When it comes to fleet-management companies (FMCs), power-grid companies, carriers and other companies with fleet vehicles, compliance needs often go far beyond the US Department of Transportation’s (DOT) standards. In fact, companies that operate in certain states are required to pay Highway Use Taxes (HUT) or Weight/Mile Taxes. These taxes come into play when carriers are traveling through these respective states, and go over a certain weight-limit threshold.
It’s critical that companies with fleet vehicles stay on top of these taxes to prevent any unnecessary audit costs or fines. While these taxes only exist in a few US states at this point, each state differs in how they apply them, and it’s likely there will be additional states requiring such taxes over the next few years.
Because of this, the ACERTUS compliance team has compiled the most critical information fleet-based companies should know about HUT and Weight/Mile taxes in 2021, outlining where they exist, the specifics that apply in each respective state and how a company can work with an outside provider to simplify and streamline the larger heavy-vehicle tax process.
Where and How These Taxes Apply
Currently, interstate HUT and Weight/Mile taxes only apply in these four US states – Kentucky, New Mexico, Oregon and New York. However, taxation specifics and thresholds differ between each of these states. Here is a breakdown of what companies with fleets operating in these states can expect:
Kentucky – Possibly the most straightforward in terms of its weight limit and rate table, Kentucky requires companies pay a Kentucky Highway Use tax on all vehicles registered at 60,000 pounds or more. It applies a flat rate for all relevant vehicles, regardless of their weight after hitting that 60,000-pound mark.
New Mexico – For companies operating in New Mexico, any vehicles that are 26,001 pounds or more must pay a Weight Distance Tax. The state has a single tax table, under which vehicles above 26,000 pounds fall into different weight categories, and as a result, into different corresponding tax rates.
Oregon – Similar to New Mexico, companies operating in Oregon are required to pay a Weight Distance Tax on any vehicles that are 26,001 pounds or more. The state also has a tax table that resembles New Mexico’s, however, it also has an overweight category for any vehicles that register at more than 80,000 pounds and up to 105,000 pounds. If a company has a vehicle registered with Oregon in this overweight category, it only needs to file at the overweight category for the months in which the vehicle is traveling overweight. Therefore, if that same vehicle falls below the overweight category for most other months during a calendar year, the company can file at the vehicle’s standard weight for that time period — however, if this is done, the vehicle must be registered at both weights with the state.
New York – These heavy-vehicle taxes are certainly the most complicated in New York. With its HUT, New York allows carriers to file by either the registered Gross Vehicle Weight (GVW) or unladen weight with different applicable limits for trucks and tractors. (In New York, a tractor is any vehicle that pulls a trailer).
If a company chooses to file by the gross weight, it must pay the HUT whenever a vehicle goes over 18,000 pounds. If a company chooses to file by unladen weight, then it will pay taxes on trucks that weigh more than 8,000 pounds and tractors that weigh more than 4,000 pounds. It’s important to note that once a company decides to file by either the GVW or unladen weight method, it must stick with that same method for the full calendar year.
However, New York has exemptions when it comes to tollways in the state. Ultimately, the state’s tollways are exempt from HUT, but they need to be calculated before filing. Many times, toll receipts can be used to calculate the distance between the toll-booth entries and exits a heavy vehicle has passed through. Because of this, if a driver of a heavy vehicle paid a toll on a highway somewhere in New York, then the miles traveled on toll-based sections of the highway do not need to be included when HUT is filed. (For example, if the driver drove 500 miles in New York but only 200 miles of that were on toll roads, then the remaining 300 miles would be filed under HUT.)
What to Know When Filing HUT or Weight/Mile Taxes
Beyond the various state-based rules and exceptions (such as New York’s tollway exception) outlined above, there are a number of different factors to keep in mind when a business files HUT or Weight/Mile taxes.
Calculation is Similar for IFTA – The tools that companies use to calculate reporting for the International Fuel Tax Agreement (IFTA) can also be used to calculate mileage for the heavy-vehicle taxes in these four states. Typically, it’s best for companies with fleets to use either mileage telematics or high-quality GPS data to get these numbers.
Additionally, IFTA requires filing when vehicles hit 26,001 pounds or above – the same limit that applies to the Weight Distance Taxes in New Mexico and Oregon – which simplifies the tax-reporting process for those states.
Taxes Apply Regardless of Fuel Type – The type of fuel a vehicle takes really doesn’t matter at all when it comes to HUT and Weight/Mile taxes. Regardless of whether a heavy vehicle runs on diesel or another fuel, electricity or a combination of both, these same taxes apply, and companies must file them the same way in the applicable states.
Tax Rates Can Fluctuate – HUT and Weight/Mile tax rates will change from time to time in these states. While there have been no changes as of yet in 2021, and none are currently anticipated, it’s crucial that companies stay on top of these requirements in the states relevant to their particular business operations.
Intrastate Taxes May Apply – A number of different US states have intrastate Weight/Mile taxes, applicable to vehicles that do not travel outside state borders. ACERTUS can work on behalf of companies for any intrastate tax needs, calling and checking on these specific requirements with local DMVs.
ACERTUS Can Help You Stay Covered
Companies with fleets can use their own team members and resources to stay on top of all these various state-based needs for their taxable vehicles – but this can often be complicated, time-consuming and unnecessarily expensive. These same companies can also choose to outsource such work to a regulatory compliance provider like ACERTUS.
Beyond helping its auto partners stay compliant with IFTA, the International Registration Plan (IRP) and DOT, ACERTUS’ expert team can manage the mileage tracking for companies with HUT and Weight/Mile tax needs. It will cover all data retention and will work to ensure all fleet vehicles are properly registered in the right jurisdictions and with the correct taxes filed.
Depending on a company’s specific needs, the ACERTUS team can go even further, helping with permitting, title-and-registration services, safety regulations, toll and transponder management systems, compliance consulting and more.
Learn more about ACERTUS’ compliance services for your fleet – as well as its full range of vehicle solutions like transports and logistics options – at https://acertusdelivers.com. To connect with one of our team members or receive a quick pricing quote, contact us here or call us at this phone number: 855-ACERTUS (855-923-2655).
