See also Construction

Managing a construction company can be a very challenging task.

Not only are there day to day issues to address such as profitably managing existing projects, identifying new opportunities and tax compliance issues are just a few to consider. While most executives know how to manage existing and win new work it’s the compliance with tax and other rules that can present challenges. Often time’s managers are surprised to learn they may be required to pay a tax on certain materials acquisition or job related hauling. This tax is not assessed by company but by qualifying vehicle which can mean a large and unexpected tax bill. To help clients, prospects and other learn more about this tax and how to properly prepare for it, Hanson & Company has provided a brief summary below.

Heavy Highway Vehicle Use Tax

The Heavy Highway Vehicle Use Tax, also called the Federal Highway Use Tax, is a federal highway tax levied each year on businesses and independent contractors who own vehicles – including trucks, truck tractors and buses – with a gross weight of 55,000 pounds or more. The tax only applies to those commercial vehicles that expect to haul more than 5,000 miles annually or agricultural vehicles that expect to haul more than 7,500 miles annually. Since construction companies and contractors use a variety of specialized hauling vehicles it’s important to check with an advisor to identify which may be subject to the tax.

Tax Calculation

The amount of the tax is calculated by determining adding the unloaded weigh of the vehicle prepared for hauling, unloaded weight of the trailer or similar implement, and weight of the maximum usually carried on the vehicle in combination with a trailer or other such item. The sum of these numbers is referred to as the taxable gross weight. According to the Department of Transportation, if the taxable gross weight is determined to be 55,000 to 75,000 pounds the tax is $100 plus $22 per 1,000 pound excess. So a qualifying vehicle that weight 60,000 pounds would be required to pay a tax of $322. For vehicles that weigh over 75,000 pounds the maximum tax rate of $550 per year applies.

Qualifying Exceptions

There are a number of exceptions available to the tax based on annual use and purpose of the machinery. A summary of these exceptions include:

  • Commercial vehicles traveling fewer than 5,000 miles annually
  • Agriculture vehicles traveling fewer than 7,500 miles annually
  • Vehicle not considered highway motor vehicles — e.g., mobile machinery for non-transportation functions, vehicles specifically designed for off-highway transportation, and non-transportation trailers and semi-trailers
  • Qualified blood collector vehicles used by qualified blood collector organizations  

Contact Us

The Heavy Highway Vehicle Use Tax is a constantly changing tax which can catch a construction of contracting company by surprise. This is especially true as a company expands operations or number of new jobs. To ensure your company is prepared for this filing requirement, contact Hanson & Co today. The last thing any business owner wants is to be surprised by additional tax obligations. For additional information on the Heavy Highway Vehicle Use Tax or other construction accounting questions, please contact us at (303) 388-1010, or click here to contact us. We look forward to speaking with you soon!