Sens. Joni Ernst (R-Iowa) and Angus King (I-Maine) introduced a bill to fix floorplan tax deductibility. The issue has affected the RV industry since passage of the 2017 Tax Cuts and Jobs Act.
The Senate bill is a companion to a House bill introduced in May by Reps. Jackie Walorski (R-Ind.) and Dina Titus (D-Nev.). The bill will fix an error in the tax reform bill that inadvertently removed travel trailers from the definition of “motor vehicle” for floorplan financing interest deductibility.
“We’re pleased Congress is acting to fix the quirk in current law that treats the towable trailer segment and motorized segment of the RV differently,” RVIA Senior Manager of Government Affairs Samantha Rocci said. “We want to thank Sens. Ernst and King for introducing the Travel Trailer and Camper Tax Parity Act. The legislation will ensure RV trailer dealers are able to remain competitive with other types of recreation products that are currently able to fully deduct interest paid on their inventory and help the RV industry continue its all-American success story.”
The proposed changes impact RV trailer dealers with more than $25 million in annual sales, whose net interest deduction is currently limited to 30 percent of earnings before interest, taxes, depreciation, amortization, and depletion. It is estimated that four out of every 10 dollars spent at an RV retail establishment is generated by a dealer with $25 million or more in annual sales.
Dealers of similar types of vehicles, including boats, motorhomes, conversion vans, motorcycles and automobiles, can fully deduct interest paid on their inventory floorplans. Ensuring RV trailer dealers also can fully deduct their interest will keep RV trailers competitive with these other recreation products, RVIA stated.
“From manufacturers and suppliers to distributors and dealers, the RV industry supports tens of thousands of jobs in northern Indiana and across the country,” Walorski said on the announcement of the House bill’s introduction. “These made-in-America products will play a vital role in our economic recovery, but one provision in the tax code is putting certain RVs at a disadvantage. This commonsense bill would fix that by restoring tax parity so all types of RVs – including travel trailers and campers – are treated equally.”
All 50 states define and regulate towable RVs and campers as motor vehicles. Though a small fix, this bill ensures that motorized and non-motorized campers and travel trailers are treated the same under the U.S. tax code.
“Travelers who use both towed and motorized RVs create jobs in our state and there is no reason these vehicles should be taxed differently,” Titus said.