Are all APUs Exempt from FET?

By Rose-Michele Nardi
Transport Counsel PC

This article was published in the January 2013 edition of NTEA News

Question: We sell and install certain auxiliary power units (APUs). Is it true that these units may still be subject to tax under Internal Revenue Code (IRC) Section 4051? I thought APUs were specifically exempted from tax a few years ago.


Answer: Yes, some APUs still may be taxable under the Section 4051 tax. Although you are correct that an exemption for idling reduction devices was created in 2008 (see IRC section 4053(9)), an APU must satisfy certain requirements in order for this exemption to apply. Unfortunately, though, not all APUs will satisfy these requirements.

First, the Environmental Protection Agency (EPA) must determine that the specific model of the APU being sold reduces idling when the vehicle is stationary/temporarily parked. The EPA has identified five general categories of idling reduction technologies:

  1. Fuel-operated heaters
  2. Battery air conditioning/heating systems
  3. Auxiliary power units/generator sets
  4. Thermal storage systems
  5. Shore connection systems. 

For each of these categories, the EPA has further identified the specific models of idling reduction units it has determined satisfy the EPA requirement in the exemption. 

To view the list of EPA-approved units, for purposes of this exemption, visit and click on “Eligible Products for the Federal Excise Tax Exemption” link under the “Federal Excise Tax Exemption” heading. If the model APU you sell and install is not on this list, then it does not satisfy the Section 4053(9) exemption. You should also review the information under the heading “***List of Technologies No Longer Eligible for Federal Excise Tax Exemption ***” to determine whether the status of a previously approved model unit has changed.

Second, in order to be exempt, the APU must be installed on a tractor. (See the statutory language cited in the subsequent third criteria.)If the APU is installed on a truck, trailer or any other type of vehicle, it will not satisfy the Section 4053(9) exemption. This means that even if the APU you sell satisfies the first criteria (i.e., it is identified on the EPA-approved list), it will not be exempt if it is not installed on a tractor.

Third, the exemption requires that an APU (or any other device(s)) must be “designed to provide to a vehicle those services (such as heat, air conditioning or electricity) that would otherwise require the operation of the main drive engine while the vehicle is temporarily parked or remains stationary using one or more devices affixed to a tractor.” You should note that this requirement is based on the unit’s design and not the use by any particular customer.

If the APU you sell and install does not satisfy all three of these requirements, the Section 4053(9) exemption will not apply. The Internal Revenue Service has not yet issued any rulings interpreting or applying this exemption. Accordingly, taxpayers should consult with their tax counsel prior to treating their idling reduction devices as nontaxable under this exemption.