Federal Excise Tax Info

ATeam

Senior Member
Retired Expediter
First of all, please note this topic is entitled "Federal Excise Tax Info," and not "Federal Excise Tax Advice." This is not tax advice. It is info for interested readers to take to their tax advisors if they choose.

The short story is, if you have or are about to pay FET tax on your generator, reefer body, dry-box truck body, or reefer, it may be wise to run the following information past your tax advisor before doing so. This information enabled us to pay no more FET tax than the law requires. Perhaps it can help you too.

Had we not shared this information with certain vendors, they would have been charged far more FET tax. This information saved us enough in FET tax to fully cover the cost of our lift gate. Perhaps this information can help save you some money too, or recover money you already but inappropriately paid (via an IRS FET refund procedure).

Again, this is not tax advice. It is information for interested readers to take to their tax advisors to see if it can be useful to them.

What follows is not the actual letter we sent to our vendors. It blends the text of letters sent to a few.

Based on our research, and advice from (our tax service), we believe the following items on our new truck are exempt from FET:

1. Generator
2. Reefer body
3. Reefer

We base our view on the following:

Generator: No question there since (the dealer) already agrees that the generator is FET exempt.

Reefer Body:

IRS Publication 510. A paragraph on page 26 of that publication says,

"The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax.
Platform truck bodies 21 feet or less in length.
Dry freight and refrigerated truck van bodies 24 feet or less in length.
Dump truck bodies with load capacities of eight cubic yards or less.
Refuse packer truck bodies with load capacities of 20 cubic yards or less.
These four classifications are effective for sales on or after April 4, 2005. For more information, see Rev. Proc. 2005-19, which is on page 832 of Internal Revenue Bulletin 2005-14 at www.irs.gov/pub/irs-irbs/irb05-14.pdf.

Reefer:

Our tax service tells us refrigeration units are not subject to FET.

Our reefer dealer tells us refrigeration units are not subject to FET.

From his personal experience with (company name, a carrier that runs thousands of reefer trucks), our tax accountant knows (company name) has purchased reefers from one or more truck dealers and (company name) does not pay FET tax on their reefers.

IRS Revenue Ruling 69-392

http://taxlinks.com/rulings/findinglist/revrulmaster.htm

This ruling reads in part, "In the U.S. Thermo Control Co. case, the United States Court of Claims concluded that certain mechanical refrigeration units designed to be installed in taxable truck or truck trailer bodies are not subject to the tax imposed by section 4061(b)(1) of the Code when sold by the manufacturer, producer, or importer of the units."

IRS Revenue Ruling 77-171

http://taxlinks.com/rulings/findinglist/revrulmaster.htm

This ruling reads in part, "...sales by the manufacturer, producer, or importer of refrigeration units designed to be installed in taxable truck or trailer bodies are not subject to the tax imposed by section 4061(b)(1) of the Code."

Code of Federal Regulations

Title 26 Part 48.4061(a)-1(a)(3)

http://ecfr.gpoaccess.gov/cgi/t/tex...8&view=text&node=26:16.0.1.1.6.5.12.3&idno=26

This paragraph of the Internal Revenue Code specifically excludes refrigeration units from FET. Note the words "...(other than refrigeration units)...."

-End of vendor letter text-


We bought our landing gear after we purchased the truck, so landing gear info was not sent to our vendors before then. But with this and additional information, we were able to convince our landing gear vendor that he is not obligated to pay or charge us FET tax on landing gear.

No such luck on the lift gate. Based on our research, we deemed the lift gate to be subject to FET, so we did not argue when our lift gate installer charged FET on that item.

Finally, with all due respect to Mr. Katz, I realize this topic may be more appropriately posted in the Tax Topics forum. I posted it here because the General Expediters Forum is more widely read.

In the hands of a new tuck buyer and the buyer's tax advisor, this information may be worth several thousands of dollars in FET tax savings. It would be a shame if someone missed out simply because he or she did not see the post further down the list in a less-active forum.
 
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