A tough market is a really tough time for unfair taxes (and high interest rates), so NTDA is looking to Congress to give trailer dealers a break on floor plan financing.
As outgoing NTDA Chairman Justin Deputy explained during the annual convention, while federal tax code exempts truck dealers, the trailer dealer tax deduction for floor plan interest is capped at 30%. And the promised push to fix the discrepancy is now underway with late November’s launch of the NTDA Commercial Semi-Trailer Advocacy PAC.
NTDA President Gwen Brown distributed to association members several documents to educate and empower them to support the cause, including letter detailing the issue, a PAC donation flyer and contribution form, a sample letter/template to contact representatives in Washington and contact information for the House Ways & Means Committee, along with an attention-grabbing infographic to simplify the matter.
Basically, the floor plan tax deduction allows dealerships to deduct the interest on loans used to purchase inventory, including semi-trailers. This deduction is essential for businesses reliant on floor plan financing, helping them maintain adequate inventory and liquidity, NTDA explains. However, the 2017 tax reform reduced this benefit, limiting the deduction to a 30% cap on adjusted taxable income (ATI).
An initial exemption was modified in 2018, leaving out trailers.
At issue, specifically, is Internal Revenue Code § 163(j). NTDA wants the code amended to redefine “self-propelled vehicles” as “any self-propelled or titled trailer designed for transporting people or property on public streets, highways, or roads, as well as boats or farm machinery and equipment,” thereby including semi-trailers.”
“This critical change would grant trailer dealers the same tax benefits currently available to auto and truck dealers, promoting fairness, business growth, and economic stability,” NTDA states.
Leading the effort for NTDA is Paul Christenson of North American Trailer LLC, who also happens to be an attorney who knows tax law and has experience on Capitol Hill. And, as Deputy emphasized, anyone with the aptitude and inclination should join the committee.
As NTDA President Gwen Brown told TBB following the PAC launch, the association has lobbied Congress before, seeking repeal of the FET. That effort will continue as NTDA will have a voice in the upcoming Highway Bill reauthorization. Additionally, some $4 trillion in business tax incentives are set to expire at the end of 2025, Brown noted.
NTDA has retained the firm of Morgan, Lewis & Bockius LLP to manage the effort in Washington, with Senior Director Timothy P. Lynch serving as the association’s lobbyist. NTDA is organizing a member fly-in early next year. While NTDA currently is not coordinating efforts with other trade groups, that is “a possibility” in the future, Brown added.
“We need to raise about $100,000 to get this done,” Deputy said at the convention. “It's a bipartisan issue; we think we can get both sides of the aisle to get behind this.”
The materials mentioned above and additional information regarding the NTDA PAC is available at NTDA.org, under the Resources tab.