School bus operators still eligible for fuel tax exemptions

After some IRS offices challenged operators’ claims of exemptions for smaller school buses earlier this year, the NSTA presented the issue to members of Congress, who asked Treasury Secretary Timothy Geithner to clarify the tax policy. Geithner stated that the law does not limit the fuel tax exemption based on size of the bus, and the IRS cases have been dismissed.

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September 22, 2010

School bus operators still eligible for fuel tax exemptions — In June, five members of Congress and a senator wrote a joint letter to Treasury Secretary Timothy Geithner asking him to clarify the federal fuel tax exemption policy for school bus operators. Geithner responded in July and stated that the law does not limit the exemption based on size of a school bus.

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WASHINGTON, D.C. — School bus operators will continue to be eligible for federal fuel tax exemptions regardless of the size of their buses, and IRS cases with operators on the issue were dismissed earlier this month.

Problems for some operators regarding the tax exemption began earlier this year — some IRS offices were challenging their claims of fuel tax exemptions for smaller school buses. The National School Transportation Association (NSTA) learned of this during its spring committee meetings in Washington, D.C., when a few members brought it to the attention of the government relations committee and board of directors and requested assistance.

The NSTA believes that the school bus fuel tax exemption language is written to apply to all school buses, so officials approached several members of Congress and the House Ways and Means Committee about the issue.

Five members of Congress and a senator then wrote a joint letter to Treasury Secretary Timothy Geithner in June.

“The group letter asked Geithner to clarify the tax policy. They explained that even though small school buses and passenger vans may share the same chassis, small school buses also meet specific criteria to be labeled a ‘school bus’ and that Congress did not intend any distinction with regards to size when applying the fuel tax exemption,” Danielle Abe, director of marketing and operations for NSTA, told SBF.

In July, Geithner responded to the letter.

“Geithner agreed that the law does not limit the fuel tax exemption based on size of the school bus,” Abe said. “The qualification is that it is engaged in the transportation of students and employees of schools and it meets the definition of a school bus regardless of the chassis it was built on.”

Geithner forwarded a copy of his letter to IRS Commissioner Douglas Shulman, Abe added, and the NSTA learned that all pending IRS cases that it had been aware of were dismissed in early September.

The association will reportedly continue to monitor the issue to ensure that the interpretation of the law remains enforced.