(But Really Should If You Operate Commercial Vehicles)
Acquiring a trucking company can be a powerful growth move—enabling market expansion, route consolidation, and increased freight capacity. But beneath the surface of every deal lies a web of regulatory obligations that can dramatically affect the success and timeline of the acquisition. The most critical (and often overlooked) components include the International Registration Plan (IRP) , International Fuel Tax Agreement (IFTA) , Federal Motor Carrier Safety Administration (FMCSA) operating authority , and a variety of state and local equipment permits . Failing to properly assess or transfer these obligations can result in costly delays, compliance breaches, and inherited liabilities . This article breaks down each of these areas, outlining their role in due diligence and post-acquisition integration. 1. IRP (International Registration Plan) Risk The IRP is a cooperative agreement among U.S. states and Canadian provinces that allows commercial vehicles to operate across jurisdictions under a single registration. Risk Factors: Unpaid Fees or Back Taxes : Outstanding balances with a base jurisdiction (e.g., the home state of the seller) can block future registration or renewal. Incorrect Mileage Reports : If historical trip/mileage data is inaccurate or poorly documented, the buyer may inherit audit exposure . Jurisdictional Discrepancies : If a carrier has operated in states not reported under IRP, it could trigger compliance reviews and penalties. Best Practice: Ensure the seller has filed accurate mileage reports and is in good standing with its base state. Consider transferring the fleet’s registration after verifying clear title and audit status. 2. IFTA (International Fuel Tax Agreement) Risk IFTA simplifies fuel tax reporting for carriers operating across state lines, requiring quarterly reports and tax payments based on miles driven and fuel consumed per jurisdiction. Risk Factors: Outstanding Tax Liabilities : Sellers may have underreported mileage, resulting in unpaid taxes, interest, and penalties. Inaccurate or Missing Records : Lack of GPS data, fuel receipts, or mileage logs can compromise audit defense. Audit Exposure : Buyers may unknowingly inherit an entity already flagged for an IFTA audit, which can occur even post-acquisition. Best Practice: Perform an IFTA audit readiness review , examining fuel purchases, mileage logs, and reporting processes. Ensure the seller’s IFTA license is in good standing and that records meet retention requirements. 3. FMCSA Operating Authority Risk The FMCSA regulates interstate trucking companies through operating authority (MC numbers), safety ratings, and compliance programs like the CSA (Compliance, Safety, Accountability) system. Risk Factors: Suspended or Revoked Authority : If the seller’s MC or USDOT number is inactive or revoked, operations may not legally continue post-acquisition. Poor CSA Scores : Buyers may inherit high BASIC scores, which can trigger FMCSA audits or higher insurance premiums. Name or Ownership Changes : The FMCSA prohibits unauthorized transfer of operating authority. A new entity may need to apply for fresh credentials if the deal structure changes control or branding. Best Practice: Check the FMCSA's SAFER database and Licensing and Insurance system to verify the seller’s active status, safety record, and authority type. Engage counsel early to structure the transaction for seamless authority transition or re-application if needed. 4. Equipment Permits and State-Level Compliance Commercial fleets often carry oversize/overweight permits , HVUT (Heavy Vehicle Use Tax) filings , apportioned plate registrations , and state-specific credentials (e.g., New York HUT, New Mexico WDT, Kentucky KYU). Risk Factors: Lapsed or Invalid Permits : Vehicles may be operating illegally, exposing buyers to impoundment, fines, or halted operations. Non-transferable Credentials : Many state permits are tied to the original entity and are not transferrable without reapplication. Unpaid 2290 HVUT : If Form 2290 is unpaid or unfiled, the IRS may deny tags or renewal, and penalties could accrue. Best Practice: Request a full equipment and permit audit . Validate VINs, cab cards, 2290 filings, and permit statuses across all operating states. Be prepared to apply for new permits where transfer isn’t allowed. Conclusion: Mitigate Risk with Regulatory Due Diligence Trucking acquisitions don’t fail because of the trucks—they fail because of the hidden regulatory burdens attached to them. Whether it’s an unfiled IFTA return or a revoked FMCSA number, these pitfalls can sideline a transaction or disrupt service post-close. To protect your investment: Conduct comprehensive regulatory and compliance due diligence. Plan for license transfers or reapplications where required. Integrate regulatory risk into valuation models and indemnification language. At National Fleet Services LLC , we specialize in due diligence for trucking M&A, including audits of IRP, IFTA, FMCSA, and state permitting compliance. Our team ensures that buyers avoid post-transaction surprises and sellers present a clean bill of operational health. Need an expert eye on your next acquisition? Let us help you navigate compliance risks and keep your deal—and your fleet—moving forward.
If you operate heavy vehicles on public highways in the United States, Form 2290 is a crucial part of staying compliant with federal tax regulations. Also known as the Heavy Highway Vehicle Use Tax Return , this form is used to report and pay the Heavy Vehicle Use Tax (HVUT) . In this post, we’ll cover the who , what , when , and how of filing Form 2290 to help you avoid penalties and keep your business running smoothly. 🚛 What Is Form 2290? Form 2290 is required by the Internal Revenue Service (IRS) for any vehicle that: Has a gross weight of 55,000 pounds or more , and Travels more than 5,000 miles per year (or 7,500 miles for agricultural vehicles ). The tax helps fund the maintenance and construction of the nation’s highway system. 🧾 Who Needs to File Form 2290? You must file Form 2290 if: You own a taxable highway motor vehicle. The vehicle is registered in your name under state, District of Columbia, or tribal motor vehicle registration laws. The vehicle meets the weight and mileage criteria above. This includes: Owner-operators Trucking companies Leasing companies Agricultural transporters (with special mileage exemptions) 🗓️ When Is Form 2290 Due? The annual tax period for Form 2290 runs from July 1 through June 30 of the following year. You must file by the end of the month following the month the vehicle is first used on public highways . Examples: If you first use the vehicle in July , you must file by August 31 . If you start using a vehicle in October , your due date is November 30 . 💵 How Much Is the HVUT? The tax rate depends on the gross taxable weight of the vehicle and whether it is used for agricultural purposes. Typical Range : $100 to $550 per vehicle per year. The maximum tax applies to vehicles that are 80,000 pounds or more . Vehicles that are not expected to exceed the mileage limit can be filed as suspended vehicles (category W), but still need to be reported. 📥 How to File Form 2290 You can file Form 2290: Electronically (e-file) – Required for filers with 25 or more vehicles. Paper filing – Only allowed for those filing fewer than 25 vehicles. Steps to e-file: Gather required info: EIN, VINs, gross weight of vehicles. Choose an IRS-approved e-file provider . Submit the form and pay any taxes owed. Receive your Schedule 1 (proof of payment) instantly once accepted. Accepted Payment Methods: EFTPS (Electronic Federal Tax Payment System) Electronic funds withdrawal Check or money order Debit or credit card 📄 What Is Schedule 1? The Schedule 1 is your proof of payment for the HVUT. It is required when: Registering your vehicle with the state DMV . Renewing your IRP or IFTA credentials. You’ll receive a stamped Schedule 1 after successful e-filing. 🛑 Penalties for Late Filing Missing the deadline can result in: 5% penalty per month on the unpaid tax. 0.5% interest per month. Delays in vehicle registration renewals. It’s critical to stay ahead of deadlines and confirm your filings are accepted. ✅ Final Tips Apply for an Employer Identification Number (EIN) if you don’t already have one. You cannot use a Social Security Number to file Form 2290. Keep records for at least 3 years from the date of filing. Consider using a tax consultant if you have a large fleet or complex operations. Need Help Filing? National Fleet Services LLC specializes in helping transportation businesses navigate HVUT compliance. Contact us for assistance with Form 2290 or other fuel and highway tax issues.
