Information on Federal Excise Tax
You will need to pay Federal Excise Tax (FET), which amounts to 12% of the price and must be collected and paid by the seller, similar to sales tax. In general, FET is due on the first retail sale of vehicles over 26,000 pounds GVWR. There are some exceptions:
- If you can document that you are registered to collect FET and that your purchase is for re-sale, the trailer manufacturer may not be required to collect FET. However you will. See your tax advisor for more advice.
- State and local government agencies are exempt, but federal government agencies are not.
- Vehicles that are not for use in the United States are exempt.
- Motorhomes and travel trailers are exempt. The question is, how much of a specialty trailer is to accommodate humans and how much is for carrying cargo? Each manufacturer negotiates its own rulings with the IRS on this. So it's possible that part of your trailer would be taxable and part would not.
Featherlite will determine what FET, if any, they must collect and include it in the sales agreement. You should be aware of it and include it in your budget.