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Free Federal Tax Filing

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Free Federal Tax Filing

Free federal tax filing 2. Free federal tax filing   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. Free federal tax filing Amount realized on a nonrecourse debt. Free federal tax filing If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Free federal tax filing The foreclosure or repossession is treated as a sale from which you may realize gain or loss. Free federal tax filing This is true even if you voluntarily return the property to the lender. Free federal tax filing If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. Free federal tax filing You must report this income on your return unless certain exceptions or exclusions apply. Free federal tax filing See chapter 1 for more details. Free federal tax filing Borrower's gain or loss. Free federal tax filing    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. Free federal tax filing The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). Free federal tax filing The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). Free federal tax filing For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. Free federal tax filing You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. Free federal tax filing Amount realized and ordinary income on a recourse debt. Free federal tax filing    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. Free federal tax filing The amount realized also includes any proceeds you received from the foreclosure sale. Free federal tax filing If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. Free federal tax filing You must report this income on your return unless certain exceptions or exclusions apply. Free federal tax filing See chapter 1 for more details. Free federal tax filing       Example 1. Free federal tax filing Tara bought a new car for $15,000. Free federal tax filing She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Free federal tax filing Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. Free federal tax filing On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Free federal tax filing The balance due after taking into account the payments Tara made was $10,000. Free federal tax filing The FMV of the car when it was repossessed was $9,000. Free federal tax filing On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. Free federal tax filing In this case, the amount Tara realizes is $9,000. Free federal tax filing This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. Free federal tax filing Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. Free federal tax filing She has a $6,000 nondeductible loss. Free federal tax filing After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). Free federal tax filing Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. Free federal tax filing Example 2. Free federal tax filing Lili paid $200,000 for her home. Free federal tax filing She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Free federal tax filing Lili is personally liable for the mortgage loan and the house secures the loan. Free federal tax filing In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. Free federal tax filing When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Free federal tax filing At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). Free federal tax filing She remained personally liable for the $8,000 balance. Free federal tax filing In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. Free federal tax filing The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). Free federal tax filing She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. Free federal tax filing Lili must also determine her gain or loss from the foreclosure. Free federal tax filing In this case, the amount that she realizes is $170,000. Free federal tax filing This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. Free federal tax filing Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. Free federal tax filing She has a $5,000 nondeductible loss. Free federal tax filing Table 1-1. Free federal tax filing Worksheet for Foreclosures and Repossessions Part 1. Free federal tax filing Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Free federal tax filing Otherwise, go to Part 2. Free federal tax filing 1. Free federal tax filing Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. Free federal tax filing Enter the fair market value of the transferred property   3. Free federal tax filing Ordinary income from the cancellation of debt upon foreclosure or repossession. Free federal tax filing * Subtract line 2 from line 1. Free federal tax filing If less than zero, enter zero. Free federal tax filing Next, go to Part 2   Part 2. Free federal tax filing Gain or loss from foreclosure or repossession. Free federal tax filing   4. Free federal tax filing Enter the smaller of line 1 or line 2. Free federal tax filing If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. Free federal tax filing Enter any proceeds you received from the foreclosure sale   6. Free federal tax filing Add line 4 and line 5   7. Free federal tax filing Enter the adjusted basis of the transferred property   8. Free federal tax filing Gain or loss from foreclosure or repossession. Free federal tax filing Subtract line 7 from line 6   * The income may not be taxable. Free federal tax filing See chapter 1 for more details. Free federal tax filing Amount realized on a nonrecourse debt. Free federal tax filing    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. Free federal tax filing This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. Free federal tax filing Example 1. Free federal tax filing Tara bought a new car for $15,000. Free federal tax filing She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Free federal tax filing Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. Free federal tax filing On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Free federal tax filing The balance due after taking into account the payments Tara made was $10,000. Free federal tax filing The FMV of the car when it was repossessed was $9,000. Free federal tax filing The amount Tara realized on the repossession is $10,000. Free federal tax filing That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. Free federal tax filing Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. Free federal tax filing Tara has a $5,000 nondeductible loss. Free federal tax filing Example 2. Free federal tax filing Lili paid $200,000 for her home. Free federal tax filing She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Free federal tax filing She is not personally liable for the loan, but grants the bank a mortgage. Free federal tax filing The bank foreclosed on the mortgage because Lili stopped making payments. Free federal tax filing When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Free federal tax filing The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. Free federal tax filing She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. Free federal tax filing Lili has a $5,000 realized gain. Free federal tax filing See Publication 523 to figure and report any taxable amount. Free federal tax filing Forms 1099-A and 1099-C. Free federal tax filing    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. Free federal tax filing However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. Free federal tax filing The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Free federal tax filing For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Free federal tax filing Prev  Up  Next   Home   More Online Publications
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The Free Federal Tax Filing

Free federal tax filing 6. Free federal tax filing   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. Free federal tax filing Vehicles not considered highway vehicles. Free federal tax filing Idling reduction device. Free federal tax filing Separate purchase. Free federal tax filing Leases. Free federal tax filing Exported vehicle. Free federal tax filing Tax on resale of tax-paid trailers and semitrailers. Free federal tax filing Use treated as sale. Free federal tax filing Sale. Free federal tax filing Long-term lease. Free federal tax filing Short-term lease. Free federal tax filing Related person. Free federal tax filing Exclusions from tax base. Free federal tax filing Sales not at arm's length. Free federal tax filing Installment sales. Free federal tax filing Repairs and modifications. Free federal tax filing Further manufacture. Free federal tax filing Rail trailers and rail vans. Free federal tax filing Parts and accessories. Free federal tax filing Trash containers. Free federal tax filing House trailers. Free federal tax filing Camper coaches or bodies for self-propelled mobile homes. Free federal tax filing Farm feed, seed, and fertilizer equipment. Free federal tax filing Ambulances and hearses. Free federal tax filing Truck-tractors. Free federal tax filing Concrete mixers. Free federal tax filing Registration requirement. Free federal tax filing Further manufacture. Free federal tax filing A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. Free federal tax filing Truck chassis and bodies. Free federal tax filing Truck trailer and semitrailer chassis and bodies. Free federal tax filing Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Free federal tax filing A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. Free federal tax filing A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. Free federal tax filing A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. Free federal tax filing A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. Free federal tax filing The seller is liable for the tax. Free federal tax filing Chassis or body. Free federal tax filing   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Free federal tax filing Highway vehicle. Free federal tax filing   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Free federal tax filing Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Free federal tax filing A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Free federal tax filing A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Free federal tax filing A special kind of cargo, goods, supplies, or materials. Free federal tax filing Some off-highway task unrelated to highway transportation, except as discussed next. Free federal tax filing Vehicles not considered highway vehicles. Free federal tax filing   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. Free federal tax filing Specially designed mobile machinery for nontransportation functions. Free federal tax filing A self-propelled vehicle is not a highway vehicle if all the following apply. Free federal tax filing The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Free federal tax filing The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Free federal tax filing The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Free federal tax filing Vehicles specially designed for off-highway transportation. Free federal tax filing A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. Free federal tax filing To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Free federal tax filing It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Free federal tax filing Nontransportation trailers and semitrailers. Free federal tax filing A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Free federal tax filing For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Free federal tax filing Gross vehicle weight. Free federal tax filing   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. Free federal tax filing It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. Free federal tax filing Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. Free federal tax filing   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. Free federal tax filing Platform truck bodies 21 feet or less in length. Free federal tax filing Dry freight and refrigerated truck van bodies 24 feet or less in length. Free federal tax filing Dump truck bodies with load capacities of 8 cubic yards or less. Free federal tax filing Refuse packer truck bodies with load capacities of 20 cubic yards or less. Free federal tax filing For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. Free federal tax filing R. Free federal tax filing B. Free federal tax filing 2005-14 at www. Free federal tax filing irs. Free federal tax filing gov/pub/irs-irbs/irb05-14. Free federal tax filing pdf. Free federal tax filing   The gross vehicle weight means the maximum total weight of a loaded vehicle. Free federal tax filing Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. Free federal tax filing The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. Free federal tax filing The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. Free federal tax filing See Regulations section 145. Free federal tax filing 4051-1(e)(3) for more information. Free federal tax filing Parts or accessories. Free federal tax filing   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. Free federal tax filing For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. Free federal tax filing The tax applies in this case whether or not the retailer bills the parts or accessories separately. Free federal tax filing   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. Free federal tax filing The tax applies unless there is evidence to the contrary. Free federal tax filing For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. Free federal tax filing The tax does not apply to parts and accessories that are spares or replacements. Free federal tax filing   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. Free federal tax filing Idling reduction device. Free federal tax filing   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. Free federal tax filing The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. Free federal tax filing The EPA discusses idling reduction technologies on its website at www. Free federal tax filing epa. Free federal tax filing gov/smartway/technology/idling. Free federal tax filing htm. Free federal tax filing Separate purchase. Free federal tax filing   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. Free federal tax filing The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. Free federal tax filing The installation occurs within 6 months after the vehicle is first placed in service. Free federal tax filing   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. Free federal tax filing   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. Free federal tax filing This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. Free federal tax filing   The tax does not apply if the installed part or accessory is a replacement part or accessory. Free federal tax filing The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. Free federal tax filing However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. Free federal tax filing Example. Free federal tax filing You bought a taxable vehicle and placed it in service on April 8. Free federal tax filing On May 3, you bought and installed parts and accessories at a cost of $850. Free federal tax filing On July 15, you bought and installed parts and accessories for $300. Free federal tax filing Tax of $138 (12% of $1,150) applies on July 15. Free federal tax filing Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. Free federal tax filing First retail sale defined. Free federal tax filing   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. Free federal tax filing There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). Free federal tax filing The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). Free federal tax filing The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. Free federal tax filing There is no registration requirement. Free federal tax filing Leases. Free federal tax filing   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. Free federal tax filing The tax is imposed on the lessor at the time of the lease. Free federal tax filing   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. Free federal tax filing The tax is imposed on the lessor at the time of the lease. Free federal tax filing Exported vehicle. Free federal tax filing   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. Free federal tax filing Tax on resale of tax-paid trailers and semitrailers. Free federal tax filing   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. Free federal tax filing The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. Free federal tax filing The credit cannot exceed the tax on the resale. Free federal tax filing See Regulations section 145. Free federal tax filing 4052-1(a)(4) for information on the conditions to allowance for the credit. Free federal tax filing Use treated as sale. Free federal tax filing   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. Free federal tax filing Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. Free federal tax filing The tax attaches when the use begins. Free federal tax filing   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. Free federal tax filing   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. Free federal tax filing   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. Free federal tax filing Presumptive retail sales price. Free federal tax filing   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. Free federal tax filing If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. Free federal tax filing Table 6-1 outlines the appropriate tax base calculation for various transactions. Free federal tax filing   The presumed markup percentage to be used for trucks and truck-tractors is 4%. Free federal tax filing But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. Free federal tax filing Sale. Free federal tax filing   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. Free federal tax filing Long-term lease. Free federal tax filing   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. Free federal tax filing Short-term lease. Free federal tax filing   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. Free federal tax filing   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. Free federal tax filing   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. Free federal tax filing Related person. Free federal tax filing   A related person is any member of the same controlled group as the manufacturer, producer, or importer. Free federal tax filing Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Free federal tax filing Table 6-1. Free federal tax filing Tax Base IF the transaction is a. Free federal tax filing . Free federal tax filing . Free federal tax filing THEN figuring the base by using the. Free federal tax filing . Free federal tax filing . Free federal tax filing Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. Free federal tax filing   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. Free federal tax filing   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. Free federal tax filing However, you do add a markup if all the following apply. Free federal tax filing You do not perform any significant activities relating to the processing of the sale of a taxable article. Free federal tax filing The main reason for processing the sale through you is to avoid or evade the presumed markup. Free federal tax filing You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Free federal tax filing In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. Free federal tax filing Determination of tax base. Free federal tax filing   These rules apply to both normal retail sales price and presumptive retail sales price computations. Free federal tax filing To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. Free federal tax filing However, see Presumptive retail sales price, earlier. Free federal tax filing Exclusions from tax base. Free federal tax filing   Exclude from the tax base the retail excise tax imposed on the sale. Free federal tax filing Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. Free federal tax filing Also exclude the value of any used component of the article furnished by the first user of the article. Free federal tax filing   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. Free federal tax filing These expenses are those incurred in delivery from the retail dealer to the customer. Free federal tax filing In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. Free federal tax filing   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. Free federal tax filing For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. Free federal tax filing Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. Free federal tax filing Sales not at arm's length. Free federal tax filing   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. Free federal tax filing   A sale is not at arm's length if either of the following apply. Free federal tax filing One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. Free federal tax filing The sale is made under special arrangements between a seller and a purchaser. Free federal tax filing Installment sales. Free federal tax filing   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. Free federal tax filing The tax is figured on the entire sales price. Free federal tax filing No part of the tax is deferred because the sales price is paid in installments. Free federal tax filing Repairs and modifications. Free federal tax filing   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. Free federal tax filing This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. Free federal tax filing However, this exception generally does not apply to an article that was not subject to the tax when it was new. Free federal tax filing Further manufacture. Free federal tax filing   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. Free federal tax filing Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. Free federal tax filing Combining an article with an item in this list does not give rise to taxability. Free federal tax filing However, see Parts or accessories discussed earlier. Free federal tax filing Articles exempt from tax. Free federal tax filing   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. Free federal tax filing Rail trailers and rail vans. Free federal tax filing   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). Free federal tax filing Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. Free federal tax filing Parts and accessories. Free federal tax filing   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. Free federal tax filing Trash containers. Free federal tax filing   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. Free federal tax filing It is designed to be used as a trash container. Free federal tax filing It is not designed to carry freight other than trash. Free federal tax filing It is not designed to be permanently mounted on or affixed to a truck chassis or body. Free federal tax filing House trailers. Free federal tax filing   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. Free federal tax filing Camper coaches or bodies for self-propelled mobile homes. Free federal tax filing   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. Free federal tax filing Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. Free federal tax filing Farm feed, seed, and fertilizer equipment. Free federal tax filing   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. Free federal tax filing This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. Free federal tax filing Ambulances and hearses. Free federal tax filing   This is any ambulance, hearse, or combination ambulance-hearse. Free federal tax filing Truck-tractors. Free federal tax filing   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. Free federal tax filing Concrete mixers. Free federal tax filing   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. Free federal tax filing This exemption does not apply to the chassis on which the article is mounted. Free federal tax filing Sales exempt from tax. Free federal tax filing   The following sales are ordinarily exempt from tax. Free federal tax filing Sales to a state or local government for its exclusive use. Free federal tax filing Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. Free federal tax filing Sales to a nonprofit educational organization for its exclusive use. Free federal tax filing Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Free federal tax filing Sales for use by the purchaser for further manufacture of other taxable articles (see below). Free federal tax filing Sales for export or for resale by the purchaser to a second purchaser for export. Free federal tax filing Sales to the United Nations for official use. Free federal tax filing Registration requirement. Free federal tax filing   In general, the seller and buyer must be registered for a sale to be tax free. Free federal tax filing See the Form 637 instructions for more information. Free federal tax filing Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. Free federal tax filing Further manufacture. Free federal tax filing   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. Free federal tax filing Credits or refunds. Free federal tax filing   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. Free federal tax filing The person using the article as a component part is eligible for the credit or refund. Free federal tax filing   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Free federal tax filing A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. Free federal tax filing   See also Conditions to allowance in chapter 5. Free federal tax filing Tire credit. Free federal tax filing   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. Free federal tax filing The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). Free federal tax filing This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. Free federal tax filing Prev  Up  Next   Home   More Online Publications