IRS still mulling off-road equipment tax proposal

The Internal Revenue Service announced at a hearing Thursday it would wait for legislative guidance before acting on an equipment tax proposal that could cost the transportation construction industry $400 million annually.

If eventually enacted, the tax proposal would impose federal taxes on mobile construction machinery, including mobile cranes, mobile drilling units and concrete pumpers. Under the current law, off-road vehicles that use the highways minimally are exempt from paying taxes to maintain the system. If the proposal were put in place, the off-road vehicles would be subject to pay a new vehicle tax (12 percent of purchase), fuel taxes, a tire excess tax on heavy-duty tires and an annual heavy vehicle tax, which is based on weight.

At the hearing, the IRS heard testimonies from 29 people or organizations opposing the tax, including the American Road and Transportation Builders Association.

“Mobile machinery should not be taxed the same as vehicles that primarily use public roads and highways because a piece of construction equipment to improve a section of roadway is not ‘using’ that roadway,” ARTBA said in its testimony at the hearing.

The IRS continues to contend that mobile construction equipment carries heavy loads during transportation from jobsite to jobsite on the highway system.

In a recent ARTBA survey of its members, 80,000 pieces of heavy construction equipment would be taxed as mobile machinery if the proposal were enforced.

According to Matt Jeanneret, spokesman for ARTBA, the IRS is waiting and looking for Congress’s perspective on the issue.

“I think it is premature to say it is a done deal just yet,” Jeanneret said.