Concrete Pumping Group Seeks Clarity in Proposed Excise Tax Regs

The American Concrete Pumping Association (ACPA) was founded in 1974 with the objectives to promote concrete pumping as the choice method of placing concrete and to encourage and educate the concrete pumping industry on safe concrete pumping procedures. It represents the approximately 500 businesses, mostly small and family owned, which comprise the American concrete pumping industry. An essential responsibility of ACPA is monitoring and advocating for positive government policies which affect the concrete pumping industry.

The ACPA closely monitors the tax laws, regulations and rulings which affect application of various excise taxes. A key interest of ACPA members is the definition for excise tax purposes of highway vehicle, under which concrete pumps are generally classified as mobile machinery. Therefore, ACPA has reviewed the Internal Revenue Service Notice of Proposed Rulemaking¹ regarding a series of issues affecting application of the Manufacturers and Retailers excise tax to highway vehicles, and the definition of highway vehicle. In general, the ACPA appreciates the efforts of IRS to carefully update these rules.

Mobile Machinery Examples

Proposed § 48.0-4 defines a highway vehicle and provides exceptions to those definitions. Among the exceptions is "Mobile Machinery." (§ 48.0-4.b.3.iii). The exception language reflects IRC § 4053(8). The following subparagraph in the proposed rule "Examples" includes ("Example 2") a discussion of the principle that a chassis with a pintle hook (which would enable towing of a trailer) is thereby not "specially designed to serve only as a mobile carriage and mount for the drilling equipment." ACPA agrees with this reading of the Florida Power & Light Co. v. United States² decision.

The final sentence in Example 2 also suggests that reinforcement by a manufacturer to allow the chassis to tow a trailer would likewise render the chassis taxable, even though a pintle hook is not actually installed. ACPA does not want statement, specific to the issue of pintle hooks, to support questioning any manufacturer reinforcement of a chassis beyond stock specifications. The nature of fitting a concrete pump on a chassis requires numerous and significant reinforcements which would not be necessary without the heavy pump, which by its operation and the weight of concrete extends severe torsion pressures on a 360 degree basis, far greater and more extreme than any standard chassis for a standard truck body would be able to support. Thus ACPA wants to emphasize that the IRS should clearly communicate to its examiners and field staff that "reinforcement" itself is not the issue and should not be a factor which disqualifies a chassis from mobile machinery status. The issue is "reinforcement for what purpose." If the purpose is to transport mobile machinery, then the chassis should be exempt, consistent with the basic standards of § 48.0-4.b.3.iii.

"Certificate" procedure for retail sale of chassis

Proposed § 48.4051-1.d.2.ii establishes a certificate process by which a retailer may sell a chassis without charging the relevant excise tax upon receipt from (in the concrete pump industry) the pump manufacturer of a certificate attesting that the manufacturer will use the chassis as a component of mobile machinery not subject to the excise tax.

This procedure should be a useful step in simplifying the process whereby pumps are sold by chassis dealers to pump manufacturers, who in turn sell the completed concrete pump to the ultimate consumer. As we read the proposal, if the pump manufacturer provides such a certificate to the chassis manufacturer, the pump manufacturer's ultimate retail customer will likewise have no liability for the excise tax in connection with what is the first retail sale of the completed concrete pump, which includes the nontaxable chassis as a component.

In connection with the certificate program, ACPA joins other commenters in encouraging the IRS to allow the certificate-based, three-year exemption currently allowed under § 145.4052-1 in the Temporary Excise Tax Regulations Under the Highway Revenue Act of 1982 to be integrated as an option under the proposal. The proposed certificate program includes ample authority for the IRS to penalize and otherwise end the privileges of a manufacturer which does not comply with certificate requirements. The opportunity to forego time and effort focused on exchange of repetitive paperwork seems significant, when measured against what would appear to be the slight risk of non-compliance by established manufacturers producing mobile machinery whose design is little changed in decades. Absent some reason the current "blanket" certificate procedure is ineffective, it should continue to be an option.

ACPA appreciates the opportunity to comment on these proposed rules.

² 375 F.3rd 1119 (Fed. Cir. 2004)