Heavy Vehicle Use Tax

Funding Our Nation's Highway Programs and Leveling the Playing Field

Evasion Methods and
  Detection (Part III)

This page explores the final two HVUT evasion methods:

• Failure to remit
• Falsifying or forging an IRS Form 2290

Evasion Method 6 – Failure to remit. The 60-day registration rule provides an opening for failure to remit the taxes to IRS. An exemption is granted for providing proof of payment when a new vehicle has been purchased within the previous 60 days. This rule does not extend to the purchase of used vehicles. A follow-up by the DMV to determine whether the HVUT was paid could reduce this form of evasion. Federal regulations allow a state up to four months to obtain the proof of payment if it has a registration suspension system in place. A good quality assurance program to review registrations that were allowed under the 60-day rule or a workable registration suspension system could prevent this type of evasion. The sample process used for proof of payment can determine the extent of this evasion method.

Evasion Method 7 – Falsifying or forging an IRS Form 2290. Knowledge of the Schedule 1 and the IRS stamps used to indicate payment of the HVUT could reduce this potential method of evasion. With the new watermark associated with the electronic filings, forgery of the IRS stamped Schedule 1 could become more difficult. However, until the IRS requires 100 percent electronic filing, the paper copy will bear the usual IRS stamp. This evasion method could be detected if the local IRS agent is willing to crosscheck the compliance sample drawn during the review. Also, a careful examination of the IRS stamped Schedule 1 can reveal potential red flags, including sloppy presentation, multiple forms with identical photocopy marks, multiple forms with identical IRS cross-outs of unused lines, poor quality forms with clear taxpayer input, EINs with the wrong number of digits or VINs with the wrong number of digits.