor) is to provide buyer (transferee) with statement that includes:
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Transferor's name, address, and EIN
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Vehicle Identification Number (VIN)
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Date of transfer of vehicle
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Odometer reading at beginning of period
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Odometer reading at time of transfer
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Transferee's name, address, and EIN
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New owner files Form 2290 by the last day of the month following the month in which vehicle was first used by the new owner and attaches statement to return.
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If transferor does not provide statement to transferee, then transferor is also liable for tax if the mileage use limit is exceeded.
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If after filing Form 2290, the taxable gross weight category of a vehicle increases within same taxable period, taxpayer must file another Form 2290 reporting additional tax due.
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Return and payment of tax is due by last day of month following month in which taxable gross weight increased and is reported on Form 2290, line 3, "Additional tax from increase in taxable gross weight."
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See page 5 of Form 2290 instructions under the heading of "Line 3" to determine the tax if the taxable weight increases.
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Because additional tax is not due until the last day of month following the month in which weight increased, input additional tax assessment with TC 298 using due date of second required return as interest start date.
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If Form 2290 has been filed to suspend the tax and the vehicle is used more than 5,000 miles (7,500 for agricultural vehicles), an amended Form 2290 must be filed and the tax paid.
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Once the mileage use limit is exceeded, tax is due for the taxable period, regardless of when the limit was exceeded and is computed on the basis of the month the vehicle was first used in that period. If a suspended vehicle exceeds 5,000 miles (7,500 for agriculture) within the tax period, the tax is due as follows:
Vehicle Suspended First Used on Highway Exceeded 5,000 Miles (7,500 Agriculture Vehicle) Tax Due From July July April July 1 through June 30th July February May February 1 through June 30th -
No interest is charged if return is filed and tax is paid by last day of month following month in which vehicle use exceeded 5,000 miles (7,500 for agricultural vehicles).
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Assess tax using TC 298 with due date of return, on which vehicles were reported as taxable, as interest start date.
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If the taxpayer does not indicate on the "Amended" Form 2290 when it exceeded 5,000 miles (7,500 miles for agricultural vehicles), assess tax with TC 290 and let interest compute. Contact taxpayer explaining that the month vehicle exceeded 5,000 miles (7,500 for agricultural vehicles) could not be established.
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Beginning July 1, 2005, the installment privilege was eliminated. The installment payment line on Form 2290 was deleted. (Lines 8-10 were renumbered to lines 7-9.) Tax must be paid in full with the filing of Form 2290. Penalties and interest accrue if the tax is not paid in full. See IRM 20.1.2, Failure to File/Failure to Pay Penalties.
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Electronic filing for taxpayers reporting 25 or more vehicles is a mandatory requirement, per the American Jobs Creation Act, HR 4520, beginning July 1, 2005. The Excise Tax E-filing and Compliance program (ETEC) became available for tax periods July 2007 and subsequent on August 8th, 2007.
Note:
As the IRS began implementation of electronic filing for excise tax returns, taxpayers were permitted to continue to file a paper Form 2290 Heavy Highway Vehicle Use Tax Return. (Also, includes those reporting 25 or more vehicles until IRS issues further guidance.)
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To review Form 2290, access EUP (Employee User Portal). See IRM 3.42.4.9.1, IRS e-file for Business Income Tax Returns, for information to access EUP.
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If the tax is fully paid, the Schedule 1 for an electronically filed return is systemically sent to the electronic return originator (ERO). The ERO and/or the Intermediate Service Provider (ISP) will provide the taxpayer with the original electronic (water marked), copy of Schedule 1 for registering their vehicle.
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The ERO, ISP and Transmitter can be separate entities; however, most of the electronic filed returns will be filed using a web based service provider. ETEC information is available at:
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ETEC information for service providers, etc., can be found at URL (Uniform Resource Locator): http://www.irs.gov/efilearticle/=170570.00.html.
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The taxpayer can file multiple Form 2290's and/or amended returns electronically. See IRM 21.7.8.4.1.24, Electronic Filing for Form 720, Quarterly Excise, for information on signature requirements.
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Beginning July 1, 2007, a document of consent to disclose tax information reported on Form 2290, Schedule 1, is included with the mail out of Form 2290. The document must be signed by the taxpayer and/or third party before information can be shared with participating states. The information shared includes:
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VINS (vehicle identification numbers) reported on Schedule 1
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Verification that tax has been paid (reported on line 6 of Form 2290)
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If the document is signed, IRS may disclose the information to the federal Department of Transportation (DOT), U.S. Customs and Border Protection (CBP), and to the state Departments of Motor Vehicles (DMV).
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If a previous owner of a registered vehicle uses the vehicle first during a taxable period, the previous owner is liable for the tax only for the months the vehicle was used by the previous owner. See IRM 21.7.8.4.2.16, Form 2290, Claims, for information about prorating the tax for claiming a refund. See IRM 21.7.8.4.2.8, Form 2290, Vehicle Transferred While Tax is Suspended, for information about vehicles transferred while tax is suspended.
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The second owner is liable for the tax for the remaining months of the taxable period the vehicle is used on public highways by the second owner. Form 2290 must be filed and the tax paid by the last day of the month after the month the vehicle is first used on a public highway.
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If the previous owner used the vehicle on public highways and has not paid the tax, and the new owner uses the vehicle before the end of the taxable period, the new owner becomes liable for the total tax for the entire period to the extent not paid by the previous owner.
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Form 2290(SP) and instructions are available in the Spanish Language.
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Beginning July 1, 2005, Form 2290-FR and its instructions are available in the French language. Publications and correspondence may also be considered in the French language at a later date.
Reminder:
Form 2290 filers must have an Employer Identification Number to file return and pay the tax. Social Security numbers cannot be used for Form 2290.
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If a taxable vehicle is registered in the name of both the owner and another person, the owner is liable for the tax. This rule also applies to dual registration of a leased vehicle.
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Any vehicle operated under a dealer's tag, license, or permit is considered registered in the name of the dealer.
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Beginning January 1, 2005, use CRN 365 for line 5 (credit) adjustments. Submission Processing transcribes line 5 using CRN 365 in initial processing. If a credit adjustment is required for line 5, input using TC 290 and CRN 365. A TC 766 will generate for CRN 365. To reverse the credit, input TC 290 and CRN 365 (with a minus).
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Taxpayers may use line 5 of the Form 2290 to claim a credit for tax paid in the three following circumstances:
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Vehicle is destroyed or stolen before June 1 of the taxable period and is not used during the remainder of the taxable period
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Vehicle was used 5,000 miles or less (7,500 for agricultural vehicles) during the prior taxable period
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Vehicle was sold
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The amount of credit cannot exceed tax liability reported on the return. Input an adjustment transaction on MFT 60, using TC 290 and CRN 365. Any excess credit must be claimed as a refund using Form 8849, Schedule 6.
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Alternatively, the taxpayer can make claims on Form 8849, Schedule 6, versus taking a line 5 (credit) on Form 2290. See IRM 21.7.8.4.5.7.11, Form 8849, Schedule 6, Form 2290, Claims Relating to Taxes Reported on Form 2290.
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A vehicle is destroyed when it is damaged by accident or other casualty to such an extent that it is not economical to rebuild.
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Taxpayer must attach an explanation of the damage by accident or theft.
Note:
A repossessed vehicle is not a sold vehicle. Disallow claim.
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See page 5 of the Form 2290 instructions regarding "Line 5" instructions on "figuring" the credit.
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Beginning July 1, 2005, per American Jobs Creation Act, HR 4520, IRC section 4481(c)(2), if a vehicle is sold during the tax period, a claim for credit can be filed using line 5 of Form 2290.
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If one vehicle is traded for a new vehicle, IRS treats it as a sale for purposes of the tax IRC section 4481, and the credit for vehicles sold, destroyed or stolen IRC section 4481(c)(2). The seller, in whose name the vehicle was registered, can claim a prorated credit of the tax paid. The buyer must file a Form 2290, and pay a prorated tax on the vehicle. The 60 day proof of payment rule applies to the buyer for purposes of registering the vehicle with the State. ( See IRM 21.7.8.4.2.3, Required Proof of Payment.)
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For vehicles destroyed, stolen, or sold, the taxpayer must include the VIN, the date of the accident, theft or sale and the computation of the amount claimed.
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Input adjustment using TC 290 and CRN 365 to adjust credit.
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The person that paid the tax may claim the credit on its first Form 2290 for the next taxable period. Reject any Form 2290 claiming the credit that is filed during the tax period to which the claim relates.
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Claim for refund may be filed on Form 8849, after tax period has ended. See IRM 21.7.8.4.5.7.11 for Form 8849, Schedule 6 instructions.
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Reject any Form 8849 claiming a refund that is filed during the tax period to which the refund relates.
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There are no provisions in the law to allow for a credit, exemption, or refund for:
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An occasional light or decreased load
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A discontinued or changed use of vehicle
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Reject claim using appropriate "C" letter.
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The ability to request an extension to pay tax has always been available for Form 2290 filers in the same way as it is available for all taxpayers.
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There are specific standards and policies for granting extensions. See IRM 5.19.1.5.3, Can Pay Balance Due Later (Extension to Pay).
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If you determine the request for an extension is not valid:
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Do not forward to Collections. See IRM 5.19.1.5.3 , Extensions Up To 120 Days, IMF, BMF Out of Business, BMF In Business, and Sole Proprietorship.
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If the taxpayer states they cannot pay the tax and you determine there is an adequate explanation, send the case and/or route the call to Collections.
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A stamped Schedule 1 must not be returned to the taxpayer until the tax is paid in full.
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There is no provision in the law for a credit or refund if weight of vehicle decreases during a taxable period.
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Refund can be given only if change is due to a reporting error.
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If taxpayer is claiming weight that is less than reported, proof is needed. Taxpayer registration must show weight at which vehicle is registered.
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Taxpayer must file Form 8849, Schedule 6, to claim a reporting error.
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If it appears a mistake on Schedule 1 is a typographical error (transposed characters), stamp Schedule 1 and return one copy to taxpayer. Attach second copy to return.
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If new VIN is totally different from old VIN, taxpayer must explain why VIN is different. Contact the taxpayer and process as appropriate based upon the taxpayer's response. The VIN may be different for several reasons.
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If vehicle first reported has been sold prior to the beginning of the tax period, taxpayer may provide a copy of the sales receipt showing the date of sale.
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If vehicle first reported was wrecked, taxpayer may provide a copy of accident report.
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A credit or refund cannot be given, unless tax has been paid on both VINs.
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If tax is paid and taxable year ended, taxpayer must file Form 8849, Schedule 6, for a refund with the above information.
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If the explanation is insufficient, the taxpayer must pay tax on new VIN before Schedule 1 is sent back.
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If a copy of Schedule 1 was sent to taxpayer, assess tax for new VIN and inform taxpayer accordingly.
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On a loose Schedule 1, research IDRS/MF records, and do the following:
If And Then Undeliverable Research for a correct address. No address found Associate loose Schedule with return. A different address is found Re-mail to taxpayer. Account is not full paid There is a discrepancy between what was reported on original return and vehicles listed on Schedule 1 Correspond with taxpayer to resolve discrepancy. Only the bottom section of Schedule 1 is received Payment received (TC 610, no TC 150) is equal to the number of vehicles shown on Schedule 1 Return the stamped Schedule 1 to the taxpayer's address of record as shown on ENMOD. If both sections (top and bottom) of Schedule 1 are received Payment received (TC 610, no TC 150) is equal to the number of vehicles shown on Schedule 1 After research, if Form 2290 cannot be located, send a 418C letter to request a completed, signed Form 2290. (Enclose Form 2290 in the letter.) If the taxpayer can be reached by telephone, they can fax the return. No reply to 418C letter Payment received (TC 610, no TC 150) is equal to the number of vehicles shown on Schedule 1 Prepare a return for amount of tax applicable to number of vehicles on Schedule 1 and send to Batching. Notate on the return: 418C sent on (date) - "no reply." No reply to 418c letter No payments or partial payments received Close base and destroy Schedule 1.
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If unable to determine reason for duplicate return filing, compare VIN numbers between TC 150 and TC 976.
Note:
Follow procedures in IRM 21.7.9, BMF Duplicate Filing Conditions
. See IRM 21.7.8.4.1.16, Form 720, Excise Tax Reported on Duplicate or Amended Returns, for additional information.
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Form 11-C, Occupational Tax And Registration Return For Wagering, is used by persons who accept taxable wagers to register certain information and to pay the occupational tax. The MFT is 63 and the tax class is 4.
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Anyone engaged in the business of receiving taxable wagers is required to file Form 11-C. This includes organizations that are otherwise exempt from tax under IRC section 501 or IRC section 521.
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Taxable wagers include:
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Those placed on a sports event or contest
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Those placed in a wagering pool conducted for profit, with respect to a sports event or contest
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Those placed in a lottery conducted for profit (other than a state-conducted lottery)
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The dual purpose Form 11-C allows the taxpayer to report and pay the occupational tax under IRC section 4411 and to register certain information with the IRS before accepting taxable wagers.
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The return is filed and the tax is paid by taxpayers who are principals or agents prior to conducting business.
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A principal is a person who is in the business of accepting taxable wagers on his or her own behalf. This person is at risk for the profit or loss depending on the outcome of the event or contest for which the wager was accepted. Principals are liable for the excise tax on wagers, which is reported on Form 730, Monthly Tax Return for Wagers.
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An agent is anyone who accepts taxable wagers on behalf of the principal.
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The occupational tax is:
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$50 per year if all taxable wagers received are authorized under the laws of the state in which accepted
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$500 per year for all other taxable wagers
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Principals often incorrectly pay the liability of an agent. These cases are worked by the Cincinnati Campus Excise Tax Function.
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A first return must be filed and the occupational tax must be paid before a taxpayer begins accepting taxable wagers. The tax period begins each July 1 and ends the following June 30.
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If wagers are first accepted in any month other than July, the first return covers the tax period from the start of business until the following June 30 and the tax is prorated for the first year by multiplying the applicable monthly rate by the number of months remaining in the taxable year. See page 2 of Form 11-C regarding "line 2" instructions on how to prorate the tax.
Example:
Taxpayer begins business on February 15, 2010. Tax is due for February 2010 through June 2010 (5 months).
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A first return is also due in certain situations in which there has been a change in ownership or control. The above rules apply. The return must be filed within 30 days of the following changes:
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New members are admitted to a firm or partnership
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A corporation is formed to continue the business of a partnership
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A stockholder continues the business of a dissolved corporation
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A supplemental registration return must be filed, but no additional tax is due when certain conditions are met. See IRM 21.7.8.4.3.3, Form 11–C, Supplemental Registration Returns.
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A renewal return must be filed by July 1 for each year in which a principal or agent accepts taxable wagers.
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A first return must be filed before wagers are accepted. Whether a first return is timely filed and whether penalties may be appropriate is determined by the Centralized Excise Tax Function at the Cincinnati Campus. All automatic penalties on first returns must be reviewed.
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A renewal return must be filed by July 1, when required.
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A supplemental registration return must be filed according to certain provisions. See IRM 21.7.8.4.3.3, Form 11-C, Supplemental Registration Returns below.
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Although additional tax is not due, a supplemental registration return must be filed by principals:
Within Of When End of thirty day period Change in address The business or home address is changed. Principal must register the change before accepting wagers at the new address or by the end of the 30 day period after the change of address, whichever occurs first. 30 days Date of death Business is continued for the remainder of the taxable period only, by a surviving spouse or child, executor, administrator, or other legal representative of a deceased person who paid the occupational tax. 30 days Bankruptcy Bankruptcy: The principal continues for the remainder of the period for the business as an assignee for creditors. 30 days Change Business is continued for the remainder of the taxable period only, by an assignee of creditors. 30 days Change One or more members withdraw from a firm or partnership 30 days Change Corporate name is changed 10 days Engagement A new agent is engaged to receive wagers. The supplemental registration return must report the name, address, and EIN of each new agent. -
Although additional tax is not due, a supplemental registration return must be filed by agents:
Within Of When 10 days Engagement A previously registered agent is engaged to receive taxable wagers on behalf of a different or additional principal. The supplemental registration return must report the name, address, and EIN of each principal. Caution:
If a supplemental registration return is received from an agent who has not previously registered, a first return is required and tax is due.
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Refer all tax decreases to Cincinnati IRS Campus (CIRSC) Excise Tax Function. There is no provision in the law to allow a refund for a portion of a year during which the person receives no taxable wagers. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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If original return is available, use Blocking Series (BS) 08 to adjust account.
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If only amended return is available, use BS 15 to adjust account.