The Internal Revenue Service announced July 24, 2003, that it has selected a proposal submitted by the National Truck Equipment Association (NTEA) as one of only five tax issues for resolution under the 2003 Industry Issue Resolution (IIR) Program. The NTEA proposal addresses the “suitable for use” provision of the federal excise tax on heavy trucks.
Under the 12% federal excise tax on the retail sales of heavy trucks, trailers, bodies, and chassis, a truck body is not taxable if it is “suitable for use” on a chassis under the 33,000-lb gross vehicle weight threshold. The problem for retail sellers is that no guidance exists as to what constitutes “suitability for use.”
The subjective nature of the “suitable for use” determination has resulted in frequent audits. Neither the companies determining the taxability of the vehicle nor the tax auditor has clear guidance in this area.
According to Large and Mid-Size Business Division Commissioner Deborah M Nolan, “The Industry Issues Resolution program provides a common-sense approach to resolving tax issues identified by the business community. Businesses and their representatives meet with IRS legal and technical experts to present their issues. We then try to find a way to resolve these areas of controversy in a way that will be less burdensome to taxpayers and allow us to focus our enforcement resources more appropriately.”
For each issue selected under the IIR program, a multi-functional team of IRS, chief counsel, and Treasury personnel will be assembled. The teams will gather and analyze the relevant facts from industry groups and taxpayers for each issue and recommend guidance.