Today, Senators Joni Ernst (R-IA) and Angus King (I-ME) introduced a fix for the critical floor plan deductibility issue affecting the RV industry.
The new bill will fix an error in the tax reform bill that inadvertently removed travel trailers from the definition of “motor vehicle” for the purposes of floor plan financing interest deductibility.
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 ten 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 floor plans. Ensuring that RV trailer dealers can fully deduct their interest will ensure that RV trailers remain competitive with these other recreation products.
“The RV industry employs thousands of Iowans and contributes almost $2 billion in economic output in our state,” said Senator Ernst, Senate RV Caucus Chairperson. “This commonsense bill would help this industry continue to thrive by ensuring that towable RV and camper dealers are not at a disadvantage.”
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.
“The day I left office as Governor in 2003, my wife and I departed with our two children in a 40-foot RV for the next five and a half months to set forth on a great adventure,” said Senator Angus King, Senate RV Caucus member. “On that trip, we participated in a tradition going back generations and witnessed the majesty of America through our windshield. This bill seeks to level the playing field for travelers in the tax code, whether they choose to purchase a motorized or non-motorized RV. The Tax Cuts and Jobs Act created a false distinction between the two, and this bill seeks to restore fairness in the tax code by granting them the same treatment.”