The federal excise tax on trucks is a significant levy that applies to certain heavy-duty vehicles sold in the United States. Governed by Internal Revenue Code (IRC) Section 4051, this tax applies to the first retail sale of heavy trucks, tractors, and trailers. If you're involved in manufacturing, selling, or importing these vehicles, you must grasp the intricacies of the tax’s application, exemptions, and filing requirements to avoid penalties and ensure accurate reporting.

What Is the Federal Excise Tax on Trucks?

The federal excise tax on trucks is a one-time, 12% charge on the first retail sale of specific heavy vehicles. These include:

Truck chassis and bodies exceeding 33,000 pounds GVW: Built for heavy-duty use and subject to FET once sold at retail.
Truck-tractors above 19,500 pounds GVW with a combined rating over 33,000 pounds: Their heavier ratings ensure they fall under FET guidelines.
Trailers and semi-trailers exceeding 26,000 pounds GVW: Their large carrying capacity places them under FET requirements.

If you're the seller, you must collect and remit this tax to the IRS, while the buyer pays it as part of the purchase price. Non-compliance with federal excise tax regulations can result in penalties, accrued interest, and back taxes.

When Does the Federal Excise Tax on Trucks Apply?

The FET on trucks generally applies under the following circumstances:

First Retail Sale in the U.S.: If you sell the vehicle for the first time at retail in the United States, FET is due at that sale.
Imported for Use in the U.S.: If no domestic retail sale took place, the tax applies upon import.
Use Before First Sale: If you use the truck before its first sale, you're considered the “retailer” and must pay FET.
Leased for More Than One Year: Long-term leases (over 12 months) are treated like a retail sale for excise tax purposes.

Exemptions from the Federal Excise Tax on Trucks

Certain vehicles and specific circumstances qualify for FET exemptions. Thorough documentation is crucial to prove your eligibility and avoid disputes.

Common FET Exemptions

Exports: If you sell trucks for export, they're not subject to FET under IRC Section 4221. You must provide documents showing foreign use.
State and Local Government Use: Vehicles purchased by state or local governments are exempt. You’ll need proof of government ownership.
Nonprofit Educational Institutions: If you're a qualifying nonprofit, such as a school, and the vehicle supports your educational mission, you may qualify.
Mobile Machinery: Vehicles designed exclusively for non-transportation (e.g., construction) are exempt if not readily adaptable for standard road use.
Weight-Based Exemptions: Trucks, trailers, and tractors under specific GVW thresholds in IRC Section 4051 are excluded from FET.

Special Considerations for Imported Used Trucks

The IRS monitors how FET applies to imported used heavy vehicles. If you’re importing a truck that has never been sold at retail in the U.S. before export, its first sale or use upon re-import triggers the tax.

If FET was paid before export, and you can prove it, you may avoid paying again. Acceptable proof includes:

Original bill of sale showing FET was collected.
Historical title or registration indicating prior U.S. use.
Export documentation from U.S. Customs and Border Protection (CBP).

Without sufficient proof, the IRS typically assesses the tax when the vehicle re-enters the country.

IRS Compliance and Dispute Resolution

The IRS closely watches FET compliance through audits and investigations. Below are focal areas for enforcement and potential remedies if you're involved in a dispute.

Key IRS Enforcement Areas

If you're importing or purchasing used heavy vehicles without proper FET documentation.
If you sell or lease taxable trucks without remitting FET.
If you misclassify vehicles to claim exemptions or evade the excise tax.

If the IRS issues an assessment, you can:

Present documents proving prior FET payment or exemption status.
File an appeal with the IRS Independent Office of Appeals.
Pursue litigation in federal court if administrative remedies fail.

Conclusion

The federal excise tax on trucks significantly impacts the heavy trucking industry. If you sell, import, or use large commercial vehicles, you must know FET regulations, exemptions, and compliance requirements to avoid penalties and audits. Accurate records and proactive tax planning are essential.

Hudson & Empire provides expert support for businesses navigating complex FET regulations, ensuring compliance and strategic tax solutions. Whether you need advice on exemptions, help with IRS disputes, or assistance optimizing your tax approach, our dedicated team can help.

Contact Hudson & Empire today to schedule a consultation and keep your trucking operations fully compliant.

Frequently Asked Questions

Who is responsible for paying the federal excise tax on trucks?

As the seller, you collect and remit the tax to the IRS, but the buyer ultimately pays it as part of the purchase price.

Are all trucks subject to the federal excise tax?

No. FET applies only to trucks exceeding specific weight requirements, such as those over 33,000 pounds GVW or truck-tractors above 19,500 pounds. Vehicles below these thresholds or designed for special purposes are exempt.

How do you claim an exemption from the federal excise tax on trucks?

You must provide documentation like proof of government use, nonprofit status, export records, or a mobile machinery classification.

What if a truck is modified after the first sale?

If the vehicle was initially exempt but modifications increase its weight or alter its function, it may become subject to FET. You should consult a tax professional before making substantial changes.

What penalties might result from failing to pay the federal excise tax on trucks?

You could face back taxes, accrued interest, significant fines, and legal disputes that hinder your operations.

Federal Excise Tax on Trucks: Everything You Should Know to Stay Compliant