Originally published in the May 2016 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.
Members have been asking about federal excise tax (FET) as related to
parts and accessories rulings. As with most FET questions, solutions are
vehicle-specific. The Internal Revenue Service breaks FET into specific
categories: taxable articles (i.e., truck chassis, truck bodies, trailer
chassis, trailer bodies and tractors) and parts and accessories (sold on or in
connection with chassis, bodies and tractors).
Helpful info
- If a taxable chassis or body is
sold by a retailer without parts or accessories considered essential for the
operation or appearance of the taxable article, in the absence of evidence to
the contrary, sale of these parts or accessories by the retailer to the buyer of
the taxable article will be considered made in connection with sale of the
taxable article even though shipped separately, whether at the same time or on a
different date.
- Tax is imposed on installation
of a part or accessory on a taxable article within six months after the article
was first placed in service. This does not apply if the aggregate price of
non-replacement parts and accessories (and installation) for any vehicle does
not exceed $1,000.
The seller of the taxable article may have liability for sale of parts
and accessories within the six–month period post-sale. Consider reviewing this
potential issue with your parts sales team to see if FET liability could occur
with sales to customers who have purchased a taxable item from you in the last
six months.
Additional resources available from NTEA
- Excise Tax
Enquirer articles:
Are you faced with technical or engineering
challenges?
Contact the 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, 8 a.m.-5 p.m. (EST).
Members can contact the Association as frequently as
needed.