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April 17, 2017 4:00 AM, EDT
Truck Rental Companies Seek More Time to Implement Federal ELD Regulation
Trala

This story appears in the April 17 print edition of Transport Topics.

Companies that rent trucks are still grappling with the Federal Motor Carrier Safety Administration over how the agency’s forthcoming electronic logging device mandate will apply to vehicles available for short-term rental. The firms are looking for a government decision in late June.

The top two executives with the Truck Renting and Leasing Association, Dennis Cooke and Jake Jacoby, said the public comment period for their petition with FMCSA ends April 21 and that a decision could come 60 days after that. Cooke of Ryder System, Trala’s new chairman, said his group is asking for a five-year exemption from the rule for trucks rented for 30 days or less.

Cooke, Ryder’s president of global fleet management solutions, was installed for a one-year term as chairman at the end of the association’s April 2-5 annual meeting in Bonita Springs, Fla.

Putting ELDs that record drivers’ hours of service into trucks for long-term leases is not a problem, Cooke said, but the short-term rental business is very different.

“The platform in the rental truck could be completely different from what the customer normally uses, and there is no interoperability between systems,” he said. “This could really hurt the rental community.”

Business-government relations dominated the recent meeting, Cooke told Transport Topics, adding that Trala President Jacoby has already developed a four-point plan on business tax reform, a popular topic within the Trump administration and Republican members of both houses of Congress. Tax matters, especially depreciation, are critical for capital-intensive companies such as lease-rental firms.

Jacoby said ELDs are the biggest issue now for Trala members and that taxes are huge for the near future.

Cooke said rental trucks are only about 2% to 3% of all trucks on the road, but they are an important part of surge capacity for the industry, such as short-term booms related to seasonal demand or an immediate need to replace damaged equipment taken off the road for repair.

The goal for the extension, Jacoby said, is to develop an easy-to-attach ELD that can readily share information among various ELD software systems, adding that right now, “There isn’t an obvious solution.”

On taxes, the association wants any changes in the law to preserve like-kind exchanges, or LKEs, and to maximize accelerated depreciation. Cooke said these favorable treatments for the companies are also good incentives for their customers to use new equipment with cleaner emissions systems and more advanced safety systems.

LKEs allow vehicle owners, including leasing companies, to defer taxes on gains from the sale of used trucks if the same or a greater number of new trucks are purchased at the same time the old equipment is sold.

While the standard depreciation for a new truck — 3½ years total, with one-third in the first year — is seen as acceptable, accelerated depreciation with 50% in the first year is better, and expensing a whole truck in a single year would be better still, the Trala policy statement said.

The final items on the four-point Trala tax agenda concern treating different types of companies equivalently, Cooke and Jacoby said.

Cooke said association members want to see C and S corporations taxed in a similar manner. A C corporation, under federal tax law, is taxed separately from its owners.

An S corporation, including many lease-rental firms, is a pass-through company that is not taxed because profits and losses go through to the returns of its owners, often a sole proprietor or small number of partners.

The final point concerns the deductibility of interest payments for companies that don’t also have interest income. While banks are taxed on interest income less interest payments, leasing companies pay interest but don’t have interest income. Cooke said capital-intensive leasing companies need to be able to deduct their interest payments.

Asked which is more important, simpler taxes at lower rates or preserving deductions, Jacoby said arithmetic would be the arbiter of Trala’s answer.

“The devil is in the details. What would you be cutting my rate to? You really have to go into the weeds on this,” he said.

Cooke and Jacoby said their association also lobbies state legislatures, especially on the taxation of rented vehicles.