The “first retail sale” is defined as “the first sale, for a purpose other than for resale or leasing in a long-term lease, after production, manufacture, or importation.” 26 U.S.C. We reverse and remand.Ī. Section 4051(a) of the Internal Revenue Code (the Code), 26 U.S.C.§ 4051(a), imposes on the “first retail sale” of heavy duty trucks and trailers a federal excise tax of twelve percent of the amount for which the article is sold. The Court of Federal Claims upheld the application of the regulation to those sales. The question in this case is whether the Internal Revenue Service (the Service) properly applied a regulation governing the federal excise tax on retail sales of certain automotive vehicles to trucks the appellant Oshkosh Truck Corporation (Oshkosh) sold directly to the United States. Alexander, Akin, Gump, Strauss, Hauer & Feld, L.L.P, Washington, DC, for amicus curiae. Argrett, Assistant Attorney General, and William J. Rothenberg, Attorney, Tax Division, Department of Justice, Washington, DC, argued, for defendant-appellee. Meckstroth,Foley & Lardner, Milwaukee, WI, argued, for plaintiff-appellant. Decided: September 12, 1997īefore MAYER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and CLEVENGER, Circuit Judge. OSHKOSH TRUCK CORPORATION, Plaintiff-Appellant, v.
So, to get myself off the hook for anything I've just written, I’ll tell you to consult your tax adviser.United States Court of Appeals,Federal Circuit. Could you avoid that by just loaning it to him for a while, then do the deal? Or, should you pay the tax on the rental and pocket at least some of that dough? Er, my knowledge on these matters has just been exhausted. Now I suppose you'd have to pay income tax on the rental amount. If that guy really needed the trailer right away because he just got a new hauling contract - ha ha, maybe the one you just lost - rent the trailer to him, then sell it after the six months. Of course you could’ve avoided this tax hassle by not buying that new trailer in the first place, or, when it became idle, parking it until that six months ran out. You’d also probably be liable for a capital gains tax on that thousand bucks, but that’s another story. In that case - after congratulating yourself for making a thousand bucks on that trailer - you’d apply for a tax credit of the $1,560 that you paid several months ago, when you bought it new, because it’s the lesser amount. However, if you resold the trailer for $14,000, you’d have charged the buyer $1,680 for the 12% FET. That’s because under the law, the credit will be for the lesser of the two FET amounts paid on that trailer. This procedure is described in Treasury Regulation Section 145.4052-1(a)(4).īut be aware that the tax credit would not be for the original $1,560, but for the $1,320. There’s a special form for this, and you’d have to submit that with documentation on both sales. Raybuck and Spata also note that the law allows you to file for a tax credit based on the fact that you paid the FET when you first bought the new trailer.
However, there might be fairness after all. But, you need to charge that guy the 12% FET or the Internal Revenue Service will be on your case if it ever finds out. You find a buyer and sell it to him at a slight loss. You can’t use the trailer for anything else, so decide to get rid of it. Then, you unexpectedly lose the hauling contract after three months. Why would a resale be necessary? I’ve made up this example: You need a van for a new hauling contract and you snap up a new one from a dealer across town and put it to work. The Tech Trends article, co-written by the National Truck Equipment Association’s Bob Raybuck, director of technical services, and Steve Spata, technical assistance director, notes that a provision in the federal Tax Code says that, unlike trucks or tractors, “the sale of a chassis or body of a trailer or semitrailer… less than six months after the taxable sale of the article shall be treated as a taxable sale.” It’s about the 12% Federal Excise Tax on new heavy trailers and how the FET is due twice if a vehicle is bought and sold within six months. And with that disturbing thought in mind, an article in the March edition of NTEA News caught my attention. The 12% Federal Excise Tax on new heavy trailers may be added twice if a vehicle is bought and sold within six months.