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When it comes to the industry of transportation, many issues must be clearly evaluated to ensure your company is in compliance with sales and use tax laws.

Transportation (in sales and use tax law) generally refers to companies who are in the business of transporting tangible personal property for others in interstate and/or intrastate commerce. This movement can be by the means of rolling stock (railroads), airplane, trucks, vessel, etc. States most often require transportation companies to first be registered as an "Interstate Common Carriers" (ICC) as prescribed under federal law. Once this classification is obtained, a transportation company, may then claim very specific sales and use tax exemptions. These exemptions can include exemption from tax on the purchase of the transportation equipment, and can be extended by a state to the tangible personal property used to the repair the equipment. In states that tax specific services, some have also granted sales and use tax exemptions to services (repair and maintenance labor) rendered on the actual transportation equipment.

Not all states grant the above cost saving exemptions. In fact, some states (such as Washington and Florida) require you to pay a prorated use tax based on the number of miles the equipment has traveled though their state. Tracking all of this for each vehicle may seem like a paperwork nightmare, but that's not all. Many states that have allowed these exemptions have substituted other types of excise taxes. These can range from fuel taxes and road usage taxes, to tire taxes and pollution reduction taxes, to name a few.

The transportation industry is an extremely complicated industry to understand when attempting sales and use taxes. Our skilled staff at Sales Tax Advisors is prepared to assist you in finding and staying on the track to compliance while maintaining the maximum benefit from available exemptions.



Feel free to call or e-mail us to discuss any tax issues you may have.


Last modified on Sat Oct 18 2014 23:40:19 UTC.
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