It will be business as usual for truck and trailer dealers regarding the federal excise tax (FET)—at least until June 30—as a result of President Obama’s signing of H.R. 4281: Surface Transportation Extension Act of 2012.
The tax was set to expire March 31, and CliftonLarsonAllen LLP—which provides strategic planning, accounting, and tax consulting services to help trucking and transportation companies—was recommending that dealers continue to collect federal excise tax on trucks, trailers, and tractors.
Greg Althardt, national leader of CliftonLarsonAllen LLP’s truck and trailer group, said the President’s action solves the problem only temporarily.
“It’s just kicking the can down the road until June, when both sides of Congress can go ahead and start fighting again,” he said. “My guess is they will put another temporary patch in there . It could be fueled by actually trying to get something done, since this is an election year. Both sides will want to prove they were able to produce jobs or prolong jobs in the United States. However, I don’t think there is going to be any change to the FET system as we know it.”
Some associations—primarily the American Truck Dealers (ATD)—have been pushing hard for Congress to change the FET system.
“It’s very gray and convoluted,” Althardt said. “Dealers are up the creek now in how to interpret it. All they’re told is they have to charge 12% on the first retail sale. Some dealers are more versed on FET than others. Unfortunately, there are some technbicali9ties that can catch you by surprise.
“It’s up to dealer to self-report, collect and remit the tax. It’s really a consumer tax. If you come in and buy a truck from me, I have to assess a 12% tax to you. If for some reason I don’t, or I deem it not taxable and that’s not correct, I’m the one who foots the bill. It’ not a very dealer-friendly tax. The other associations out there are pushing to change the way it’s calculated and go to more of a use tax or additional gasoline tax on diesel fuel and do away with the resale sales tax. But that doesn’t have an appetite in Congress.”
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