Considering buying a truck and adding a tag or pusher axle? Already bought one, and your friendly expedite truck dealer sent you just down the road to “his guy” where you paid cash to have the axle added, outside of the sale of your truck? Better give this some long thought. He told you if you did that, you wouldn’t have to pay Federal Excise Tax, right? Or, you’d just be rolling the dice, and odds were greatly in your favor that you wouldn’t get caught.
In http://www.expeditersonline.com/forums/threads/federal-excise-tax-info.18412/, Phil talks about doing his homework when building his truck.
In http://www.expeditersonline.com/forums/threads/excise-tax.27479/#post-214056, Frank Katz suggests the poster wait until after the purchase, so some mythical clock expires that would allow taxation of this truck add-on.
In http://www.expeditersonline.com/forums/threads/our-new-straight-truck.59885/page-5#post-658590, another team appears to be following FKatz advice, as he acknowledges he is their tax guy, and also considering waiting for the clock to strike midnight, and their tax liability to turn into a pumpkin. Another owner from Michigan appears to thumb his nose at the tax.
Sorry for the joke. Here’s the no-laughing-matter part:
Last week, in a Facebook group I’m a member of, another member who owns 3 new and one newer trucks was talking about his recent face-to-face audit by the IRS for deducting the expense of pusher axles on his 3 new trucks from last tax year’s income. The result? He now has a very unanticipated $84,000 tax bill. That’s for the addition of pusher axles to his 4 trucks (3-2014’s, one 2012). The tax is due on all four, as he changed the carrying capacity on all 4 over the 33,000 GVWR threshold. He argued, in vain, over the 2012, and the urban-legendary 6-month rule. He was shown the rule by the IRS investigator. The 6-months is for accessories. The tag or pusher axle is considered a chassis component by the IRS. One particularly vocal member of this Facebook group, touting their decades of experience, firmly stated that GVWR had no bearing on FET. Um, yeah. Go with that.
The nice part? The KGB, er, IRS, is allowing this person to make installments on his tax burden. Oh, and that’s complete with interest. To the date they installed the axles. The “nice” comment was sarcasm.
Now let’s think about this for a minute: Your salesman advises you to go down the road, so that you can avoid some tax. Somebody, somewhere, catches wind that this is happening. The IRS investigator told this fella he was the third fleet owner they’re collecting from. Further said they’ve been investigating this for a while, and this is just the tip of the iceberg. Seriously, think about that. How many trucks have the two large expediter truck-selling dealerships churned out in the last several years? How many fleet owners are there that bought these trucks? I can think of one, a really big fleet, and their use of this tactic dates back to even another dealer. Some of the same folks involved, too. Now you get a notice. You’re getting called on the carpet. You’re pissed, maybe partly at yourself, for falling into this stupid scheme in the first place, but maybe a little more at the dealer for setting up this scheme. I wonder why couldn’t they just be upfront about it, include the FET in the sale price. Are the trucks overpriced? Would the increase in price push the total dollar amount over the palatability threshold for a lender? One of the members of the FB group I speak of was a salesman for one of these dealers. After reading the post, he reported the post to Facebook as offensive, and it was promptly taken down (kind of like the filing of a personal protection order – you can complain uncontested, and the alleged ‘offender’ has an opportunity to contest). Long story short: It was fairly obvious he didn’t want this information out there. Are these folks complicit in tax evasion? Not for me to decide. I know if I were them, I’d have trouble sleeping at night.
What would I do? I would get in front of it. Now. Today. INTEREST NEVER SLEEPS. Get in front of it today, and is starting to go away. You owe it, and you know it. That’s just me. That’s what I would do.
If you buy a new or used truck, and it's GVWR is 33,000 pounds, and you upfit it with an additional axle to carry one ounce more than that, you owe 12% Federal excise tax on the entire purchase price of the vehicle, plus the additional chassis components. Doesn't matter if you do it today, 6 months from now, or 40 years from now. If you're the original purchaser, and you made the changes, you owe it. Don't take my word for it. Call the folks who are going to levy the tax against you.
None of what I am saying above should be construed as tax advice. I do suggest using the services of an Enrolled Agent(EA) or a CPA. If they don’t have those letters in the alphabet soup after their name, they don’t have the authority to represent you in an argument in front of the IRS.
Mods, feel free to move wherever you please. I picked General, as it was a mix of truck spec and tax.
BTW, Phil did his homework. He was right.
In http://www.expeditersonline.com/forums/threads/federal-excise-tax-info.18412/, Phil talks about doing his homework when building his truck.
In http://www.expeditersonline.com/forums/threads/excise-tax.27479/#post-214056, Frank Katz suggests the poster wait until after the purchase, so some mythical clock expires that would allow taxation of this truck add-on.
In http://www.expeditersonline.com/forums/threads/our-new-straight-truck.59885/page-5#post-658590, another team appears to be following FKatz advice, as he acknowledges he is their tax guy, and also considering waiting for the clock to strike midnight, and their tax liability to turn into a pumpkin. Another owner from Michigan appears to thumb his nose at the tax.
Sorry for the joke. Here’s the no-laughing-matter part:
Last week, in a Facebook group I’m a member of, another member who owns 3 new and one newer trucks was talking about his recent face-to-face audit by the IRS for deducting the expense of pusher axles on his 3 new trucks from last tax year’s income. The result? He now has a very unanticipated $84,000 tax bill. That’s for the addition of pusher axles to his 4 trucks (3-2014’s, one 2012). The tax is due on all four, as he changed the carrying capacity on all 4 over the 33,000 GVWR threshold. He argued, in vain, over the 2012, and the urban-legendary 6-month rule. He was shown the rule by the IRS investigator. The 6-months is for accessories. The tag or pusher axle is considered a chassis component by the IRS. One particularly vocal member of this Facebook group, touting their decades of experience, firmly stated that GVWR had no bearing on FET. Um, yeah. Go with that.
The nice part? The KGB, er, IRS, is allowing this person to make installments on his tax burden. Oh, and that’s complete with interest. To the date they installed the axles. The “nice” comment was sarcasm.
Now let’s think about this for a minute: Your salesman advises you to go down the road, so that you can avoid some tax. Somebody, somewhere, catches wind that this is happening. The IRS investigator told this fella he was the third fleet owner they’re collecting from. Further said they’ve been investigating this for a while, and this is just the tip of the iceberg. Seriously, think about that. How many trucks have the two large expediter truck-selling dealerships churned out in the last several years? How many fleet owners are there that bought these trucks? I can think of one, a really big fleet, and their use of this tactic dates back to even another dealer. Some of the same folks involved, too. Now you get a notice. You’re getting called on the carpet. You’re pissed, maybe partly at yourself, for falling into this stupid scheme in the first place, but maybe a little more at the dealer for setting up this scheme. I wonder why couldn’t they just be upfront about it, include the FET in the sale price. Are the trucks overpriced? Would the increase in price push the total dollar amount over the palatability threshold for a lender? One of the members of the FB group I speak of was a salesman for one of these dealers. After reading the post, he reported the post to Facebook as offensive, and it was promptly taken down (kind of like the filing of a personal protection order – you can complain uncontested, and the alleged ‘offender’ has an opportunity to contest). Long story short: It was fairly obvious he didn’t want this information out there. Are these folks complicit in tax evasion? Not for me to decide. I know if I were them, I’d have trouble sleeping at night.
What would I do? I would get in front of it. Now. Today. INTEREST NEVER SLEEPS. Get in front of it today, and is starting to go away. You owe it, and you know it. That’s just me. That’s what I would do.
If you buy a new or used truck, and it's GVWR is 33,000 pounds, and you upfit it with an additional axle to carry one ounce more than that, you owe 12% Federal excise tax on the entire purchase price of the vehicle, plus the additional chassis components. Doesn't matter if you do it today, 6 months from now, or 40 years from now. If you're the original purchaser, and you made the changes, you owe it. Don't take my word for it. Call the folks who are going to levy the tax against you.
None of what I am saying above should be construed as tax advice. I do suggest using the services of an Enrolled Agent(EA) or a CPA. If they don’t have those letters in the alphabet soup after their name, they don’t have the authority to represent you in an argument in front of the IRS.
Mods, feel free to move wherever you please. I picked General, as it was a mix of truck spec and tax.
BTW, Phil did his homework. He was right.
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