Transcript Available of IRS Hearing on Truck Excise Taxes

For IRS:

MS. SMITH: Good morning. OK. It looks like everyone can hear me. We are going to get started with the hearing. This is the Public Hearing for the Proposed Regulations regarding the Federal Excise Tax on Tractors, Trailers, Trucks and Tires, and the Definition of a Highway Vehicle. A notice of the Proposed Rulemaking was published in the Federal Register on October 20, 2016.

Written-in electronic comments were received and five people have requested the opportunity to speak this morning. Each speaker will have 10 minutes to present their comments. There is a timer and a lighted indicator here at the top of the podium. The light will turn green, yellow and red. When the light turns green please begin to speak. The yellow light is a warning that you have three minutes left, and when the light turns red your time is over.

So, now I will introduce the panel. My name is Rachel Smith, and I'm an Attorney in Passthroughs and Special Industries, Branch 7. To my left are: Stephanie Bland, the Branch Chief of Branch 7; Celia Gabryah, she is an Attorney in Branch 7; Chris Kelley, who is the Special Counsel to the Associate Chief Counsel in PSI; and Hannah Hawkins, who is Attorney Advisor in the Office Tax Policy at Treasury.

The first speaker on our agenda is Jeff Sims speaking on behalf of the Truck Trailer Manufacturers Association. Jeff, are you here? I don't you signed in, if you are. Jeff? OK. We don't have Jeff yet, so we'll come back to him if he shows up. The next speaker is Kimberly Pendo, speaking on behalf of the Truck and Engine Manufacturers Association. Ready?

MS. PENDO: Ladies and gentlemen, good morning. My name is Kimberly Pendo, Counsel with the Truck and Engine Manufacturers Association, or EMA. EMA is the not-for-profit trade association that represents the world's leading manufacturers of a broad array of heavy duty and medium duty on-highway vehicles, and the many types and sizes of engines that power them. More specifically, EMA's Members which include Volvo, Daimler, Navistar and Packer, among others, manufacture the on-highway trucks and tractors that are the subject of the proposed Federal Excise Tax Regulations the IRS is considering today.

EMA's Members have a direct and very significant interest in this proposed rulemaking. On behalf of EMA, I thank you for the opportunity to present testimony on the IRS' proposed adoption of new regulations relating to the excise taxes imposed on the sale of highway tractors, trailers, trucks and tires, and the definition of highway vehicles related to these and other taxes.

My comments today should be viewed as a supplement to the joint-written comments submitted by EMA along with the National Truck Equipment Association and the American Truck Dealers.

Others today will speak to industries' concerns with the proposed new requirements for all retail certificates. While those are concerns EMA strongly shares, as well as its members, and which were addressed in our written comments, my comments this morning will focus on the necessity of retaining the blanket resale certificates.

In 1985 issued temporary regulations requiring an exemption certificate in order to conduct certain sales for resale on a non-taxable basis. The 85 regulations provided that one certificate could be used to cover all orders by seller to the same purchaser for up to two years. In 1988, the temporary regulations were amended, the exemption certificate was expanded to cover all sales for resale and long-term leasing, and the permissible time period a single exemption certificate could cover was extended to three years. That three-year period remains in the current regulations.

Since the inception of the resale exemption certificate, the regulations have provided that a single certificate could be used to cover multiple orders occurring over time between the same seller and purchaser. We refer to this type of certificate as a blanket certificate. The blanket certificate has been available for a great many years now. However, without justification or reason, the proposed regulations eliminate the blanket certificate, and dramatically increased the regulatory burden placed on manufacturers and purchasers.

The current regulations expressly acknowledge that obtaining individual resale certificates may be at odds with the practicalities of the marketplace. And I quote from the current regulations. If it is impracticable to furnish a separate certificate for each sale, because of the frequency of sales to such purchaser, a certificate covering all orders between given dates, such period not to exceed 12 calendar quarters, will be acceptable.

Given the extremely high volume of sales by OEMs, original equipment manufacturers to dealers, it is impractical, inefficient, expensive, time consuming, unjustified and simply unnecessary to require a manufacturer to create an individual resale exemption certificate for each and every sale made to a purchaser for a number of reasons. The proposed regulations they also take into account the relationship that the OEM, EMA's members, have with their extensive dealer networks and the high volume of sales that occur between the manufacturers and their dealer networks.

The absence of a blanket certificate option would vastly increase the number of resale exemption certificates a seller would need to obtain and retain, and an auditor would need to examine. For example, one of EMA's manufacturer members estimates that if every sale to dealers needed to be documented with an individual certificate instead of 180 certificates that they currently produce, as an example, over a three-year period, the manufacturer would need to obtain over 17,000 certificates. Even if we accept the IRS' estimate that each individual certificate will take approximately 15 minutes to prepare, this manufacturer will be required to spend an additional 4,250 additional hours annually in order to meet the new regulation certificate requirements.

And this estimate, I must point out, is extremely conservative, as it does not take into account the time and money that will be required in order to develop and implement system changes used by OEMs and dealers to ensure accurate and timely execution of certificates under the new requirements. This estimate also does not include the substantial additional amount of time that will be spent in order to revise certificates based on late changes to VINs, to product orders, and to the date and place of sale issues.

Similarly, as another example, another EMA Member, manufacturer member, estimates that using the current blanket certificate option, it maintains 67 certificate over a three-year period. However, if every sale for resale needed to be documented it estimates it would need to maintain approximately 114,000 certificates over that same period of time. As demonstrated by my examples, the absence of a blanket certificate option will impose a significant and unjustified burden on OEMs.

Manufacturers will be required to spend a significantly increased amount of time, gathering, verifying, reviewing, changing, exchanging the newly required information, updating such information in the course of the manufacturing and sale process, preparing and arranging for the delivery of a significantly increased number of certificates.

Clearly, with no blanket certificate option, the administrative burdens on both the manufacturers and purchasers would dramatically increase. In addition, the burden on the IRS as examining agents required to review the voluminous amount of additional paperwork, the incredible increased expense and burden that will be caused by the unavailability of a blanket certificate is also unsubstantiated in the NPRM. The IRS has simply failed to present any evidence or reason necessitating or justifying the removal of this final option.

In conclusion, all of this additional administrative burden and increased complexity and uncertainty, would have little to no attendant benefit. The proposed regulations do not provide any discussion or rationale for excluding the blanket certificate option for sale, for resale and long-term leasing, and does explain why the proposed changes would be of beneficial. The current blanket certificate works, and includes all the information necessary to properly administer the Federal excise tax.

No information or justification has been presented to dispute these facts or justify its abandonment. There is also no indication in the proposed regulations that the use of individual certificates would aid in the proper application of the Federal excise tax. In fact, such action likely will make it more difficult for the IRS to conduct efficient examinations. In addition, the form certificate proposed by the IRS, in the proposed regulations for tax resales of tires to the Coast Guard, or the Department of Defense, includes a blanket certificate option for 12 calendar quarters.

Therefore, the IRS clearly does not view the blanket certificate as an impediment to the proper collection of the Federal excise tax. Moreover, the absence of a blanket certificate option is contrary to the historical regulation of sales for resale under Section 4051, and could actually interfere with conducting routine sales for resale on a tax-free basis. It also would vastly increase the likelihood of certificate inaccuracies, thereby threatening the tax-free nature of the sale.

In addition, the absence of a blanket certificate option, would impose a heavy administrative burden on manufacturers and purchasers, and would appear to be at odds with the statutory directive for a simple statement on a sales invoice.

For all these reasons, in addition to the detailed comments and additional concerns raised in our written comments, EMA urges the IRS to amend the proposed regulations by removing the proposed new resale exemption certificate and reinstating the blanket certificate option. EMA urges the IRS to take the joint written comments of EMA, the National Truck Equipment Association, and the American Truck Dealers into careful consideration, and respectfully requests further review and analysis of the burden and impact the proposed regulations will have on manufacturers and purchasers prior to implementation.

Thank you for your attention. And I will be happy to try to answer any questions that you may have.

MS. BLAND: Thank you very much.

MS. SMITH: Thank you. OK. Our next speaker will be Steven Parker, speaking on behalf of the Baltimore Potomac Truck Centers, Inc.

MR. PARKER: Ready. Green light. Thank you. Good morning. My name is Steven Parker; I'm the President of Baltimore Potomac Truck Centers in Linthicum, Maryland. I've been with the Baltimore Potomac Truck Group for over 40 years and we sell Mac, Volvo, and Hino trucks.

My comments today are offered on behalf of the American Truck Dealers division of National Automobile Dealers Association, which I refer to as ATD, and currently serving as Chairman of ATD. On behalf of ATD I want to thank you for giving us this opportunity to address the IRS's proposed rulemaking with respect to the Federal Excise Tax on heavy-duty trucks, or FET.

ATD represents over 1800 franchise dealers that sell heavy and medium duty trucks in all 50 states and the District of Columbia. The vehicles are manufactured by more than 15 manufacturers and consist of trucks, tractors, and all manner of self-propelled commercial vehicles. The dealers that ATD represents vary widely in size and scope, but the majority of our members are small businesses as defined by the SBA.

First, please understand that FET is a very complicated tax to administer, with numerous exceptions and exclusions and many gray areas where lack of clear guidance is problematic for dealers and truck purchasers alike. At the same time, at 12 percent FET is a material consideration and a taxability determination can make the difference between whether a truck is purchased or not. The imposition of a 12 percent FET is an average of $12,000-22,000 to the price of each new qualifying heavy-duty truck sold and FET often acts as an active deterrent to sales of new, cleaner, and safer trucks.

It's not just the direct cost then to end purchasers, FET also greatly increases my dealership's costs as well. We, like other heavy-duty dealers throughout the country, spend a great deal of time and effort managing FET compliance. That is partly because the FET taxability determination depends on a number of complicated factors that are not always clear or within the control of the dealer. These include the specifications of the vehicle as outlined by the customer, the identity of the purchaser, and the ultimate disposition and/or use of a vehicle, among others. In addition to determining whether a specific vehicle is taxable the dealer must also determine what portion of the purchase price is subject to tax, properly compute the tax to the sale, and any related sales, and ensure that the tax is collected and remitted as required by the IRS. To do all this requires that dealers not only conduct the complicated analysis of a vehicle and a purchaser, they must also ensure that various required forms, certificates, and other paperwork are gathered and completed properly.

While dealers do their best to comply with these requirements they face a very real risk that a mistake may occur, either in making these determinations or the clerical errors that may occur in the paperwork requirements associated with the FET compliance. Many of these changes in the proposed rule would increase the already tremendous compliance risk by making the paperwork more complicated. ATD has outlined our concerns and our comments to the proposed rule and we would urge the Service to carefully consider each of those concerns. However, given the short period of time we have today I'd like to focus on one example in my remarks, the proposed changes to the so called sale for resale certificate.

What is the sale for resale certificate and why is it important? Well, as you know, FET is applied upon the first retail sale of a taxable truck. As you are also likely aware truck manufacturers generally sell the trucks they produce to truck dealers who purchase those trucks either for direct sale to an end user or for stock and inventory. While it seems obvious that those sales from the manufacturer to its dealers are not retail sales, under the current rules those sales are subject to FET. There is, however, an exception that applies to these rules, but only if the sale is accompanied by a specific sale for resale certificate. Currently dealers use a form that simply states, under penalty of perjury, that a specific sale is for resale, that all sales from this one seller to another buyer, for up to 12 quarters, are sales for resale. This latter option is why the current form is referred to as the blanket certificate and it means that one form can cover all the sales from a manufacturer to a dealer for a three-year period.

The proposed new sale certificate would add administrative complexity in several ways. First, the proposal would eliminate the blanket certificate option and require that a separate certificate be completed for each sale for resale. In our comments we outlined several examples of the practical result if the blanket option were to be eliminated. One truck dealer reported that this change would mean they would need to provide 719 resale certificates compared to 2 under the current rule. Another estimated that it would increase the number of resale certificates from 2 to 515. Of course similar increases would be felt by all of our 1800+ members and would result in a substantial paperwork burden increase for all dealers overall.

Second, the proposal to require additional information on the resale certificate creates additional difficulties. For example, the proposed certificate requires inclusion of both the date and location of a sale for resale. On the surface this information seems benign, but in reality it is very difficult to accurately determine that information in many cases in today's marketplace. For example, what is the date of a sale from a manufacturer to a dealer when the dealer places an order for several trucks on one date, receives delivery on several other dates, arranges for a delivery of portions of the order on different locations and different dates, pays for portions of the order on yet other dates, those trucks are then delivered to several different locations on yet another date. Furthermore, what is the location of that sale?

In addition, the proposed new certificate requires inclusion of a Vehicle Identification Number, or VIN, for each sold vehicle on the certificate. First, a 17 digit VIN adds tremendous possibility for inadvertent clerical error. Moreover a VIN is not assigned to a vehicle at the time when an order is placed. In fact, a VIN may be assigned to a vehicle not until several days before the sale occurs. In addition, once a VIN is assigned to a chassis it may subsequently need to be changed. A VIN reflects specific characteristics of a chassis, such as the engine, cab type, gross vehicle weight, et cetera. For a custom ordered chassis, a customer may request changes to the chassis between the time an order is placed and the assembly of the vehicle. These changes may result in a new VIN being assigned. In such cases this would add to the risk of error while reducing the timeframe for accurately completing the individual certificates.

These are but a few examples of the issues created by the added complexities of the proposed new certificate. What is particularly troubling is that there does not appear to be any attendant benefit to requiring this additional information or eliminating the blanket certificate option. No explanation of any benefit was outlined in the Notice, neither was there any explanation of how the current certificate fails to provide the needed documentation. Clear, simple, and accurate forms are critical to dealers and should be benefit to the Service and their efforts as well. I cannot imagine what the impact would be on a nationwide basis for a small business like mine if the FET paperwork burden and complexity were to exponentially increase, as I fear it would under this current proposal. Not only would the paperwork increase itself be difficult and expensive, but the risk of human error would soar. These changes would of course provide -- I'm sorry -- these changes would of course present more than simply theoretical challenges for the dealers. I'm aware of the dealers who have faced audits along with substantial penalties and fines, not because they deceptively sought to avoid the payment of tax or failed to pay the tax that should have been rightfully due, but simply because of errors or mistakes in their FET paperwork.

As I mentioned earlier, the sale for resale certificate is only one example of the concerns raised by the proposed rule. Our comments detail numerous other concerns for the proposed rule, including complications and concerns with the required forms, such as the proposed new form certificate for exempt sales of chassis/bodies being used as a component of a non-highway vehicle and the proposed new form certificate for an incomplete chassis cab.

We would urge you to review each of these concerns carefully and would request that the Service reconsider making the proposed changes to the resale and other form certificates.

ATD appreciates the opportunity to comment and your attention to this important matter.

Thank you very much.

MS. BLAND: Thank you very much.

MS. SMITH: Any questions? No? All right. Thank you.

MR. PARKER: Thank you.

MS. SMITH: All right. Our next speaker is Sam Ruggieri, speaking on behalf of Volvo and Mac Trucks.

MR. RUGGIERI: Good morning. My name is Sam Ruggieri; I'm a Manager for Volvo Trucks and Mac Trucks. And I want to focus my discussion on the downside of the elimination of the blanket resale certificate.

There are three main areas that cause problems for original equipment manufacturers. The first has to do with paper. A single two-inch binder can hold all of the resale certificates, the blanket resale certificates, that we accumulate from all of our U.S. dealers for a three year period. They could all be held in one two-inch binder. It would require two two-inch binders to hold all the exemption certificates on a unit basis for a single week of production during 2015. The increase in the amount of paper that's required under the new model certificate is substantial and we've heard there's no reason given for the change.

The second issue has to do with control over the information that's required on the certificate. If you remember nothing else of what I have to say, please be advised that you cannot implement this until you have defined what the place of sale and the date of sale mean. That could be the date that the invoice is issued, that could be the date that a commercial transaction has been agreed to, that could be whatever you mean it to be, but we certainly bear an awful lot of risk for getting it wrong and we absolutely need your guidance on telling us what that information is. If you look at a transaction between two resellers, this certificate is a little burdensome, but it still works. And the reason for that is because all the information that has to go on the certificate is known to both parties at the time of the transaction. The truck is already built. You can read the VIN off the cab and the buyer and the seller completely control the date and place of sale. But between a dealer and an OEM, as the gentleman before me mentioned, the order of a truck is unlikely to be fulfilled by an OEM for at least several weeks and during a good market maybe a few months. And that means that the date of sale becomes very uncertain. Any production delay at the plant or if a component does not arrive for a vehicle or there's any kind of performance issue with the vehicle, the date that we expect to assemble, complete, and deliver that vehicle can be delayed. And every single delay -- and these are pretty common -- would require the issuance of a new exemption certificate by the dealer. So in addition to needing two binders for every week of production, we might also have several preliminary exemption certificates issued having to do with changes in the information that needs to go onto the certificate.

The third area has to do with audit risk. And although the dealers certainly bear their fair share as the principal collectors and remitters of the tax, the OEM is now going to be responsible for maintaining hundreds of thousands of pieces of paper. Each one of them has enough information on it to practically guarantee that there will be clerical errors. If you have ever had to review a 2290 form you know that a 17 character VIN, which is just a combination of numbers and capital letters, can be very difficult to work with. It's not like a social security number or a federal ID number.

This enormous amount of paper is going to transform routine transactions into a compliance exercise. We're not sure who would benefit from it, but the errors will occur and ultimately that will result in potential assessments for the original equipment manufacturers. I don't believe it's the intention of the statute to impose tax based on clerical errors, but that will ultimately result from doing away with the blanket certificate.

It also means that there's a decent chance that a same vehicle will be taxed twice, once by the dealer and the retail sale, as it's supposed to go on, and potentially again as an assessment against the original equipment manufacturer.

And I'd also like to point out that there is no relief specified for transactions where the dealer has collected tax on a vehicle and the OEM has a clerical error in his exemption certificate. But, obviously, I think that would be a reasonable solution if you have to go through with this.

We also have situations where the OEM will repurchase a vehicle from one dealer and sell it to a separate dealer, so we now have additional paperwork that we're going to need for routine transactions, simply moving a vehicle to a market where it can be sold.

So why compel thousands of certificates when a single one will achieve the same result? OEMs are currently required to maintain enough information to conduct an audit, lists of all invoices, the invoices have dates on them having to do with when the vehicle is sold, and the required information on the new unit certificates is kind of a duplication of the effort. But, again, they have to coincide in order to be correctly administered.

So the certificate is to identify both parties to the transaction, and it shifts responsibility for calculating, collecting, and remitting FET to the dealers, which is the statutory requirement. That's all that piece of paper is supposed to do. It's not supposed to be able to create a new liability for the OEM. And I believe if you change to a unit certificate we're going to wind up with some of that going on. Bear in mind that all the dealers have to an excise tax license. So in the event that a dealer were to purchase a vehicle and not resell it the dealer is already compelled by law to self-assess tax and remit it on his own.

And an exemption certificate is kind of similar to what is used in sales tax commonly. Every single state that imposes sales tax permits a blanket certificate. The shortest period that I'm aware of for the life of a blanket certificate is one year. And I believe there are plenty of states that they never go bad. There are billions of dollars worth of transactions made under the sales, under a single resale exemption certificate, and I don't think trucks are anything special when it comes to the volume of market.

In view of the substantial administrative burden caused by the removal of the blanket certificate and the audit risk caused by the elimination of the resale certificate, we respectfully request that the IRS reconsider the proposed change to the certificate requirement.

You got any questions?

MS. SMITH: No questions. Thank you.

SPEAKER: Really?

MS. BLAND: Thank you very much.

MS. SMITH: Thank you. Our next speaker is Matt Wilson, speaking on behalf of NTEA. Ready?

MR. WILSON: Yes. Good morning. My name is Matt Wilson. I am the Chairman and CEO of Switch-N-Go, AmeriDeck and Bucks Divisions of Deist Industries, Incorporated. I am also the elected President of NTEA, the Association for the Work Truck Industry. On behalf of NTEA, I thank you for this opportunity to express the views of the work truck industry. NTEA, the Association for the Work Truck Industry, represents more than 1,800 member companies involved in remanufacture and distribution of vocational trucks, truck bodies, and equipment. My comments today should be viewed as a supplement to the written comments filed by NTEA along with ATB and EMA on retail certificates.

Others today will talk or have spoken about keeping the blanket resale certificates. As discussed in our written comments, NTEA strongly feels that this option needs to be retained. However, given my limited time, I'm going to focus on the new requirements proposed for all resale certificates.

First, such requirements may delay transactions. For example, VINs and sale dates are subject to change throughout the manufacturing process, which may require the retail certificates to be updated. The need to update certificates can delay routine transactions. Similarly, requiring the location of sale is problematic. It is unclear how this would be defined and why it would be necessary.

Which leads to NTEA's second concern. None of this extra information is needed to certify a sale for resale. Third, every time the IRS adds a new informational requirement, it increases the likelihood of an inadvertent mistake. Transcribing the 17-digit VIN will undoubtedly generate errors. What if the sale date is not updated? What if an old form is used and none of this information is provided?

The resale certificate is an incredibly important document. It alone determines which party is responsible for the FET. The IRS should streamline and simplify the certificate, not make it more difficult. The NTEA believes a streamlined approach to a retail certificate is what Congress intended when it got rid of the registration requirement and provided an option to simply execute a statement on the invoices stating that the sale was for resale. The IRS should not require any new information for the resale certificate.

Regarding body identification numbers. This is another new requirement for the resale certificates and other exemption certificates. I will talk about this requirement in a little more detail. The proposed rulemaking neither identifies what constitutes a body identification numbering system, not what purpose it is intended to serve. The IRS proposal may seem similar to the VIN system, but it is not. VINs are a complex numbering system governed by federal law. To implement a comparable national system for bodies would be a monumental task. In addition, it is unclear how any body-numbering system would be relevant to an exemption covered by a certificate.

There would also be the issue of cost. While some body manufacturers have company specific numbering systems, others do not. Setting up a simple numbering system, obtaining the tools to generate and affix the number to the bodies, and performing that work, in my personal experience, would be a significant expense. Specialized printers, software licenses, and probably an additional computer and monitor would be needed.

For a simple numbering system with permanent printed labels the estimated cost would be more than $25,000 a year for a daily production of less than 20 bodies. For a more complex numbering system that incorporates additional data, the costs, of course, increase. The cost of any required expense that it unnecessary is a cost that is too high.

Finally, the industry needs time to comply. The proposed regulations do not provide any lead time for manufacturers to set up a new numbering system.

NTEA urges the IRS to eliminate the proposed body numbering system. If the IRS believes that such a system is required, the IRS should propose separate rulemaking defining its scope, it's purpose, and the lead time for its establishment.

Moving on to commercial and practical fitness. One of the most complex issues in FETs is the suitable for use test for bodies. The problem is that bodies do not get assigned a GVW, and any truck body can be mounted on broad range of chassis whose GVWs may be above or below the taxable threshold. As a result, the seller has to determine for every model whether the body is suitable for use on vehicles below 33,000 pounds. If it is not suitable for such use, the model body is always non-taxable without regard to the GVW truck on which it is mounted. A body is suitable for use on a vehicle if it has a practical and commercial fitness for such use.

In the real world, the way a seller demonstrates a body has a practical and commercial fitness is by showing it is mounted with some frequency on a vehicle below that threshold. This presents several problems. First, when a seller does not sell very many of the body in question, they simply don't have enough data to establish the body's suitability for use. Body manufacturers generally do not have such data as they aren't involved in the sale of the completed unit. Second, even if the seller has the sale's data, the IRS has never established what percentage of sales would show body suitability for use.

One 1988 private letter ruling indicated that 15 percent would be acceptable, but the industry cannot rely on that ruling alone. In 2005, the IRS provided some safe harbors for specific size, dump truck bodies, van bodies, refuse packer bodies, and platform bodies. But for bigger versions of those types of bodies and all other types of bodies there is no objective IRS guidance at all.

This lack of objective standards has created a situation in which risk-averse companies charge tax while other more aggressive competitors do not. There is no way to determine which company is right. The NTEA urges the IRS to publish guidance providing a safe harbor for body sellers if based on a minimum sample size, a certain percentage of sales are below a certain taxable threshold.

On incomplete chassis cabs, IRS is concerned that under the regulations incomplete chassis cabs equipped with towing-related features are automatically treated as tractors rather than trucks. This is an important distinction because the taxable thresholds are different for trucks and tractors. Vehicles can have both truck and tractor attributes.

The IRS has expressly recognized this fact in its proposed regulations, which provide a primary design test for completed vehicles when they have a mixture of truck/tractor attributes. The NTEA urges the IRS to recognize the same reality for incomplete chassis cabs regardless of whether or not an incomplete chassis cab has towing attributes. All such cabs should be treated the same. They should be treated as tractors unless the purchaser certifies that it will complete the cab as a truck.

On mobile machinery, the proposed regulations exclude a vehicle from the mobile machine exemption if the chassis is reinforced so the vehicle could tow a trailer even if it is not actually equipped with a pintle hook. This language is problematic. In order to accommodate towing, it is generally the pintle hook that needs to be reinforced not the chassis frame. This is an important distinction because a chassis frame will often be reinforced to accommodate mobile machinery.

NTEA requests that the proposed language in the regulation exclude vehicles that are either outfitted with a pintle hook or outfitted with a mounting system for a pintle hook.

Again, thank you for allowing me to speak to you all today and share our thoughts, and for this opportunity to comment on the proposed regulations at this time. Any questions?

MS. SMITH: No questions, thank you.

MR. WILSON: Thank you.

MS. SMITH: Did Jeff Sims ever come in? You did, okay great. Come on up.

MR. SIMS: I won't be long. I apologize for being late, the VRE was broke down for over an hour today, so sorry about that. So, I'm Jeff Sims, I am the President of the Truck Trailer Manufacturers Association. We represent about 90 percent of the trailers manufactured in North America as a membership. We're here like the other commenters I was reading on the docket to talk about this blanket certificate that was, we feel, inadvertently omitted from the final rule, or from the proposed rule.

Currently, as you know, the OEM and dealer have the certificate good for a three-year period; without that it was going to cause a tremendous on everybody, the IRS, the manufacturer, and the dealer. One of our largest members has 37 certificates in place right now. If this was to go into effect as written, that 37 pieces of paper is going to go to over 111,000 pieces of paper. It's a 300,000 percent increase. It's going to cause an additional approximately 2,400 man hours per year just to manage that. The issue with doing it VIN by VIN, as the other gentleman mentioned, VINs are established, at least in the trailer industry, up to like just a few days before the trailer is finished. It can change production lines, production sets, or anything. So, they can't issue a VIN until just a few days before, then it has to go to the dealer to be signed and certified back to the manufacturer before the trailer can be released. So, that's quite an additional burden there.

One of the reasons we feel it's a simple omission in this rulemaking is in the Paperwork Reduction Act, you estimate that's only 0.25 hours needed for this whole rulemaking, there is no way that you can handle 111,000 pieces of paper in 0.25. So, we feel that the 0.25 is fully justified for a three-year blanket exemption.

We filed our comments for the deadline and they further explain our position on this. Any questions?

MS. SMITH: No questions, thank you.

MR. SIMS: Thank you for allowing me to speak.

MS. SMITH: Those are the speakers that were scheduled to speak today. Thank you for attending and the hearing is now concluded.

MS. BLAND: Would anyone else like to speak? I'd like to open the floor to anyone who wasn't previously scheduled who might like to make comments.

MS. SMITH: Thanks everyone.

MS. BLANK: Thank you all for coming.

MR. KELLEY: Thanks a lot.