WASHINGTON - The United Motorcoach Association has been given assurances that a bill designed to close a tax loophole being exploited by defense contractors is being modified so its doesn't have the unintended consequence of harming hundreds of motorcoach operators.
The proposed legislation, Senate Bill 1637, was introduced last year by Senate Finance Committee Chairman Charles Grassley, R-Iowa, to fix loopholes in government lease/buy-back arrangements.
However, after studying the bill, UMA, Laidlaw International Inc. and others said they believed the IRS might interpret the proposed law as eliminating the ability of tax-paying private motor carriers to use "straight-line" depreciation for equipment used to provide contract bus services to tax-exempt entities.
All across the U.S., private bus operators, especially school bus contractors, derive substantial amounts of revenue by contracting with government entities.
Section 476 of Grassley's bill appeared to disallow the use of straight-line depreciation for any contract service if it was provided to a tax-exempt entity.
"I have spoken to the author of the legislation and ... he has informed me we have nothing to worry about," said Norman Littler, vice president for government and industry affairs at UMA. "I was told that not only is the bill language being modified but that the conference report will reflect the true intent."
Littler said he also was told that a clear statement of intent will be made by Sen. Grassley on the floor of the Senate.
"Finally, he told me that he didn't want his sister to get mad at him - since she works for a motorcoach manufacturer."
The bill's intent is to amend the Internal Revenue Code to comply with World Trade Organization rulings. It is called the Jumpstart Our Business Strength Act or JOBS Act.