The trucking industry covers a lot of legal formalities. One of such legal regulations is various taxes. Taxes and the taxation process hold a major position in the trucking profession. Irrespective of the fact that either you sell trucks or drive them, one has to undergo as well as understand different types of taxes in each segment. People or organizations who are beginners in the field of trucking, need to understand every type of tax in a better manner. One of the basic taxes that revolves around trucking is an excise tax. It is basic yet mandatory in nature.Read More
Understanding Excise Tax
Thus, in order to learn more about taxes, it is primarily important to understand the exact meaning of excise tax. In general terms, the excise tax is imposed on certain goods and the miles traveled tax is imposed on trucking businesses. Furthermore, the basic feature of this tax is that it is levied at the time of manufacturing rather than at the time of sale. Additionally, this tax is incorporated in the price of goods or commodities. For instance, it is largely levied on cigarettes and fuel. Another feature of this tax is that it is not levied on every product, other than that, it is specific in nature and is imposed on certain products and commodities.
Though it is imposed on certain commodities, it also has a role in trucking. The excise tax is also imposed on the sale of a few trucks and tractors. The simple reason behind its imposition is: trucks and tractors are used for transporting commodities and other loads from one place to another. Although, not every truck and tractor is eligible for the payment of excise tax. There are also few exceptions to this tax system. Heavy vehicles that are huge and large in size are required to pay tax.
Liability to Pay Tax
As mentioned before, this tax is imposed at the time of manufacturing and not at the time of sale. Therefore, the duty and responsibility to pay this tax falls on the seller. Seller, in accordance with the terms and conditions, is liable to pay excise tax. Furthermore, a proper contract is made, so that there are no chances of a breach. Once the contact is made, the seller can transfer the products to the other party, i.e, the purchaser. When the purchaser purchases the products, he will further on the pass or sell them to a new buyer, who can do anything with the newly acquired products. Nevertheless, the buyer must use the commodities for legal purposes, otherwise, harsh penalties and consequences would have to be faced.
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Time Period to Pay Tax
On a wide scale, each and every tax is paid at a required time during the taxation season. In addition to this, the excise tax is payable on the very first sale. Here the very first sale stands for the first time the product was sold or service was rendered. It does not include leasing, subletting, and resale. In order to pay the tax, an organization or an individual is required to fill Form 720 in accordance with every quarter. The scheduled date is before the end of each month and is followed by the respective quarter. For instance, if an organization is paying the tax for the first quarter of the month, i.e, from January to March, then the scheduled date is April 30. Thus, an enterprise is required to pay the tax amount before the scheduled date, i.e, April 30.
Calculating the right amount of tax that one is supposed to pay is the key to the whole process. When calculating excise tax on truckers, remember that the central authorities impose 12% of tax on trucks, tractors, trailers, and also includes semi-trailers as well as trailers. All of these are used in the transportation of heavy loads on highways.
- The vehicles whose total weight is 33000 pounds or less are excluded from the excise tax.
- In case, if a trailer or a semi-trailer weighs 26000 pounds or less, it is also excluded from the payment of tax.
- Tractors whose weight is 19,500 pounds or less than that, furthermore, total gross weight is less than or equal to 33000 pounds are also excluded.
Used Trucks and Excise Tax
The tax is paid on the first sale of the truck. Additionally, it is also payable on the first use of a truck. While on the other hand, there are certain circumstances that an individual needs to understand. For example, when a truck is exported, then the excise tax is exempted and only export duty has to be paid. On the contrary, when the same truck is imported back, then excise tax has to be paid.
Government and Excise Tax
The amount received from such taxes is directly used in the highway expenditure. Furthermore, trucks and tractors are heavy commercial in nature. Due to this, roads and highways have to suffer. Hence, the amount is used in further maintenance of roads by the government.
The Bottom Line
Hence, in the nutshell, one can say that excise tax has a large part to play in the trucking industry and thus, must be paid on time.