WASHINGTON (Oct. 17, 2001)—The Internal Revenue Service plans by the end of November to settle an argument on the tax treatment of tractor-trailer tires that has been going on for 59 years, according to the American Trucking Associations.
An Oct. 1 article in the ATA's Transport Topics magazine quoted Robert M. Everitt, an IRS technical adviser, as saying the agency would rule soon on whether tire-related business expenses should be written off in one year or depreciated over three or more years.
Mr. Everitt, who made his remarks before the ATA's National Accounting & Finance Council, has already recommended to the IRS chief counsel's office that trucking companies should treat new tires as part of the truck or trailer, rather than as a separate class of property. This would mean a three-year depreciation period for tractor tires, and a five-year period for trailer tires. Replacement tires for both, however, could be written off in one year.
The IRS explicitly does not want new tires to be expensed over one year, Mr. Everitt told the group. If trucking companies insist on treating tires separately from tractor-trailers, they will have to amortize them over eight years, he said.
This issue has been controversial between the IRS and trucking fleets since a federal court first ruled on it in 1942. ATA officials did not return repeated calls for further comment, and an IRS spokesman said merely that the new ruling is not out yet. “We're trying to get a definitive date,” he said.
The International Tire & Rubber Association, whose retreader members rely on trucking business, does not have a stand at this time on the taxation issue, according to Roy E. Littlefield III, ITRA director of government relations. But Mr. Littlefield said he understood why the IRS might want to rewrite the law.
“The current law was written when tires didn't see as many miles as they do now,” he said. “In those days, they would wear out within a year. Now, in some retreading shops, we see tires five years old. We reject them, because they've gone five years without being retreaded.”
Mr. Littlefield said he would take the issue to ITRA members. “We'll put it on our radar screen to see if our members are interested in taking a stand,” he said.