[Congressional Record Volume 142, Number 128 (Tuesday, September 17, 1996)]
[Extensions of Remarks]
[Pages E1615-E1616]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   LEGISLATION TO CLARIFY THE APPLICATION OF THE RETAIL TAX ON HEAVY 
                          TRUCKS AND TRAILERS

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                           HON. PHIL ENGLISH

                            of pennsylvania

                    in the house of representatives

                      Tuesday, September 17, 1996

  Mr. ENGLISH of Pennsylvania. Mr. Speaker, today, I am introducing 
legislation to both correct existing law as well as practices in the 
administration of those laws that have proven to be quite burdensome 
and inefficient.
  Currently, a 12-percent excise tax is imposed on heavy trucks, 
trailers, and tractors. The tax is on trucks weighing over 33,000 
pounds, trailers weighing over 26,000 pounds, and all tractors used 
with a trailer or semitrailer for highway transportation. The IRS has 
crafted a registration, certification, and reporting regime that 
imposes a heavy paperwork burden and awkward procedures for proving 
compliance. Complex regulations and rulings issued over many years have 
added to the compliance burden.
  I am introducing legislation today to remedy the most serious 
administrative difficulties brought to my attention with the following 
four proposed changes:
  First, to clearly delineate taxable tractor sales and to eliminate 
uncertainty regarding when there is a tax on an incomplete chassis, my 
bill would make the tax apply only to tractors with a gross vehicle 
weight in excess of 33,000 pounds.
  Second, similarly, to provide certainty regarding when an article is 
subject to tax, my bill codifies the clear and unequivocal test put in 
place by the IRS in Revenue Rule 91-27 which imposes the tax on the 
restoration of a worn or used truck, tractor, or trailer only where the 
cost of such restoration work exceeds 75 percent of the price of a 
comparable new vehicle. My bill expands this sensible test to cover the 
restoration of wrecked vehicles as well as changes or modifications of 
a truck's function such as the conversion of a tractor to a straight 
truck, the lengthening or shortening of a frame, or the addition or 
subtraction of axles.
  Third, to foster greater uniformity in the application of the tax and 
to provide a more precise measurement of the reduction in tax that

[[Page E1616]]

should occur for tires that are part of a taxable sale and which have 
been previously taxed, my bill provides an offset to the truck excise 
tax equal to the tax already paid on such tires. Correspondingly, the 
bill eliminates the deduction now allowed for the fair market value of 
tires in determining the taxable amount of a retail truck sale.
  Fourth, heavy truck dealers must register with the IRS and furnish 
exemption certificates for vehicles purchased for resale. A dealer who 
makes a sale for a resale must produce a valid exemption certificate 
obtained in connection with sales for resale. A dealer can be required 
to pay on an exempt sale where the IRS, long after the transaction has 
been completed, determines that verification of the claimed exemption 
is inadequate and there is no proof the tax was collected from the 
first retail user. Even though some sales have obviously been for 
resale, slavish application of the statute and regulations have 
nevertheless resulted in the collection of such taxes.
  My bill would make it easier to more systematically obtain and retain 
the required certifications by permitting invoices used in transferring 
taxable vehicles to include a certification that the transfer is a sale 
for resale. Resellers would affirm under penalties of perjury, that 
there was no obligation to collect the Federal excise tax. The same 
penalties imposed under current law for fraudulent claims of exemption 
would remain in force. Because it has proven to be of minimal 
compliance value, my bill would also eliminate the cumbersome 
registration system now required for heavy truck dealers and other 
resellers.

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