IRS Interest Rates for Late Heavy Vehicle Use Tax Payments

The Internal Revenue Service (IRS) imposes a tax on heavy vehicles, known as the Heavy Vehicle Use Tax (HVUT). This tax is required for vehicles with a gross weight of 55,000 pounds or more that are operated on public highways. The tax is paid annually, and the deadline for filing and paying the HVUT is typically August 31st.

If a taxpayer fails to file and pay the HVUT by the due date, they may be subject to penalties and interest charges. The interest rate for late HVUT payments is determined by the IRS and is typically based on the federal short-term rate plus 3 percentage points. This interest rate is updated quarterly by the IRS.

For example, if the federal short-term rate is 2% and the interest rate for HVUT late payments is 5%, a taxpayer who fails to pay their HVUT on time would be charged an annual interest rate of 5%. This interest is compounded daily, meaning that the amount of interest owed increases each day until the tax is paid in full.

It is important for taxpayers to file and pay their HVUT on time to avoid incurring interest charges. The IRS assesses interest from the date the tax was due, regardless of any extensions granted. Therefore, even if a taxpayer files for an extension to file their HVUT return, any late payment will still accrue interest from the original due date.

Taxpayers who are unable to pay the HVUT in full by the due date may be able to set up a payment plan with the IRS. However, interest will continue to accrue on any unpaid balance until it is paid in full.

In summary, the interest rate for late HVUT payments is determined by the IRS and is typically based on the federal short-term rate plus 3 percentage points. It is important for taxpayers to file and pay their HVUT on time to avoid incurring interest charges.