Perspectives

IRS guidance on vehicle transfer under state replacement incentive program

Multistate tax alert | February 9, 2015

​This tax alert summarizes the Federal Heavy Highway Vehicle Use Tax (“HHVUT”), IRS Program Manager Technical Assistance 2014-03 (“PMTA 2014-03”), and other related matters.

PMTA 2014-03

On January 22, 2015, the Internal Revenue Service (“IRS”) Office of Chief Counsel issues IRS Program Manager Technical Assistance 2014-03 (“PMTA 2014-03”), which provides guidance on the federal excise tax implications of a taxpayer’s transfer of a vehicle to a dealer under a state vehicle replacement incentive program (“Program”).1 PMTA 2014-03 concludes that under the specified Program the transfer of a vehicle to the dealer is considered a “sale” for purposes of the Federal Heavy Highway Vehicle Use Tax (“HHVUT”) under Internal Revenue Code (IRC) §4481 and is thus eligible for a prorated credit or refund of the tax.

Although PMTAs do not constitute precedential authority, the reasoning underlying PMTA 2014-03 may potentially be applicable to vehicle transfers in states with similar programs.

1 IRS PMTA 2014-03 (dated: Apr. 14, 2014, with a release date of Jan. 22, 2015) is accessible at: http://www.irs.gov/pub/irs-utl/PMTA-2014-03.pdf.

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