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1040

1040 Index Symbols "Hours of service" limits, Individuals subject to hours of service limits. 1040 Form 2106, Hours of service limits. 1040 50% limit on meals, 50% limit on meals. 1040 A Accountable plans, Accountable Plans, Per diem allowance more than federal rate. 1040 Accounting to employer, Accountable Plans Adequate accounting, Adequate Accounting Independent contractors, Adequate accounting. 1040 Adequate records, What Are Adequate Records? Advertising Car display, Advertising display on car. 1040 Expenses, 3 - Advertising expenses. 1040 Signs, display racks, or other promotional material to be used on recipient's business premises, Exceptions. 1040 Airline clubs, Club dues and membership fees. 1040 Allocating costs, Separating costs. 1040 , Separating costs. 1040 , Allocating between business and nonbusiness. 1040 , Allocating total cost. 1040 Allowance (see Reimbursements) Armed forces Assigned overseas, Members of the Armed Forces. 1040 Assistance (see Tax help) Associated entertainment, Associated Test Athletic clubs, Club dues and membership fees. 1040 B Basis of car, Basis. 1040 (see also Depreciation of car) Bona fide business purpose, Bona fide business purpose. 1040 Box seats at entertainment events, Skyboxes and other private luxury boxes. 1040 Business travel, Trip Primarily for Business Outside U. 1040 S. 1040 , Travel Entirely for Business or Considered Entirely for Business Business use of car, Business and personal use. 1040 More-than-50%-use test. 1040 , More-than-50%-use test. 1040 Qualified business use, Qualified business use. 1040 C Canceled checks As evidence of business expenses, Canceled check. 1040 Car expenses, Car Expenses, Reporting inclusion amounts. 1040 Actual expenses, Actual Car Expenses Allowances for, Per Diem and Car Allowances, Allowance more than the federal rate. 1040 Business and personal use, Business and personal use. 1040 Combining expenses, Car expenses. 1040 Disposition of car, Disposition of a Car Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). 1040 Form 2106, Car expenses. 1040 Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. 1040 Mileage rate (see Standard mileage rate) Taxes paid on car, Taxes paid on your car. 1040 Traffic tickets, Fines and collateral. 1040 Car pools, Car pools. 1040 Car rentals, Reporting inclusion amounts. 1040 Form 2106, Car rentals. 1040 Car, defined, Car defined. 1040 Car, truck, or van rentals, Leasing a Car, Reporting inclusion amounts. 1040 Casualty and theft losses Cars, Casualty and theft losses. 1040 Depreciation, Casualty or theft. 1040 Charitable organizations Benefit events for, Exception for events that benefit charitable organizations. 1040 Sports events to benefit, 5 - Charitable sports event. 1040 Club dues, Club dues and membership fees. 1040 Commuting expenses, Commuting expenses. 1040 Conventions, Conventions, Meetings at conventions. 1040 Country clubs, Club dues and membership fees. 1040 Cruise ships, Cruise Ships D Daily business mileage and expense log (Table 6-2), Table 5-2. 1040 Daily Business Mileage and Expense Log Name: Depreciation of car, Depreciation and section 179 deductions. 1040 (see also Section 179 deductions) Adjustment for using standard mileage rate, Depreciation adjustment when you used the standard mileage rate. 1040 Basis, Basis. 1040 Sales taxes, Sales taxes. 1040 Unrecovered basis, How to treat unrecovered basis. 1040 Casualty or theft, effect, Casualty or theft. 1040 Deduction, Depreciation and section 179 deductions. 1040 , Depreciation deduction for the year of disposition. 1040 Excess depreciation, Excess depreciation. 1040 Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). 1040 Trade-in, effect, Car trade-in. 1040 , Trade-in. 1040 Trucks and vans, Trucks and vans. 1040 Depreciation of Car Section 179 deduction, Section 179 deduction. 1040 Directly-related entertainment, Directly-Related Test Disabled employees Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Documentary evidence, Documentary evidence. 1040 E Employer-provided vehicles, Employer-provided vehicle. 1040 Reporting requirements, Vehicle Provided by Your Employer Entertainment expenses, Entertainment, Individuals subject to hours of service limits. 1040 , Gift or entertainment. 1040 50% limit, Directly before or after business discussion. 1040 Determination of applicability (Figure A), 50% Limit Associated test, Associated Test Deductible, What Entertainment Expenses Are Deductible?, Expenses for spouses. 1040 Summary (Table 2-1), Exception for events that benefit charitable organizations. 1040 Directly-related test, Directly-Related Test Entertainment, defined, Entertainment. 1040 Form 2106, Meal and entertainment expenses. 1040 Tickets (see Tickets) Entertainment facilities Expenses for use of, Entertainment facilities. 1040 Estimates of expenses, How To Prove Expenses Exceptions to the 50% Limit, Exceptions to the 50% Limit Excess reimbursements (see Reimbursements) Extravagant expenses, Lavish or extravagant. 1040 , Lavish or extravagant expenses. 1040 F Fair market value of car, Fair market value. 1040 Farmers Form 1040, Schedule F, Self-employed. 1040 Federal crime investigations or prosecutions Federal employees engaged in, Exception for federal crime investigations or prosecutions. 1040 Federal rate for per diem, Standard Meal Allowance, The federal rate. 1040 Fee-basis officials, Officials Paid on a Fee Basis Fees you pay, Parking fees. 1040 Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). 1040 Form 1040, Schedule C, Self-employed. 1040 Form 1040, Schedule F, Self-employed. 1040 Form 2106, How to choose. 1040 , Employees. 1040 , Full value included in your income. 1040 , Reporting your expenses under a nonaccountable plan. 1040 , Completing Forms 2106 and 2106-EZ Form 2106-EZ, Form 2106-EZ. 1040 Form 4562, Self-employed. 1040 Form 4797, Excess depreciation. 1040 Form W-2 Employer-provided vehicles, Value reported on Form W-2. 1040 Reimbursement of personal expenses, Reimbursement for personal expenses. 1040 Statutory employees, Statutory employees. 1040 Free tax services, Free help with your tax return. 1040 G Gifts, Gift or entertainment. 1040 , Gifts $25 limit, $25 limit. 1040 Combining for recordkeeping purposes, Gift expenses. 1040 Reporting requirements, Gifts. 1040 Golf clubs, Club dues and membership fees. 1040 H Hauling tools, Hauling tools or instruments. 1040 Help (see Tax help) High-low method Introduction, High-low method. 1040 Transition rules, High-low method. 1040 High-low rate method, High-low rate. 1040 Home office, Office in the home. 1040 Hotel clubs, Club dues and membership fees. 1040 I Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Incidental expenses Defined, Incidental expenses. 1040 Gifts, Incidental costs. 1040 No meals, incidentals only, Incidental-expenses-only method. 1040 Income-producing property, Income-producing property. 1040 Incomplete records, What If I Have Incomplete Records? Indefinite job assignment, Temporary assignment vs. 1040 indefinite assignment. 1040 Independent contractors, Rules for Independent Contractors and Clients Interest on car loans, Interest on car loans. 1040 Itinerants, Tax Home L Lavish or extravagant expenses, Lavish or extravagant. 1040 , Lavish or extravagant expenses. 1040 Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. 1040 Luxury private boxes at entertainment events, Skyboxes and other private luxury boxes. 1040 Luxury water travel, Luxury Water Travel M MACRS (Modified Accelerated Cost Recovery System), Modified Accelerated Cost Recovery System (MACRS). 1040 2011 chart (Table 4-1), Table 4-1. 1040 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. 1040 ) Main place of business or work, Main place of business or work. 1040 Married taxpayers Performing artists, Special rules for married persons. 1040 Meal expenses, Meals 50% limit, 50% Limit Determination of applicability (Figure A), 50% Limit Exceptions, Exceptions to the 50% Limit Actual cost method, Actual Cost Form 2106, Meal and entertainment expenses. 1040 Major cities with higher allowances, Amount of standard meal allowance. 1040 Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance. 1040 , The standard meal allowance. 1040 Meals, entertainment-related, A meal as a form of entertainment. 1040 Mileage rate (see Standard mileage rate) Military (see Armed forces) Missing children, photographs of, Reminder Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). 1040 2011 chart (Table 4-1), Table 4-1. 1040 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. 1040 ) N Nonaccountable plans, Nonaccountable Plans O Office in the home, Office in the home. 1040 Officials paid on fee basis, Officials Paid on a Fee Basis Overseas travel Conventions, Conventions Held Outside the North American Area Meal allowance, Standard meal allowance for areas outside the continental United States. 1040 Part of trip outside U. 1040 S. 1040 , Part of Trip Outside the United States P Parking fees, Parking fees. 1040 , Parking fees and tolls. 1040 Per diem allowances, Per Diem and Car Allowances, Allowance more than the federal rate. 1040 Defined, Reimbursement, allowance, or advance. 1040 Federal rate for, The federal rate. 1040 Per diem rates High-cost localities, High-low method. 1040 High-low method, High-low method. 1040 Regular federal method, Regular federal per diem rate method. 1040 Standard rate for unlisted localities, High-low method. 1040 , Regular federal per diem rate method. 1040 Transition rules, High-low method. 1040 , Federal per diem rate method. 1040 Performing artists, Expenses of Certain Performing Artists Personal property taxes, Personal property taxes. 1040 , Taxes paid on your car. 1040 Personal trips, Trip Primarily for Personal Reasons Outside U. 1040 S. 1040 , Travel Primarily for Personal Reasons Placed in service, cars, Placed in service. 1040 Probationary work period, Probationary work period. 1040 Proving business purpose, Proving business purpose. 1040 Public transportation Outside of U. 1040 S. 1040 travel, Public transportation. 1040 Publications (see Tax help) R Recordkeeping requirements, Recordkeeping, Examples of Records Adequate records, What Are Adequate Records? Daily business mileage and expense log (Table 6-2), Table 5-2. 1040 Daily Business Mileage and Expense Log Name: Destroyed records, Destroyed records. 1040 How to prove expenses (Table 5-1), Table 5-1. 1040 How To Prove Certain Business Expenses Incomplete records, What If I Have Incomplete Records? Reimbursed expenses, Reimbursed for expenses. 1040 Sampling to prove expenses, Sampling. 1040 Separating and combining expenses, Separating and Combining Expenses, If your return is examined. 1040 Three-year period of retention, How Long To Keep Records and Receipts Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Regular federal method Introduction, Regular federal per diem rate method. 1040 Transition rules, Federal per diem rate method. 1040 Reimbursements, Less than full value included in your income. 1040 , Contractor does not adequately account. 1040 Accountable plans, Accountable Plans Excess, Returning Excess Reimbursements, Nonaccountable Plans Form 2106, Reimbursements. 1040 Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Reimbursement of nondeductible expenses. 1040 Personal expenses, Reimbursement for personal expenses. 1040 Recordkeeping, Reimbursed for expenses. 1040 Reporting (Table 6-1), Table 6-1. 1040 Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements Unclaimed, Where To Report Reporting requirements, How To Report Per diem or car allowance, Reporting your expenses with a per diem or car allowance. 1040 Reimbursements, Reimbursements, Contractor does not adequately account. 1040 Reservists Transportation expenses, Armed Forces reservists. 1040 Traveling more than 100 miles from home, Armed Forces Reservists Traveling More Than 100 Miles From Home Returning excess reimbursements, Returning Excess Reimbursements Rural mail carriers, Rural mail carriers. 1040 S Section 179 deduction Amended return, How to choose. 1040 Deduction, Section 179 Deduction Limits, Limits. 1040 Self-employed persons, 2 - Self-employed. 1040 Reporting requirements, Self-employed. 1040 Skyboxes, Skyboxes and other private luxury boxes. 1040 Spouse, expenses for, Travel expenses for another individual. 1040 , Expenses for spouses. 1040 Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance. 1040 , The standard meal allowance. 1040 Standard mileage rate, What's New, Standard Mileage Rate, The standard mileage rate. 1040 Depreciation adjustment for using, Depreciation adjustment when you used the standard mileage rate. 1040 Form 2106, Standard mileage rate. 1040 Statutory employees, Statutory employees. 1040 T Tables and figures 50% limit determination (Figure A), 50% Limit Daily business mileage and expense log (Table 6-2), Table 5-2. 1040 Daily Business Mileage and Expense Log Name: Entertainment expenses, determination of deductibility (Table 2-1), Table 2-1. 1040 When Are Entertainment Expenses Deductible? Maximum depreciation deduction for cars table, Maximum Depreciation Deduction for Cars Modified Accelerated Cost Recovery System (MACRS) 2011 chart (Table 4-1), Table 4-1. 1040 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. 1040 ) Proving expenses (Table 5-1), Table 5-1. 1040 How To Prove Certain Business Expenses Reporting reimbursements (Table 6-1), Table 6-1. 1040 Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements Transportation expenses, determination of deductibility (Figure B), Gift or entertainment. 1040 , Illustration of transportation expenses. 1040 Travel expenses, determination of deductibility (Table 1-1), Table 1-1. 1040 Travel Expenses You Can Deduct Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Tax help, How To Get Tax Help Tax home, determination of, Tax Home Temporary job assignments, Temporary Assignment or Job Temporary work location, Temporary work location. 1040 Tickets, Entertainment tickets. 1040 , Gift or entertainment. 1040 Season or series tickets, Season or series tickets. 1040 Traffic violations, Fines and collateral. 1040 Tools Hauling tools, Hauling tools or instruments. 1040 Trade association meetings, Trade association meetings. 1040 Trade-in of car, Car trade-in. 1040 , Trade-in. 1040 Traffic tickets, Fines and collateral. 1040 Transients, Tax Home Transition rules, Transition Rules Example High-low method, High-low method. 1040 High-low method, High-low method. 1040 Regular federal method, Federal per diem rate method. 1040 Transportation expenses, Transportation, Depreciation deduction for the year of disposition. 1040 Car expenses, Car Expenses, Reporting inclusion amounts. 1040 Deductible (Figure B), Gift or entertainment. 1040 , Illustration of transportation expenses. 1040 five or more cars, Five or more cars. 1040 Form 2106, Transportation expenses. 1040 Transportation workers, Special rate for transportation workers. 1040 , Individuals subject to hours of service limits. 1040 Travel advance, Reimbursement, allowance, or advance. 1040 , Travel advance. 1040 (see also Reimbursements) Travel expenses, Travel, Cruise Ships Another individual accompanying taxpayer, Travel expenses for another individual. 1040 Away from home, Traveling Away From Home, Tax Home Deductible, What Travel Expenses Are Deductible?, Cruise Ships Summary of (Table 1-1), Table 1-1. 1040 Travel Expenses You Can Deduct Defined, Travel expenses defined. 1040 Going home on days off, Going home on days off. 1040 In U. 1040 S. 1040 , Travel in the United States Lodging, Standard Meal Allowance Luxury water travel, Luxury Water Travel Outside U. 1040 S. 1040 , Travel Outside the United States Travel to family home, Tax Home Different From Family Home Trucks and vans Depreciation, Trucks and vans. 1040 Transportation workers, Individuals subject to hours of service limits. 1040 Transportation workers' expenses, Special rate for transportation workers. 1040 Two places of work, Two places of work. 1040 U Unclaimed reimbursements, Where To Report Unions Trips from union hall to place of work, Union members' trips from a union hall. 1040 Unrecovered basis of car, How to treat unrecovered basis. 1040 V Volunteers, Volunteers. 1040 W Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Prev  Up     Home   More Online Publications
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The 1040

1040 6. 1040   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. 1040 Vehicles not considered highway vehicles. 1040 Idling reduction device. 1040 Separate purchase. 1040 Leases. 1040 Exported vehicle. 1040 Tax on resale of tax-paid trailers and semitrailers. 1040 Use treated as sale. 1040 Sale. 1040 Long-term lease. 1040 Short-term lease. 1040 Related person. 1040 Exclusions from tax base. 1040 Sales not at arm's length. 1040 Installment sales. 1040 Repairs and modifications. 1040 Further manufacture. 1040 Rail trailers and rail vans. 1040 Parts and accessories. 1040 Trash containers. 1040 House trailers. 1040 Camper coaches or bodies for self-propelled mobile homes. 1040 Farm feed, seed, and fertilizer equipment. 1040 Ambulances and hearses. 1040 Truck-tractors. 1040 Concrete mixers. 1040 Registration requirement. 1040 Further manufacture. 1040 A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. 1040 Truck chassis and bodies. 1040 Truck trailer and semitrailer chassis and bodies. 1040 Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. 1040 A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. 1040 A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. 1040 A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. 1040 A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. 1040 The seller is liable for the tax. 1040 Chassis or body. 1040   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. 1040 Highway vehicle. 1040   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. 1040 Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. 1040 A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. 1040 A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). 1040 A special kind of cargo, goods, supplies, or materials. 1040 Some off-highway task unrelated to highway transportation, except as discussed next. 1040 Vehicles not considered highway vehicles. 1040   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. 1040 Specially designed mobile machinery for nontransportation functions. 1040 A self-propelled vehicle is not a highway vehicle if all the following apply. 1040 The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. 1040 The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. 1040 The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. 1040 Vehicles specially designed for off-highway transportation. 1040 A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. 1040 To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. 1040 It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. 1040 Nontransportation trailers and semitrailers. 1040 A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. 1040 For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. 1040 Gross vehicle weight. 1040   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. 1040 It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. 1040 Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. 1040   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. 1040 Platform truck bodies 21 feet or less in length. 1040 Dry freight and refrigerated truck van bodies 24 feet or less in length. 1040 Dump truck bodies with load capacities of 8 cubic yards or less. 1040 Refuse packer truck bodies with load capacities of 20 cubic yards or less. 1040 For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. 1040 R. 1040 B. 1040 2005-14 at www. 1040 irs. 1040 gov/pub/irs-irbs/irb05-14. 1040 pdf. 1040   The gross vehicle weight means the maximum total weight of a loaded vehicle. 1040 Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. 1040 The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. 1040 The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. 1040 See Regulations section 145. 1040 4051-1(e)(3) for more information. 1040 Parts or accessories. 1040   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. 1040 For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. 1040 The tax applies in this case whether or not the retailer bills the parts or accessories separately. 1040   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. 1040 The tax applies unless there is evidence to the contrary. 1040 For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. 1040 The tax does not apply to parts and accessories that are spares or replacements. 1040   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. 1040 Idling reduction device. 1040   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. 1040 The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. 1040 The EPA discusses idling reduction technologies on its website at www. 1040 epa. 1040 gov/smartway/technology/idling. 1040 htm. 1040 Separate purchase. 1040   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. 1040 The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. 1040 The installation occurs within 6 months after the vehicle is first placed in service. 1040   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. 1040   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. 1040 This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. 1040   The tax does not apply if the installed part or accessory is a replacement part or accessory. 1040 The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. 1040 However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. 1040 Example. 1040 You bought a taxable vehicle and placed it in service on April 8. 1040 On May 3, you bought and installed parts and accessories at a cost of $850. 1040 On July 15, you bought and installed parts and accessories for $300. 1040 Tax of $138 (12% of $1,150) applies on July 15. 1040 Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. 1040 First retail sale defined. 1040   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. 1040 There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). 1040 The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). 1040 The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. 1040 There is no registration requirement. 1040 Leases. 1040   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. 1040 The tax is imposed on the lessor at the time of the lease. 1040   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. 1040 The tax is imposed on the lessor at the time of the lease. 1040 Exported vehicle. 1040   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. 1040 Tax on resale of tax-paid trailers and semitrailers. 1040   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. 1040 The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. 1040 The credit cannot exceed the tax on the resale. 1040 See Regulations section 145. 1040 4052-1(a)(4) for information on the conditions to allowance for the credit. 1040 Use treated as sale. 1040   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. 1040 Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. 1040 The tax attaches when the use begins. 1040   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. 1040   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. 1040   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. 1040 Presumptive retail sales price. 1040   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. 1040 If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. 1040 Table 6-1 outlines the appropriate tax base calculation for various transactions. 1040   The presumed markup percentage to be used for trucks and truck-tractors is 4%. 1040 But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. 1040 Sale. 1040   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. 1040 Long-term lease. 1040   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. 1040 Short-term lease. 1040   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. 1040   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. 1040   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. 1040 Related person. 1040   A related person is any member of the same controlled group as the manufacturer, producer, or importer. 1040 Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. 1040 Table 6-1. 1040 Tax Base IF the transaction is a. 1040 . 1040 . 1040 THEN figuring the base by using the. 1040 . 1040 . 1040 Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. 1040   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. 1040   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. 1040 However, you do add a markup if all the following apply. 1040 You do not perform any significant activities relating to the processing of the sale of a taxable article. 1040 The main reason for processing the sale through you is to avoid or evade the presumed markup. 1040 You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. 1040 In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. 1040 Determination of tax base. 1040   These rules apply to both normal retail sales price and presumptive retail sales price computations. 1040 To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. 1040 However, see Presumptive retail sales price, earlier. 1040 Exclusions from tax base. 1040   Exclude from the tax base the retail excise tax imposed on the sale. 1040 Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. 1040 Also exclude the value of any used component of the article furnished by the first user of the article. 1040   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. 1040 These expenses are those incurred in delivery from the retail dealer to the customer. 1040 In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. 1040   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. 1040 For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. 1040 Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. 1040 Sales not at arm's length. 1040   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. 1040   A sale is not at arm's length if either of the following apply. 1040 One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. 1040 The sale is made under special arrangements between a seller and a purchaser. 1040 Installment sales. 1040   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. 1040 The tax is figured on the entire sales price. 1040 No part of the tax is deferred because the sales price is paid in installments. 1040 Repairs and modifications. 1040   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. 1040 This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. 1040 However, this exception generally does not apply to an article that was not subject to the tax when it was new. 1040 Further manufacture. 1040   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. 1040 Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. 1040 Combining an article with an item in this list does not give rise to taxability. 1040 However, see Parts or accessories discussed earlier. 1040 Articles exempt from tax. 1040   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. 1040 Rail trailers and rail vans. 1040   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). 1040 Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. 1040 Parts and accessories. 1040   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. 1040 Trash containers. 1040   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. 1040 It is designed to be used as a trash container. 1040 It is not designed to carry freight other than trash. 1040 It is not designed to be permanently mounted on or affixed to a truck chassis or body. 1040 House trailers. 1040   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. 1040 Camper coaches or bodies for self-propelled mobile homes. 1040   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. 1040 Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. 1040 Farm feed, seed, and fertilizer equipment. 1040   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. 1040 This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. 1040 Ambulances and hearses. 1040   This is any ambulance, hearse, or combination ambulance-hearse. 1040 Truck-tractors. 1040   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. 1040 Concrete mixers. 1040   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. 1040 This exemption does not apply to the chassis on which the article is mounted. 1040 Sales exempt from tax. 1040   The following sales are ordinarily exempt from tax. 1040 Sales to a state or local government for its exclusive use. 1040 Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. 1040 Sales to a nonprofit educational organization for its exclusive use. 1040 Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. 1040 Sales for use by the purchaser for further manufacture of other taxable articles (see below). 1040 Sales for export or for resale by the purchaser to a second purchaser for export. 1040 Sales to the United Nations for official use. 1040 Registration requirement. 1040   In general, the seller and buyer must be registered for a sale to be tax free. 1040 See the Form 637 instructions for more information. 1040 Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. 1040 Further manufacture. 1040   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. 1040 Credits or refunds. 1040   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. 1040 The person using the article as a component part is eligible for the credit or refund. 1040   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. 1040 A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. 1040   See also Conditions to allowance in chapter 5. 1040 Tire credit. 1040   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. 1040 The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). 1040 This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. 1040 Prev  Up  Next   Home   More Online Publications