WASHINGTON-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 the first set of 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 does not want original equipment 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 calls for further comment, and an IRS spokesman said that the new ruling is not out yet.
The International Tire & Rubber Association, after polling its members, said the truck tire tax rule ``would have little effect on tire dealers and retreaders, but a major effect on their customers in the trucking industry,'' according to Roy E. Littlefield III, ITRA director of government relations.
For that reason, ITRA will support the trucking industry's stand on the issue, he said, noting that 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 5 years old. We reject them, because they've gone five years without being retreaded.''