Federal Excise Tax Guidelines for Tire Tax Credit on trucks and trailers subject to FET
Originally published in the March 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.
Calls and emails regarding Federal Excise Tax (FET) have surged in the
last few months. Since FET is 12% of the retail sales price on a taxable item,
it is critical for the seller to be able to accurately determine when the tax is
applicable and precisely how much is due. A common question involves how to
handle the tire tax credit when determining FET to be collected on a truck
chassis or trailer chassis. Much of the confusion stems from the lack of readily
available information on how much FET has been collected on the tire, seeing as
it is calculated and paid by the tire manufacturer.
- When selling an FET-taxable
truck chassis or truck body, the seller can deduct the amount of FET collected
on the individual tires from the total FET due.
- FET on a tire is based on the
load rating of the tire and is set by a specific formula. The individual tire
manufacturers calculate the FET due based on the tire size and construction, and
they pay the FET directly to the Internal Revenue Service.
- So, how does an upfitter find
out how much FET was paid on a specific size and type of tire? The tire
manufacturers include the FET amount as part of their price lists, and the MSRP
price list normally has a column for FET. As an upfitter, if you have a good
relationship with a local tire dealer that supplies your shop with tires or that
you refer your customers to for tire replacement and warranty, the dealer can be
an excellent resource for tire FET documentation. Remember to get the specific
FET information by brand (i.e., Goodyear, Bridgestone, etc.) and tire size and
Are you faced with technical or engineering
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, 8AM–5PM (EST). Members can contact the Association
as frequently as needed.