The Internal Revenue Service (IRS) recently issued proposed regulations governing IRC §168(k), which after the Tax Cuts & Jobs Act’s enactment, permits bonus depreciation (100 percent through 2022) on certain equipment purchases. The new proposal gives construction equipment dealers that sell other types of equipment or vehicles (such as trucks and farm equipment) greater flexibility to take advantage of bonus depreciation.
AED strongly supports 100 percent bonus depreciation and has a long track-record of advocating for capital investment incentives in Washington. The Association was instrumental in ensuring that construction equipment distributors are able to take advantage of the tax law’s full expensing provision by successfully lobbying to remove “construction machinery and equipment” from a carve-out prohibiting dealers with floor plan financing from utilizing bonus depreciation.
Since the Tax Cuts & Jobs Act’s passage, AED has worked with the Department of Treasury, IRS and Congress on the law’s implementation, which included urging relief for AED members that sell construction equipment and other machinery or vehicles, such as farm equipment and trucks, to utilize bonus depreciation.
The IRS’s proposed regulations grant much-needed flexibility to equipment dealers by clarifying that dealerships with floor plan financing indebtedness are ineligible for bonus depreciation only if such interest is in fact “taken into account” and a company received a benefit from section 163(j)(1)(C) (i.e., if total business interest expense, including floor plan financing interest, exceeds business interest income plus 30 percent of adjusted taxable income). Additionally, this is an annual test, allowing dealers that may have been prohibited from taking advantage of bonus depreciation due to excessive business interest in one year to utilize it subsequently.
It’s imperative that equipment dealers consult with your CPA and tax attorney to determine the impact on your company. The IRS is accepting public comment on the proposal, but taxpayers may rely on the determinations until a final rule is issued. Please provide any feedback and concerns to AED’s Vice President of Government Affairs Daniel B. Fisher.
Review the bonus depreciation proposed regulations and the docket visit here.
On July 29, the Senate Environment & Public Works (EPW) Committee’s leadership released a five-year, bipartisan highway reauthorization bill. The America’s Transportation Infrastructure Act authorizes $287 billion over five years, including $259 billion to maintain and repair America’s roads and bridges. The investment levels represent an increase of over 27 percent from the FAST Act, the current highway bill that expires on Sept. 30, 2020. The proposal was introduced by EPW Committee Chairman John Barrasso (R-Wyo.) and EPW Committee Ranking Member Tom Carper (D-Del.) along with Transportation & Infrastructure Subcommittee Chairman Shelley Moore Capito (R-W.Va.) and Transportation & Infrastructure Subcommittee Ranking Member Ben Cardin (D-Md.).
“AED commends the Environment & Public Works Committee’s leadership for working in a bipartisan manner to provide a framework for essential investments in our nation’s surface transportation infrastructure,” said AED’s President & CEO Brian P. McGuire. “The America’s Transportation Infrastructure Act is a great step to modernizing the United States’ decaying roads and bridges while creating sustained economic growth and job creation, improving our nation’s safety and security, and enhancing quality of life for all Americans. Construction equipment dealers are eager to provide the machinery to rebuild the country and AED urges support for the legislation.”
The EPW Committee is scheduled to consider the America’s Transportation Infrastructure Act on July 30. If approved, it will go to the Senate floor. However, other committees of jurisdiction must still consider components that will be combined to form a final surface transportation reauthorization package before full Senate action, including the Senate Finance Committee, which must identify the revenue to fund the proposed investment levels.
In addition to road and bridge funding, the America’s Transportation Infrastructure Act also codifies key pieces of the administration’s “One Federal Decision” policy to streamline project delivery.
The text of the legislation is available here.
A summary of the legislation is accessible here.
A section-by-section analysis of the legislation is available to read here.
For questions or comments, please contact AED’s Vice President of Government Affairs Daniel B. Fisher at firstname.lastname@example.org or 202-897-8799.
Yesterday, Prime Minister Justin Trudeau was joined on stage in Ottawa by five senior cabinet members to announce that the government has approved the Trans Mountain expansion project. The government purchased the pipeline for $4.5 billion a year ago and has conducted consultations since that time to overcome hurdles in the project’s development.
In response to the government’s actions, AED’s President & CEO Brian P. McGuire said, “AED commends the government for approving the Trans Mountain pipeline, a long-overdue step that is in Canada’s national interest. The project will generate considerable economic activity, creating jobs across the construction sector. AED members are ready to provide the equipment needed to complete the pipeline and the resulting infrastructure projects.”
It is anticipated the project will ramp up immediately, with shovels in the ground during the 2019 construction season. The government’s announcement also calls for investment in climate change mitigation projects across Canada and indigenous groups will have the opportunity to own shares of the pipeline.
While the announcement is welcomed news, court challenges are likely in the near future. Stay tuned to AED for updates as more details emerge.
On May 17, the United States, Canada and Mexico announced an agreement to remove tariffs on steel and aluminum imported from each of the countries. The move will lift the 25 percent steel and 10 percent aluminum tariffs the United States imposed nearly a year ago, which resulted in retaliatory measures from Canada and Mexico. AED opposed the tariffs and frequently warned the Trump administration about its impact on the construction equipment industry and broader sector.
In response to the agreement, AED’s President & CEO Brian P. McGuire issued the following statement:
“AED commends the United States, Canadian and Mexican governments for reaching an accord to remove the steel and aluminum tariffs. The tariffs were disrupting the supply chain and increasing costs for equipment distributors, manufacturers and customers. Congress must now approve the United States-Mexico-Canadian Agreement.
“The USMCA modernizes and strengthens the trade ties between the three countries, which will boost economic growth and job creation in North America while providing trade certainty for the construction equipment industry.”
This morning, in the shadow of the U.S. Capitol, Michael Vazquez of MECO Miami, Inc., demanded bipartisan congressional action on infrastructure investment legislation. Vazquez serves on AED’s Executive Committee as the association’s vice president of membership.
Vazquez spoke during a Capitol Hill press conference, where he was joined by Rep. Earl Blumenauer (D-Ore.), a senior member of the House Ways & Means Committee, and Rep. Rodney Davis (R-Ill.), the top Republican on the House Highway & Transit Subcommittee, as well as several other senior construction industry leaders. The event was organized by the Highway Materials Group, a coalition of trade associations representing companies that provide the materials and equipment essential to building America’s roads, bridges, highways, airports and water infrastructure. AED is a leading member of the Highway Materials Group.
Echoing the sentiment of AED members across the country, Vazquez said, “For the last decade, the construction industry has been plagued with uncertainty due to inaction on a long-term infrastructure plan. In particular, the Highway Trust Fund’s inadequate resources prevent states from planning significant projects, which, in turn, means contractors aren’t investing in new equipment, hindering economic growth for equipment dealers.”
Vazquez further detailed how Congress’ failure to invest in infrastructure impacts his company, employees and customers, while demanding congressional action. “I routinely talk to customers that forego purchasing equipment due to the uncertainty about how much construction work will be available,” Vazquez said. “My employees who are delivering equipment to customers or servicing machinery on a job site are wasting time and fuel in traffic due to the country’s inadequate infrastructure. Our failure to invest impacts everyone’s quality of life, the competitiveness of our businesses, and the safety and security of our country.”
Vazquez’s participation in the press conference coincides with the Highway Materials Group sponsoring national television advertisement buys over the next two weeks calling for Washington to fund infrastructure investment now. The ads, titled “Life Won’t Wait,” shows the human consequences of our crumbling infrastructure, and how it affects our daily lives. Targeted at the White House and Republican and Democratic congressional leaders, the ads will run in the Washington, D.C. media market on Fox News, CNBC, CNN and MSNBC.
With infrastructure discussions heating up, AED’s Washington Fly-In from June 11 to 13 comes at a pivotal time. It’s going to take the personal engagement of business leaders around the country to make infrastructure investment legislation a reality. The Washington Fly-In is your chance to join other industry leaders to advocate for your company and the construction equipment sector. Register today!
On April 24, at the request of House Transportation & Infrastructure Committee leadership, AED submitted its infrastructure-related policy priorities as the panel develops both public works-focused bills and begins reauthorization of the Fixing America’s Surface Transportation (FAST) Act, the most recent highway bill.
In its submission, the Association focused on policies that directly impact AED members primary product markets and cost-of-doing business, including:
- Increasing revenue to ensure the federal highway program’s long-term solvency;
- Investing in other infrastructure projects, including pipes, water systems, airports, dams and levees;
- Developing a skilled workforce for the construction equipment industry as part of infrastructure investment legislation;
- Providing relief for equipment service trucks from burdensome hours-of-service regulations; and
- Limiting the expansion of Buy America requirements.
The House Transportation & Infrastructure Committee’s request for stakeholder input is a strong indication that the panel is working diligently to produce infrastructure-related legislation in the coming months, making it a crucial time for AED members to join us in our nation’s capital for the AED Washington Fly-In on June 11-13.
Infrastructure legislation is widely regarded as one area where Congress and the administration can work productively in a bipartisan manner. In fact, President Trump is scheduled to meet with House and Senate Democratic leadership next week to discuss the issue. However, legislative success won’t happen without the engagement of AED members.
On June 11-13, construction equipment industry leaders will storm Capitol Hill to discuss the importance of infrastructure investment, addressing the skills gap, resolving trade uncertainty and providing regulatory relief to job creators. We need your help to ensure the construction equipment industry’s voice is heard! Register today for the 2019 AED Washington Fly-In.
On April 9, Associated Equipment Distributors (AED) delivered a letter to congressional leadership expressing support for the United States-Mexico-Canada Agreement (USMCA) and urging lawmakers to expeditiously consider and ratify the accord between the United States’ closest trading partners.
“As a U.S.-based organization with companies operating in the United States, Canada and Mexico, AED’s members are uniquely impacted by the trade uncertainty in North America,” said AED’s President & CEO Brian P. McGuire. “The USMCA modernizes and strengthens the trade ties between the three countries, which will boost economic growth and job creation here in the United States.”
The letter highlighted that while the U.S. construction equipment industry has experienced a period of economic expansion, trade uncertainty is a top concern for equipment dealers. “For American construction equipment companies to remain competitive in the global market, we need strong international agreements, such as USMCA,” wrote McGuire. “The USMCA will help restore predictability to North American trade markets, while limiting disruptions to the construction equipment supply chain that causes delays in product delivery and increased costs for equipment purchasers.”
To view AED’s letter supporting the USMCA, click here.
For questions regarding AED’s Government Affairs program, contact AED’s Vice President of Government Affairs Daniel B. Fisher at email@example.com or 202-897-8799.
Earlier this week, AED’s 2019 Chairman Michael Brennan (Brandeis Machinery & Supply Co.) led the association’s executive committee for meetings on Capitol Hill and at the White House to push for long-term, robustly funded infrastructure investment legislation.
Brennan was joined by AED’s Immediate Past Chairwoman Diane Benck (West Side Tractor Sales Co.), Vice President of Finance Gayle Humphries (Low Country Machinery), Vice President of Membership Michael Vazquez (MECO Miami) and Vice President of Political Action Wes Stowers (Stowers Machinery).
Participants told a bipartisan group of leading lawmakers and Trump administration officials that the construction equipment industry and the broader economy need a long-term infrastructure bill with increased investment levels, including:
- Senate Majority Leader Mitch McConnell (R-Ky.);
- House Transportation & Infrastructure Committee Chairman Peter DeFazio (D-Ore.);
- Senate Transportation & Infrastructure Subcommittee Chairman Shelley Moore Capito (R-W.V.);
- House Budget Committee Chairman John Yarmuth (D-Ky.);
- House Republican Whip Steve Scalise (R-La.);
- Democratic Congressional Campaign Committee Chair Cheri Bustos (D-Ill.); and
- Senior staff from the president’s National Economic Council.
Infrastructure investment is a top priority for the House, Senate and the White House. However, the lawmakers made it clear that legislation won’t get across the finish line without AED and its members delivering the message that further delay is unacceptable. Attending the 2019 Washington Fly-In on June 11-13 is critical to ensuring as many lawmakers as possible hear directly from construction equipment dealers about the importance of infrastructure investment.
Be sure to register today and join us in Washington to help make a long-term, robustly funded infrastructure bill a reality.
Brian P. McGuire, president and CEO of Associated Equipment Distributors (AED), issued the following statement after President Donald J. Trump’s State of the Union address.
“AED commends President Trump for once again highlighting the decrepit state of our nation’s infrastructure and for calling on lawmakers to provide the resources necessary to rebuild America. With economic growth, quality of life and international competitiveness at stake, further delay is unacceptable. The American people demand results and it’s time for talk and promises to finally turn into congressional action by providing the essential investments needed to return the United States’ infrastructure to the envy of the world.”
On Friday, February 9, AED’s newly appointed Vice President of Political Action, Wes Stowers (CEO of Stowers Machinery), participated in an infrastructure panel discussion at the Newseum in Washington, D.C. The event was hosted by the Association of Equipment Manufacturers (AEM) and No Labels, an organization dedicated to bringing together both political parties to solve the nation’s biggest issues in a non-partisan manner.
In addition to Stowers, panelists included representatives from Volvo Construction Equipment, the U.S. Chamber of Commerce and the American Road & Transportation Builders Association. Covered on C-Span, the town hall discussion featured Republican and Democrat members of Congress and U.S. business leaders, exploring the prospects for movement on a long-term, comprehensive infrastructure bill in the 116th Congress.
Stowers emphasized the need for infrastructure funding certainty, saying, “It’s irresponsible if we aren’t able to fund long-term projects with long-term money.” Regarding Congress’ failure to act to provide for substantial and sustainable infrastructure investments, Stowers said, “It has safety impacts, quality of life impacts and certainly it’s critical for the continued success of our economy. Infrastructure is one of the most competitive advantages the United States has worldwide. But, other countries are improving and modernizing their infrastructure and we’ve got catching up to do.”
Immediately preceding the stakeholder panel, lawmakers from the Problem Solvers Caucus, including Reps. John Katko (R-N.Y.), Kurt Schroeder (D-Ore.) and Jim Costa (D-Cal.), discussed the prospects for infrastructure legislation in 2019. All agreed that Democrats and Republicans should work together to do what’s necessary to address America’s crumbling infrastructure during the 116th congressional session.
To view the stakeholder panel discussion visit: https://www.c-span.org/video/?457708-3/infrastructure-town-hall-discussion-industry-stakeholders
To view the lawmaker panel discussion visit: https://www.c-span.org/video/?457708-2/infrastructure-town-hall-discussion-house-members
Be sure to register today for the 2019 AED Washington Fly-In, June 11-13, on Capitol Hill, where infrastructure investment will top the agenda. Gain valuable political intelligence from leading lawmakers and administration officials and advocate on behalf of your company and the industry. AED will schedule meetings with your House and Senate representatives. Just show up ready to learn and have fun!