The 2008 Economic Stimulus Act may be good in theory, but it isn’t going to help if businesses have no idea how to take advantage of it.

According to Jon Eide, manager of the commercial vehicle group of equipment finance for Wells Fargo, the first step is knowledge. “People need to be aware of the benefits,” he told FleetOwner. “They’re aware of the act, but need to be educated to what it exactly means.”

“The stimulus package was created for folks in all industries to acquire new equipment,” he said. “It’s a tax deferral for any equipment acquired in 2008.”

Eide said that for the trucking industry in particular, accelerated purchase in 2006 led to strong sales, but ’07 and ’08 has been affected by the poor economy, and the package is designed to stimulate equipment purchase through two legislative acts—bonus depreciation and expense deduction.

“What bonus depreciation means is if you are acquiring a piece of equipment, such as a new truck or trailer, you have the ability to realize 50% of that asset in 2008,” Eide said. As long as the equipment is purchased before the end of the calendar year, it will save current tax expenditure by accelerating the normal depreciation rate, he added.

This is the second time in recent memory that bonus depreciation has been used as an economic stimulus, Eide said—a 50% depreciation was put into law in 2001, after the September 11th terrorist attacks, and was extended the following year at a 30% rate.

The second part of the stimulus package gives small businesses the ability to use an expense deduction for any equipment costing up to $250,000. Previously, the limit was $128,000.

Individual businesses will need to check Internal Revenue Code Section 179 to see if they are eligible for expense deduction benefits, as it is designed solely for small businesses.

Eide recommends checking with experts to check eligibility requirements. “Most of the time, an outside tax accounting group will handle the benefits for fleets,” he said. “It’s up to each individual business to consult with their tax professionals.”

For both bonus depreciation and expense deduction, all equipment must be purchased and put into use by December 31, 2008 to qualify for benefits, barring a further extension of the act.

Eide surmised that the act might convince some wavering fleets to buy equipment this year. “It will affect those in the market for acquiring equipment, and help those over the fence about whether to acquire equipment or not decide, but it probably won’t cause people to want to buy,” he said.