In an informal session, three speakers from the federal government answered questions from the dealers on various issues, including the tax code regarding freight cost exclusion and workplace safety regulations. Fielding questions for the IRS were Bob Cirilli, industry specialist on retail truck tax, and Carole Sheets, national coordinator for transportation tax specializing in heavy vehicle taxes. Discussing OSHA issues was Walt Siegfried, of the office of technical compliance.
The NTDA long ago proposed a change in the tax code regarding the exclusion of freight costs in computing the federal excise tax. Trailer dealers contend that the law is unfair because it allows manufacturers who sell trailers directly to customers to exclude freight from the taxable price, but it does not allow trailer dealers to do so.
The critical point in the law is the point of retail sale, Cirilli explained. Freight or any cost incurred to bring a vehicle to the point where the first retail sale will occur is subject to the 12% tax. Any cost that is incurred that involves an activity past that sale is excludable.
The law is clear enough when sales occur the traditional way, he said. A manufacturer would produce a trailer, ship it to the retailer, and then the retailer either already would have a sale for it or would get one. Then the dealer would assess the tax, and the full amount would be billed to the customer. In that scenario, the freight to get that trailer from manufacturer to retailer is included in the tax.
"We have a problem whenever the manufacturer also sells trailers to the general public," Cirilli said. "We have an inequity when that first retail sale actually occurs in a transaction from the factory. Freight from the factory to the customer location, or even possibly through a dealer, is not included in the tax, because that's subsequent to the first retail sale. You always have to think about where the actual retail sales occur. Typically, it doesn't matter if there's a presale on an order. It really depends on where the retail sale occurs."
NTDA Forms Task Force Under the NTDA proposal, all charges for transportation, installation, and other expenses connected with the delivery of a trailer should be excluded from the trailer's sale price for purposes of computing the FET, regardless of whether the trailer is shipped or received by the trailer manufacturer or by the dealer.
The moderator of the session, Bob Hesseling, executive vice-president and general manager of E&R Trailer Sales and Leasing, Middle Point, Ohio, said after the convention that the NTDA has formed a task force to petition Congress to change the law. The task force includes Hesseling; Jon Comeford of Utility Trailers of NE, Seabrook, New Hampshire; and Terry Donahue of Shamrock Utility Trailers, New Stanton, Pennsylvania.
The NTDA also has drafted a letter to the Department of Transportation on another issue discussed at the convention. The letter supports section (16) of 23CFR658, a rule proposal regarding length and width exclusive devices on trailers. One of the width exclusive devices covered in section (16) is automated tarp systems.
Over the past 20 years, many states have passed tarp laws for dump truck and trailer applications hauling sand and gravel, the letter states. Manually thrown tarps are a safety hazard for truck drivers to operate. To prevent accidents, various automatic and semi-automatic tarp systems have been produced to keep the operator on the ground and effectively cover the load. However, all of them extend beyond the width of the trailer.
States may get confused between the priority of keeping the public safe from loads flying from trucks and trailers and the 102" width requirement, the letter continues.
"Automatic tarp systems do not increase the load-bearing capacity of trailers, and they are an effective means of covering the load and keeping drivers and the public safe," said Jim Tuerk of Aero Industries, Indianapolis, Indiana. "But using these systems has created problems for truckers in some states that penalize them for exceeding the 102" trailer width requirement in the 1983 Surface Transportation Act."
Section (16) would allow automatic tarp systems, if they extend no more than three inches on either side of a 102" trailer. It would provide a national standard eliminating any conflict in enforcement of the 102" width requirement for trailers on Class 1 and Class 2 roads and enforcement of the tarp requirement for safety purposes.
The NTDA supports section (16) on exclusive devices. The Department of Transportation published the rule proposal on August 18, and the deadline for comments on the proposal was reached in November, Tuerk said. The next step is possible revision of the proposal and the publishing of a final rule.
Federal Outreach Programs Admitting that some laws are difficult for industry to understand, Cirilli, Sheets, and Siegfried said that the IRS and OSHA are striving to enforce the rules fairly. They also have programs to help businesses comply with regulations.
"Our primary goal is to have standard enforcement and to get compliance through education rather than assessments and penalties," Cirilli said.
About six years ago, the IRS started the excise industry specialist program to help the agency work more effectively with industry, Cirilli noted. The aim of the program was to place people with a specific interest and background in an industry into positions as IRS specialists working with that industry. Cirilli himself fits the specialist profile since he previously worked with Cummins Engine Company.
"Being called a specialist meant that we had to have a good understanding of what our taxpayers and agents were doing and what the problems were," he said. "We had to be able to work with all the industry associations that affected our particular area.
"Over the past three years or so, we've been very active in working with all of the trucking and trailer associations. This is our first time at the NTDA convention, but we would like to be back in a few years. We're available to help solve problems not only on local areas but on a national basis."
By accessing the IRS on the Internet, trailer dealers can get any IRS form and publication that can be downloaded in usable form, Cirilli noted. The web site address is www.irs.gov.
OSHA also has outreach programs particularly aimed at helping small businesses, Siegfried said. "We have free consultation for small businesses," he said. "You call OSHA and they will come out and do an inspection without any penalties or citations. They will issue a report with findings and obviously if there are serious concerns - maybe a paint booth hazard - we would ask that that would be corrected. This is an excellent program for small businesses, and it's free."
OSHA Inspection Figures From October 1997 through September 2000, OSHA did 121 inspections of truck/trailer manufacturing companies, Siegfried said. Of those, 60 were unprogrammed and 61 were programmed. Unprogrammed inspections occur at work sites where imminent dangers are sighted or where fatalities and catastrophes occur. Other unprogrammed inspections result from formal complaints or signed complaints by employees, or from informal and anonymous complaints.
During the same period, OSHA also conducted 15 inspections of wholesalers in the automotive, truck, and trailer industries, Siegfried said. Of these, 13 were unprogrammed and two were programmed. The agency also performed 53 inspections of retail companies - 30 unprogrammed and 23 programmed.
Siegfried commented that 1999 was the first year OSHA utilized site-specific injury and illness data to focus its programmed inspection program. The data was obtained from industry. In 2000, OSHA analyzed the high-rate employers, and in February the agency sent out 13,000 letters to employers with the higher rates.
"We're identifying specific employers with potential health hazards, and we are asking for an action plan on how they plan on correcting these problems," he said. "As an agency with limited resources, we're trying to leverage our resources and go after the companies with the highest injury rates and have them voluntarily get back to us. Nonresponders may get citations, but companies that respond to these letters get a chance for voluntary improvement of safety and health in the workplace."
The OSHA web site address is www.osha.gov.
NTDA's 12th annual convention is scheduled for September 26 through 29, 2001, in Scottsdale, Arizona.