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Federal Excise Tax FET on Semi-Trucks and Trailers Explained - YouTube
Channel: 1800Accountant
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if you drive trucks sell trucks or run
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any trucking related business
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you're gonna need to be familiar with
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all the taxes and fees associated with
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trucks
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for truckers just starting out you may
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need to budget for these tax
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responsibilities ahead of time
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truck drivers who drive big rigs on the
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highway have to pay the heavy highway
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vehicle use tax
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for their use of the highway each year
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the first tax a new truck driver will
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encounter is the federal excise tax on
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trucks excise taxes are taxes imposed on
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specific goods or products like gasoline
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or cigarettes they're usually paid at
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the point of purchase and they're
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usually included in the product's price
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the federal government imposes a
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specific excise tax on sales of trucks
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and tractors
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for the government's purposes a truck is
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defined as a highway vehicle primarily
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designed to transport its load on the
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same chassis as the engine even if it's
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equipped to tow a vehicle such as a
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trailer or semi-trailer
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that definition includes smaller trucks
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but only trucks of a certain size
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require paying this tax
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meanwhile a tractor is defined as a
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highway vehicle designed to tow a
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vehicle such as a trailer or
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semi-trailer a tractor may may carry
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incidental items of cargo when towing or
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limited amounts of cargo when not towing
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a truck truck trailer or semi-trailer is
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considered a sale of a chassis and a
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body
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the seller is liable for the tax and may
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accept a statement from the buyer in
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good faith stating that under penalties
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of perjury and executed in good faith
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the purchaser intends to resell or lease
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on a long-term basis
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the purchaser will be liable for the tax
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when the article is ultimately sold to a
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new buyer who will use it for its
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intended purpose irs publication 510 on
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excise taxes says that the federal
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excise tax fet is imposed on the first
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retail sale meaning the first sale for a
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purpose other than resale or leasing in
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a long-term lease
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after manufacture production or
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importation
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form 720 must be filed with the irs for
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each quarter if you were liable for or
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responsible for collecting federal
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excise tax the due date is on or before
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the end of the month following the close
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quarter
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i.e january to march is due by april
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30th internal revenue service section
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4051 imposes a 12 federal excise tax on
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the sale of trucks trailers and tractors
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used for highway transportation in
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combination with the trailer or
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semi-trailer
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the fet does not apply to truck chassis
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and body as suitable for use with a
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vehicle with a gross weight of 33 000
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pounds or less the fet also does not
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apply to a truck trailer and
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semi-trailer chassis and body suitable
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for use with a trailer or semi-trailer
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with a gross vehicle weight of 26 000
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pounds or less
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tractors with a gross vehicle weight of
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19 500 or less and a gross combined
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weight of 33 000 pounds or less are
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excluded from the 12 fet
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numbers right the fet is paid on the
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initial sale or use of the truck if the
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truck were bought and used previously an
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excise tax would usually be unnecessary
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however there may be some instances
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where a used truck may be subject to the
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fet if the truck were exported to
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another country the export would be
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exempt from fet however
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when imported back to the u.s and
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there's a subsequent sale the tax would
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then be triggered as if it were an
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initial sale or use
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these sales are also ordinarily exempt
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from excise taxes
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sales to a state or local government for
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its exclusive use
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sales to indian tribal governments but
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only if the transaction involves the
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exercise of an essential tribal
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government function
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sales to a non-profit educational
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organization for its exclusive use
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sales to a qualified blood collector
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organization for its exclusive use in
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collecting storage or transportation of
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blood
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sales for use by the purchaser or
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further manufacturer of other taxable
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articles
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sales for export or resale by the
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purchaser to a second purchaser for
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export
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and sales to the united nations for
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official use
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these taxes fund the highway trust fund
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expenditures from which are generally
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used to repair and expand the federal
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highway system of the united states
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trucks and other heavy vehicles create a
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lot of extra wear and tear on roads so
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these excise taxes contribute to ongoing
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road maintenance and infrastructure
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repair
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the seller is responsible for the retail
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fet due to a truck or trailer
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the truck owner is then responsible for
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filing and paying form 2290 for heavy
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highway vehicle use this is an annual
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tax on the continuing use of heavy
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load-bearing vehicles
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if the truck isn't used very frequently
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you may be able to waive the tax
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only trucks that weigh 55 000 pounds or
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more require their owners to pay this
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tax the deadline to file for the first
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time is the last day of the next month
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after the truck's first use
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see the form itself to find out how much
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your tax will be
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look if you're unsure about your
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obligations as an owner operator reach
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out today for a free consultation with
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1-800 accountant to learn more we can
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guide you through the paperwork and
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smooth out the process for you it's
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important to be informed and know your
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obligations but sometimes the smartest
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thing to do is let an expert help out
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1-800 accountant has experts in the
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trucking industry and experts in every
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state we know exactly how to help you
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save money and make your business more
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efficient
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