By: Rose-Michele Nardi, Transport Counsel PC
This article was published in the May 2016 edition of NTEA
News
Question: Can a truck chassis with a gross vehicle
weight (GVW) greater than 33,000 pounds be treated as nontaxable under Internal
Revenue Code (IRC) 4051 if sold with a body that limits maximum loaded vehicle
weight to 33,000 pounds or less?
Answer: The loaded weight capacity of a body generally
will not affect Internal Revenue Service (IRS) determinations on
taxability.
As a practical matter, the IRS treats truck chassis as taxable if GVW
is more than 33,000 pounds. When making a decision, the IRS typically will rely
on the GVW established by the chassis manufacturer or seller. (Note, the IRS may
disregard an established GVW if deemed unreasonable in a certain situation.)
Treasury Regulations state gross vehicle weight means “the
maximum total weight of a loaded vehicle” (see Section 145.4051-1(e)(3)(i)).
They also provide a “seller’s gross vehicle weight rating must take into
account, among other things, the strength of the chassis frame and the axle
capacity and placement” (see Section 145.4051-1(e)(3)(v)). If axle capacity
exceeds 33,000 pounds, you likely will have an uphill battle convincing an IRS
agent the chassis is not taxable.
Past determination
In Technical Advice
Memorandum (TAM) 200606038, an IRS agent took the position that chassis GVW
rating, based on axle capacity, was 49,520 pounds. In addition, the
IRS concluded “the strength of the chassis frame exceed[ed] 33,000 pounds
because the chassis could be ordered from the manufacturer with a front
gross axle weight rating (GAWR) of 12,000 pounds and a rear GAWR of
23,000 pounds.”
In this TAM, the body installed on the chassis was a 3,000-gallon tank
body. The taxpayer argued the truck should not be subject to tax “because the
maximum loaded weight of the truck cannot exceed 33,000 pounds.” The IRS
responded that “[t]he limited capacity of the tank body does not dictate the tax
status of the chassis because a body and a chassis are two separate taxable
items.” Although the TAM ruling is not binding on the IRS, it provides guidance
on how it might rule in a similar situation.
Under the reasoning of this TAM, body weight capacity constraints
should not affect chassis taxability even if, as a result of body installation,
maximum loaded vehicle weight is 33,000 pounds or less. In other words, the IRS
generally will determine a chassis exceeding 33,000 pounds GVW is
taxable, regardless of the body mounted on it, unless an exemption or exception
otherwise applies to the chassis.
Rose-Michele Nardi is a shareholder of the Washington, DC law firm
Transport Counsel PC. For 18
years, she has advised clients on the proper application of the retailer FET on
trucks, trailers and tractors. Rose-Michele represents clients in IRS
proceedings involving FET, and regularly presents webinars and seminars for
truck dealers and upfitters.