Turning its attention away from large corporations and toward small businesses, the Sierra Club has urged the IRS to use its audit power as a weapon against entrepreneurs who receive tax breaks for driving extra-large sport utility vehicles.

The tax code currently allows small businesses to write off as much as $25,000 if a vehicle purchased weighs more than 6,000 pounds. But environmentalists now say that provision, first enacted in the pre-SUV days of 1978, has become a loophole that encourages small businesses to buy huge, gas-guzzling cars that contribute to global warming--and that only the IRS can put a stop to it.

"The only reason the weight limit was enacted was to let businesses that use farm trucks, delivery trucks, etc., to get the deduction--not suburban doctors, lawyers and car dealers," says the Sierra Club's Zachary Roth. "The law specifically denies this tax break to people with luxury cars. The luxury car exemption was to prevent exactly those people from taking big deductions on luxury vehicles that were used primarily as personal vehicles."

The law states that at least 50 percent of the vehicle's mileage must be devoted to business use to qualify for the tax break--and that's the part the Sierra Club wants the IRS to audit. Otherwise, says Roth, the tax code would actually be encouraging people to buy cars that damage the environment. "Vehicles with lower fuel economy use more gas, and vehicles that use more gas burn more gas, creating more emissions," Roth says. "Auto emissions contain global warming pollutants, as well as non-global warming pollutants, which are harmful to the health of humans."

But small-business representatives have accused the Sierra Club of treating them like criminals by urging a government agency to investigate them on the basis of dubious science and a political bias against larger cars. "It's all part of the ongoing attempt by various left-wing groups to demonize SUVs, along with the people who drive them," asserts Raymond J. Keating, chief economist for the Small Business Survival Committee (SBSC) in Washington, DC. "The Sierra Club offers no evidence that small-business owners are in any way abusing this tax provision. Instead, this turns out to be a public relations stunt to further their environmental agenda at the expense of hard-working, law-abiding small-business owners. Such regulatory costs take a toll on small businesses, their owners and employees, and the economy in general."

Accountants in the Middle
The Sierra Club developed its IRS strategy after interviewing accountants and reviewing news reports in which small-business owners openly acknowledged buying SUVs simply to take advantage of the tax deduction. Accountants themselves say that while they don't have any exact numbers on how many additional SUVs have been bought as a result of the loophole, they alert their clients to the SUV write-off as a matter of course. "We have seen a great increase in clients buying large SUVs," says J. Brisco Gassaway III, a CPA with Bunch & Co. in Rocky Mount, North Carolina. "We routinely advise clients to purchase large SUVs to take advantage of this rule."

James Stroh of accounting firm Stroh, Johnson & Co. in Wapakoneta, Ohio says it's up to the government to decide which deductions should remain and which should go; his job remains simply to advise his clients on how those deductions affect them. "We're looking out for the client--we want them to get the lowest tax burden as possible," Stroh says. "We don't work for the IRS."

Stroh's stance represents a common view in his professional community, which rejects the notion that accountants should also play the role of environmental policemen for their clients. And, many accountants note, from the IRS' point of view, the audit strategy recommended by the Sierra Club is bad for business: The amount that the agency might collect as a consequence of the audits would pale in comparison to the cost of the audits themselves. Says Gassaway, "There is not enough money involved to warrant the time the IRS would need to spend doing the audits."

A representative from the IRS said that due to tax privacy laws, the tax authority could not comment on the Sierra Club's request.

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SUVs: Safer and Environmentally Friendly?

In addition to questioning the propriety of a plan that would use a tax agency to advance an environmental policy, however, Keating also questions the science behind global warming itself. He notes that more than 17,000 scientists have signed on to the Global Warming Petition Project from the Oregon Institute of Science and Medicine, which declares there is "no compelling evidence that humans are causing discernible climate change," such as those alleged from auto emissions.

The Sierra Club, however, notes that the world's leading climate scientists have warned there is now 30 percent more carbon dioxide--the primary global-warming gas--in the atmosphere than a century ago. The average surface temperature of the earth has risen more than 1 degree Fahrenheit, they say, and the burning of fossil fuels is the primarily to blame. According to the Sierra Club, America's cars and light trucks alone produce nearly 20 percent of U.S. CO2 pollution--more than all but four countries worldwide--and transportation is the fastest-growing sector of global-warming pollution in the nation.

Keating also claims that statistically, SUV drivers and passengers have a much higher accident survival rate than those in smaller cars; if the Sierra Club was actually concerned about vehicle safety, he says, it would urge people to abandon lighter, more dangerous cars in favor of safer, heavier vehicles. "Physics tell us that bigger and heavier vehicles will be safer," says Keating. "Since the federal government imposed [fuel economy] standards, the result has been more deaths on the road, because automobile manufacturers were forced to make smaller, lighter automobiles."

But a recent study by the Alliance of Automobile Manufacturers--a consortium of 10 manufacturers, including Chrysler, Porsche and Toyota--puts challenge to that notion. It says that while SUV passengers have better survival rates in collisions, they are nearly three times more likely to be killed from a rollover. Still, the alliance acknowledges that rollovers remain only a small fraction of car accidents, and that most people killed in SUV rollovers had not buckled their seat belts.

Meanwhile, New York-based CPA Marc Albaum contends that there is really no reason for federal tax collectors to sort through such safety and environmental issues, or to become the instruments of political activists from any side of an issue. "It would make no sense for the IRS to target a group for following the tax law," Albaum says. "The IRS takes their orders from Congress, not the public."

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Jennifer Anne Perez, a former Los Angeles Times reporter and editor for numerous business trade journals, is currently a freelance business writer based in New York City.