Originally published in the August 2018 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.
NTEA’s technical services department receives calls from members being audited by Internal Revenue Service (IRS) for Federal Excise Tax (FET) compliance. Members report that auditors are focused on a few key FET items, such as ensuring current FET exemption certificates are on file; how the company handles lift axle installation and potential FET collection responsibilities; and taxable body sales.
What you need to know
Key FET information to prepare for an IRS audit includes
- Keeping up-to-date FET exemption certificates from truck dealers to which you sell bodies and equipment. One way to ensure records are current is to request new exemption certificates at the same time every year from your truck dealer customers.
- Obtaining new municipal exemption certificates for every tax-exempt municipal sale you make.
- Retaining detailed records of body sales and specific chassis on which they are mounted, including the chassis gross vehicle weight rating. IRS revenue procedure 2005-19 details safe harbor rules for specific truck bodies.
- Note: lift axle installation can be a tricky FET issue. When installing a lift axle on a customer-owned truck chassis, your FET collection responsibilities may be limited. Keep detailed records on who owned the chassis when you installed any lift axle to help determine FET tax-paying responsibilities.
Additional NTEA resources
Suitable for use — determinations for dump bodies was originally published as a 2016 Excise Tax Enquirer article.
The technical services department can help answer your FET questions before, during and after an audit, and may be able to provide insights on IRS rulings that could help support your FET position. Members can contact the department at 800-441-6832 or firstname.lastname@example.org (Monday-Friday, 8am-5pm (EST)) as frequently as needed.
For more information
Visit ntea.com/techtrends to find related articles and helpful resources on these topics, as well as previous subjects covered in recent Tech Trends columns. Member login to access this online information is required. For login assistance, email email@example.com.