WASHINGTON -- Congress may be close to solving a long-standing problem for dealers.
Lawmakers soon will give final consideration to a bill that would clarify which vehicles are subject to a 12 percent federal excise tax on trucks and trailers. The National Automobile Dealers Association says its members need such clarity to keep from being penalized, sometimes years later, for sales they thought were not taxable.
"We have made a credible case that something needs to be done," says NADA lobbyist Rob Braziel.
The tax applies to trucks of more than 33,000 pounds gross vehicle weight and trailers of more than 26,000 pounds gvw. But the tax law is not clear about other trucks designed for towing, legally referred to as highway tractors.
Some dealers have been charged back taxes, interest and penalties for selling tow-capable vehicles as small as Classes 4 and 5, or 14,000 pounds gvw, says the American Truck Dealers, a division of NADA.
The tax, enacted in 1938, covers heavy trucks used by commercial fleets. But dealers report an increasing number of cases of Internal Revenue Service officials "reaching down" to apply the tax to lighter vehicles capable of towing, American Truck Dealers says.
Under the proposed clarification, any highway tractor with gvw of 19,500 pounds or less would be exempt. The tax would apply only to Class 6, 7 and 8 vehicles.
The change would cost the U.S. Treasury an estimated $31 million over 10 years.
The Senate version of a federal highway bill includes the tax change. The House-passed version does not. House and Senate negotiators
working on a compromise will de-cide whether the change stays in the bill.
These provisions important to the industry also are at stake in the highway bill bargaining:
The Senate version of the legislation would authorize spending $295 billion over six years. President Bush has threatened to veto any bill that exceeds $284 billion.
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