Clarifying the Tax Burden on Off-Highway Vehicles
Originally published in the February 2014 edition of Tech Trends
(e-newsletter and as an article within NTEA News), this article is also
available to you below as an employee of an NTEA member company.
Many areas of the U.S. are currently experiencing an increase in
construction, drilling and mining activity. A majority of these activities
require heavy-duty commercial vehicles that are mainly used off-highway. As a
result, many customers who purchase new truck chassis and truck bodies for
off-road usage falsely believe they qualify for an off-highway Federal Excise
Tax (FET) exemption. This type of customer confusion can be quite problematic
for an upfitter. If the upfitter does not collect tax on a taxable body or
chassis, the upfitter could end up with a potentially large Internal Revenue
Service (IRS) FET bill.
What You Need to Know
- Vehicle use does not determine
whether or not a truck body or truck chassis is taxable under FET. The truck
chassis design will determine taxability.
- Truck chassis specifically
designed for off-highway use have severe limitations for on-highway usage.
Normally, the chassis OEM has already secured an IRS ruling confirming the
- Remember that truck bodies and
truck chassis are separate taxable items. For example, a truck body that meets
IRS design requirements for an off-highway FET exemption could be mounted on a
standard on-road truck chassis. In this case, if the truck chassis meets the
taxable requirements (33,001 lbs. GVWR or greater), it is taxable, but the
off-highway truck body is not
Are you faced with
technical or engineering challenges?
Technical and Engineering Hotline at 800-441-6832 for individual attention on
varied topics such as Federal Excise Tax, truck certification and labeling,
vehicle compliance and truck spec’ing. The Hotline is available Monday-Friday,
8am-5pm (EST). Members can contact the Association as frequently as