FRA, ALC BEAT BACK MOBILE MACHINERY EXCISE TAX

RELEASE: October 11, 2004

CONTACT: Steve Jarvis (301/838-9385)
sjarvis@forestresources.org

Rockville, MD – On October 8, the “Jumpstart Our Business Strength” (JOBS) bill passed both the House and the Senate—including an important provision denying the Internal Revenue Service the authority to assess new excise taxes and heavy vehicle use taxes on most mobile machinery used on logging jobs.

“This was a crucial win for the whole wood fiber supply chain,” stated Richard Lewis, President of the Forest Resources Association. “The IRS proposed taxing mobile logging equipment $200 million each year and applying it to the Highway Fund. Congress said ‘no.’ Highway and bridge maintenance must be supported by the vehicles that actually cause the wear on highways and bridges—-not by mobile delimbers, log loaders, and chippers.”

The Forest Resources Association and the American Loggers Council marshaled all their members to oppose this new tax, in a fight that extended over a 22-month period. There was always a risk that the provision would be lost in the larger negotiations over the JOBS bill, but with Senator Michael Crapo (R-Idaho) championing the provision in the House-Senate conference, the provision remained visible and its terms were even improved in the final weeks.

Danny Dructor, Executive Vice President of the American Loggers Council stated, “My hat’s off to all of the ALC and FRA members who called, faxed and wrote their representatives to make certain that the right language was placed in the final bill to preserve our mobile machinery exemptions, and I would especially like to thank all of the members of Congress and their staff who responded to our concerns by including specific language to include ‘timbering’ operations which will give clarity to the intent of the law.”

The JOBS Bill codifies the IRS-own three-part Design Test for determining whether truck/trailer-mounted machinery using public roads while traveling from jobsite to jobsite is exempt from: 12% Retail Excise Tax on the cost of the truck/trailer chassis, Heavy Vehicle Use Tax, and the Tire Excise Tax. The fourth Use Test establishes a mileage cap on the Fuel Tax exemption, such that mobile machinery traveling over 7,500 miles per year on public roads will not be eligible to file for a fuel tax refund. The vast majority of mobile machinery used by loggers will PASS the three-part Design Test and the fourth Use Test, effectively maintaining the exemption from federal excise and highway taxes for mobile logging machinery.

The Forest Resources Association Inc. is a nonprofit trade association concerned with the safe, efficient, and sustainable harvest of forest products and their transport from woods to mill. FRA represents wood consumers, independent logging contractors, and wood dealers, as well as businesses providing products and services to the forest resource-based industries.

The American Loggers Council is a nonprofit 501(c)(6) organization whose mission is to enhance the logging profession, provide a unified voice on logging issues; and cooperate with public, industrial and private timberland owners to further sustainable forestry practices. For more information, visit their website at www.americanloggers.org or contact their office at (281) 432-7167. 

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