U.S. Rep. Tom Emmer (R-Minn.) and Rep. Jackie Walorski (R-Ind.), co-chair of the House RV Caucus, are sponsoring new legislation to ensure that towable RVs are included in the floorplan interest financing deductibility provisions of the Tax Cuts and Job Act.
The Travel Trailer and Camper Technical Corrections Act (H.R.6969) was introduced this week with the strong support of the RV Industry Association and the national RV Dealers Association.
Last year’s tax reform bill provided much needed relief for small businesses, however, a last-minute definition change in one section of the bill unintentionally resulted in effectively removing travel trailers from the definition of “motor vehicle” for the purposes of floorplan financing interest deductibility. Made during the House-Senate conference, this change unintentionally disadvantaged the RV travel trailer industry, by limiting the deductibility of some RV trailer dealers’ floorplan costs.
The change impacts RV trailer dealers with more than $25 million in annual sales. Other dealers, including boats, motorhomes, conversion vans, motorcycles, and automobiles, can fully deduct interest paid on their inventory floorplans. However, RV trailer net interest deduction is limited to 30 percent of earnings before interest, taxes, depreciation, amortization, and depletion. It is estimated that four out of every ten dollars spent at an RV retail establishment is generated by a dealer with $25 million or more in annual sales.
“As the law is currently written, our RV dealers do not have the clarity and consistency they need, putting them at an unnecessary competitive disadvantage,” said Emmer. “Since RV ownership continues to climb in Minnesota and across the country, it is imperative for Congress to immediately correct this oversight in the new tax law by passing this common-sense legislation.”
All 50 states define and regulate towable RVs and campers as motor vehicles. Through a small, technical fix, this bill ensures that motorized and non-motorized campers and travel trailers are treated the same under the U.S. tax code.
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