Originally published in the February 2015 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.
Each month, the NTEA’s staff engineers field questions about Federal
Excise Tax (FET) on “replacement” bodies. Some members are unsure as to whether
or not to charge tax, believing that because they are installing a new body on a
used chassis, the body is a replacement part or accessory and, therefore, not
subject to tax. This is not true, though, as bodies are considered separate
primary taxable articles by the Internal Revenue Service (IRS). If a body is new
and taxable based on the IRS’s “suitable for use” rules, the seller is
responsible for collecting and turning in the tax to the IRS.
Helpful
Information
Following are details on the five primary
taxable items under FET rules for heavy-duty trucks.
- Based on IRS rules, a truck is
considered two separate items — a truck chassis and a truck body. Each can be
taxable or non-taxable independent of each other, even when joined together to
make a truck.
- A trailer is considered two
separate items — a trailer chassis and a trailer body — by IRS rules. Again,
each can be taxable or non-taxable independent of each other, even when joined
together to make a semi-trailer.
- A truck-tractor is the final
primary taxable article based on IRS rules for GVWR, gross combined weight
rating and primary design.
- A new truck body or trailer
body will not meet the “75% rule” for further manufacturing because it is a new
body.
As with many FET issues, the answers are fact-specific to the
particular truck and application. NTEA’s Technical Services Department is
always available to help with your FET questions.
Resources Available from the
NTEA
Excise Tax Enquirer
Articles
Applying Federal ExciseTax - A General Overview
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, 8am-5pm
(EST). Members can contact the Association as frequently as needed.