EPA Exempts 70 Idle-Reduction Devices From Federal Excise Tax for First Time
By Eric Miller, Staff Reporter
This story appears in the Feb. 2 print edition of Transport Topics.
The U.S. Environmental Protection Agency has permanently exempted more than 70 commercial idle-reduction devices from the 12% federal excise tax because the devices help trucks reduce idling time.
Congress authorized the exemption for units purchased after Oct. 4, 2008, in legislation passed late last year at the urging of American Trucking Associations and other industry groups.
“It’s the first time ever that Congress has recognized that these things are great for our industry, and they’re great for the country,” said Glen Kedzie, ATA’s environmental affairs counsel, “Our industry wants to do the right thing, but we have to remove the barriers that are not allowing us to make these purchases.
“This opens the door. There’s finally recognition that these devices work,” Kedzie said. “This is more or less justifying the whole premises of the SmartWay program, which is something else that we’re keenly focused in on, as well.”
The exemptions can save a carrier from $700 to $1,000 per truck, Tommy Hodges, ATA’s first vice chairman, told the House Transportation Committee in a Jan. 27 hearing. They will save the trucking industry $95 million over 10 years, according to federal estimates.
EPA announced its decision on Jan. 26, after the agency’s administrator signed and transmitted a final letter to the Internal Revenue Service designating which devices purchased by fleets are eligible for exclusion from payment of the federal excise tax.
In addition to the power units, the new law also includes a tax exemption for the cost of installing advanced insulation intended to reduce energy consumption by transportation vehicles carrying refrigerated cargo. Both exemptions are aimed at encouraging truckers to save diesel fuel and reduce their carbon emissions by purchasing idle-reduction devices ranging from heaters and air-conditioning units to thermal storage systems and shore connection systems.
The IRS now will begin to provide guidance and update its instructions for Form 720 — the quarterly federal excise tax return — which will allow fleets to be reimbursed for federal excise taxes already paid on the devices.
To be eligible for an exemption, EPA said idle-reduction technology devices must be affixed to a tractor, designed to provide such services as heat, air conditioning and electricity that otherwise would require the operation of the main engine when parked and one that reduces unnecessary idling of the vehicle or equipment.
The list of approved technologies can be found at http://www.epa.gov/smartway/transport/what-smartway/idling-reduction-fet.htm.
EPA said that, in the future, additional technologies and devices that are similar in design, function and effect may be added to this list after the agency evaluates them.
