IRS proposes changes to definition of vehicles that fall under excise tax

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Updated Apr 10, 2016

truckSome changes have been proposed by the Internal Revenue service relating to the excise taxes on the sale of trucks and more.

The IRS issued a Notice of Proposed Rulemaking last week that would change the definition of vehicles that fall under excise taxes on the sale of highway tractors, trailers, trucks and tires; the use of highway vehicles on the highway; and the definition of highway vehicle related to these taxes.

The federal tax agency says the reason for the proposed regulations is because many existing regulations “do not reflect current law,” and the changes will reflect changes to IRS code since 1982, address recent court decisions and remove obsolete regulations.

The proposed rule redefines a highway vehicle, which are the vehicles that fall under the excise tax, as “any self-propelled vehicle, or any truck trailer or semitrailer, designed to perform a function of transporting a load over public highways.” A vehicle isn’t considered a highway vehicle if its capability to transport a load over a public highway is “limited or impaired.”

The proposed changes also provide a model for a seller to establish the tax status of an incomplete chassis cab. If the buyer of an incomplete chassis certifies to the seller that they won’t complete the chassis as a taxable tractor, it can be sold as a truck or small tractor. No tax is imposed on the sale of an incomplete chassis cab when accompanied by a qualifying certificate.

The IRS says the proposed regulations affect manufacturers, producers, importers, dealers, retailers and users of certain highway tractors, trailers, trucks and tires.

The full document can be found here. The IRS is seeking comments from the public on the proposed rulemaking, which can be made here, or by searching Docket No. IRS-2016-0013 at