Rev. Rul. 58-115

Advice has been requested whether electric water heaters, designed for use in homes, with two heating elements aggregating over 7,500 watts, are considered to be electric water heaters of the household type.

A company manufactures so-called `quick recovery' type electric water heaters with an upper and a lower heating element, each having a wattage of 4,500 (4 1/2 KW), or an aggregate wattage of 9,000 (9 KW). The heaters are equipped with an interlocking control so that only the upper element is energized until the water in the top of the tank reaches the temperature set in the upper thermostat, at which time the upper element shuts off automatically and the lower element is energized to heat the water in the lower part of the tank.

Section 4121(a) of the Internal Revenue Code of 1954 imposes a tax upon the sale by the manufacturer, producer, or importer of various electric, gas, or oil appliances of the household type (including in each case parts or accessories therefor sold on or in connection with the sale thereof). Included in the enumeration of articles are electric, gas, or oil water heaters.

Revenue Ruling 54-386, C.B. 1954-2, 414, holds that an electric water heater with heating elements aggregating wattages not exceeding 7,500 (7 1/2 KW) is a heater of the household type, unless the heater, by reason of other features of design and construction is primarily adaptable for purposes other than household use. In reaching that conclusion, the Internal Revenue Service contemplated electric water heaters which are designed to operate at wattages not exceeding 7,500 (7 1/2 KW).

The so-called `quick recovery' type electric water heaters described above are designed to operate on one heating element not exceeding 7,500 watts, although the aggregate wattages of the upper and lower heating elements, if energized at the same time, would exceed 7,500. Accordingly, it is held that an electric water heater which is equipped with an interlocking control, or is so designed by the manufacturer that such a control may readily be installed, for operation on one element not exceeding 7,500 watts, is an electric water heater of the household type. Therefore, the sale by the manufacturer, producer, or importer of such an electric water heater is subject to the manufacturers excise tax on electric, gas, or oil appliances, imposed by section 4121(a) of the Code. See Rev. Rul. 58-519, I.R.B. 1958-42, 28.

Revenue Ruling 54-386, supra , is hereby amplified.