Off-highway vehicle users and manufacturers are joining with makers of giant off-highway tires to fight an Internal Revenue Service proposal that would force them to pay a federal excise tax (FET).
Meanwhile, major commercial tire dealers say the move would affect their customers more than it would their own businesses.
The IRS rule would narrow the definition of ``mobile machinery'' to make mobile cranes, mobile drilling units, concrete pumpers and other heavy machinery subject to the same excise taxes as heavy highway vehicles. The tires placed on such machinery also would be subject to the tax. As with current highway excise taxes, the new taxes would go into to the Highway Trust Fund.
The Rubber Manufacturers Association and the Mobile Machinery Caucus have joined forces to oppose the proposed tax. Besides presenting their case to the IRS, the two associations are seeking the support of Capitol Hill legislators in fighting the measure.
``This proposal would broaden the reach of the FET,'' an RMA spokesman said. ``The people who buy the tires pay the tax, but our members would have to collect it. They'd collect the tax for the Highway Trust Fund, but these vehicles are never used on the road.''
Terry Westhafer, president of Central Tire Corp. in Verona, Va., said the main effect of the proposed tax on his business would be to inflate the cost of his inventory.
``I don't know about other states, but in Virginia they charge a sales tax on the FET because it's part of the acquisition cost,'' he said. ``In rough terms, 10 percent of the value of any truck tire is FET, so if I have $500,000 worth of off-highway tires, that would add another $50,000 the state could tax.''
Other than this, the new tax wouldn't be a burden on dealers, since dealers pass on all taxes to customers, Mr. Westhafer said.
The IRS is expected to make a final ruling on the off-highway tax proposal early next year.