What are Agricultural vehicles in Form 2290? 

Agricultural vehicles are vehicles primarily used for farming purposes, and they receive a tax benefit under IRS Form 2290. Let’s discuss in brief: 

Criteria for Qualifying as an Agricultural Vehicle 

To qualify as an agricultural vehicle, the IRS has certain Criteria: 

1) Primary Use in Farming 
The vehicle must be used exclusively for agricultural purposes, such as transporting farm products, equipment, or supplies to and from a farm. 

2) Registered as Agricultural vehicle 
The vehicle must be registered with the state as an agricultural vehicle to receive mileage exemptions and reduced tax rates.  

Note: Always ensure your vehicle is officially classified as agricultural with your state’s motor vehicle department before filing. 

Do Agricultural Vehicles need to pay the Heavy Vehicle Use Tax? 

It depends on their usage: 

• If the agricultural vehicle was driven more than 7,500 miles on public highways during the tax year, then you must pay the HVUT (Heavy Vehicle Use Tax). 
• If it was driven 7,500 miles or less on public roads during the tax year, it is considered as suspended vehicle and there is no need to pay the HVUT, but you need to file and report it on Form 2290. 

What to do if a suspended vehicle exceeds 7,500 miles?   

• A suspended vehicle is one that is expected to be driven 7,500 miles or less during the tax period, so it is exempt from Heavy Vehicle Use Tax.  
• However, if the vehicle exceeds the 7,500-mile limit, it no longer qualifies as suspended and becomes a regular taxable vehicle.  
• In this case, you must file a “Mileage Exceeded amendment” with the IRS and pay the Heavy Vehicle Use Tax to remain compliant. 

Can I switch from a Regular vehicle to Agricultural status mid-year? 

• No, the IRS requires that the vehicle be intended for agricultural use at the start of the tax period. If a vehicle starts the year as a commercial and later switches to farming, it will not qualify for suspension for that tax period. 
• However, if you purchase a new vehicle during the year and it is used exclusively for farming from day one, you can claim it as an agricultural vehicle when filing. 

Common mistakes to avoid when filing for agricultural vehicles 

Even though agricultural vehicles may be exempt from paying HVUT, many filers still make simple errors that can lead to IRS rejection or penalties. Here are a few to watch out for: 

• Forgetting to file: Just because you are exempt from paying doesn’t mean you are exempt from filing. The IRS still requires Form 2290 for suspended vehicles. 
• Incorrectly selecting the vehicle category: Make sure to choose Category W for suspended agricultural vehicles. Selecting a taxable category by mistake can lead to unnecessary tax payments. 
• Entering an incorrect VIN: Always double-check your Vehicle Identification Number (VIN). Even a small error can result in your Schedule 1 being rejected. 
• Not keeping mileage logs: You must be able to prove that your vehicle did not exceed the 7,500-mile limit if the IRS audits you. 

Difference between Regular vehicle and Agricultural vehicle 

Let’s see the difference between regular and agricultural vehicle: