NTEA Clarifies Truck Tax Issues

As a result of efforts by the National Truck Equipment Assn. (NTEA) through the Internal Revenue Service Industry Issues Resolution program, guidelines are available to help truck dealers determine if a truck body is subject to federal excise tax

under Revenue Procedure 2005-19.
The issue arose because of provisions in various IRS codes. Section 4051(a)(1) imposes a tax on the first retail sale of truck chassis and bodies and truck trailer and semitrailer chassis and bodies, but Section 4051(a)(2)provides an exclusion from this tax for truck chassis and bodies suitable for use with a vehicle having a gross vehicle weight (GVW) of 33,000 lbs. or less. Similarly, Section 4051(a)(3) provides an exclusion for truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer having a GVW of 26,000 lbs. or less.
The term “suitable for use” is defined as practical and commercial fitness for such use. In addition, a chassis or body possesses practical fitness for use with a vehicle if it performs its intended function up to a generally acceptable standard of efficiency with the vehicle, and a chassis or body possesses commercial fitness for use with a vehicle if it is generally available for use with the vehicle at a price that is reasonably competitive with other articles that may be used for the same purpose.
The lack of clear and objective determinations for the term “suitable for use” has resulted in competitive disadvantages and frequent audits. As a result of the NTEA's efforts, the IRS declared that it will not challenge a seller¹s determination that several specific classifications of truck body types meet the suitable for use standard, and sales thereof are excluded from the retail excise tax.
For more information about the excise tax issue, go to www.ntea.com or contact NTEA government relations director Mike Kastner at 202-484-0526.