Construction companies may be liable for the federal highway vehicle use tax. These companies may also be eligible to claim an income tax credit or a refund for gasoline, diesel fuel, or kerosene that is used in nontaxable uses.
Heavy Highway Vehicle Use Tax
A truck or truck tractor is subject to the highway vehicle use tax if it:
- Is a highway motor vehicle (generally, a vehicle moved by its own motor and designed to transport a load over the public highways, even if it is designed to do other things)
- Is registered or required to be registered for highway use
- Is used on a public highway, and
- Has a taxable gross weight of at least 55,000 pounds (taxable gross weight means the weight of the vehicle plus the weight of the trailers and semi-trailers customarily used in connection with vehicles of the same type, plus the weight of the maximum load customarily carried on vehicles, trailer, and semi-trailers of the same type)
The tax applies to the first use of a taxable vehicle on a public highway during the taxable period, which is each July 1st through June 30th. The person in whose name a taxable vehicle is registered or required to be registered must pay the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. The tax is due by the last day of the month following the month in which the vehicle is first used during the taxable period. Thus, if you use a taxable vehicle in July, you must file Form 2290 by August 31st. See Form 2290 and Publication 510 (Including Fuel Tax Credits and Refunds).
Fuel Tax Credits and Refunds
A federal excise tax is imposed on gasoline ($.184 per gallon), clear diesel fuel ($.244 per gallon), and clear kerosene ($.244 per gallon). The amount of these taxes may be credited or refunded if these fuels are used in many types of off-road uses. Common off-road uses include use as heating oil, use in stationary engines, use in non-highway vehicles, and use in separate engines mounted on highway vehicles.
Generally, refunds of $750 or more may be claimed quarterly on Form 8849. Claims not made on Form 8849 may be claimed as income tax credit on Form 4136. See the forms and their instructions for specific claim requirements.
Note that a credit or refund is not allowable for the following:
- Any use in the propulsion engine of a registered highway vehicle, even if the vehicle is used off the highway
- Any fuel that is lost or destroyed through fire, spillage, or evaporation
- Any use of dyed diesel fuel or dyed kerosene. In fact, you may be subject to a substantial penalty if you use dyed fuel as a fuel in a registered diesel-powered highway vehicle
It is important to keep records to support your claim. Keep these records at your principal place of business. These records should establish the number of gallons used during the period covered by the claim, the dates of purchase, the names and addresses of suppliers and amounts bought from each in the period covered by the claim, the purposes for which you used the fuel, and the number of gallons used for each purpose.
See Publication 510 if you use propane or other special fuels in registered highway vehicles. If you do, you may be liable for tax on this use.