Rev. Rul. 63-159

Advice has been requested concerning the applicability of the manufacturers excise tax on automobile `parts or accessories' to sales by the manufacturer of the articles described below.

A company manufactures replacement roofs for automobiles. These roofs are designed to fold or slide so as to allow air and sunlight to enter the automobiles. A replacement roof is installed by cutting out a section of the existing roof of the automobile. The company sells these roofs with the necessary parts and materials for proper installation.

Section 4061(b) of the Internal Revenue Code of 1954 imposes a tax on the sale by the manufacturer, producer, or importer of parts or accessories (other than tires and inner tubes and other than automobile radio and television receiving sets) for any of the articles enumerated in section 4061(a) of the Code.

Section 40.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that, in general, the term `parts or accessories' includes-

(1) any article the primary use of which is to improve, repair, replace, or serve as a component part of an automobile truck or bus chassis or body, or other automobile chassis or body, or taxable tractor,

(2) any article designed to be attached to or used in connection with such chassis, body, or tractor to add to its utility or ornamentation, and

(3) any article, the primary use of which is in connection with such chassis, body, or tractor, whether or not essential to its operation or use.

The primary use of the replacement roofs described above is to replace or serve as component parts of automobiles. Therefore, they are automobile `parts or accessories' as defined by section 40.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations.

Accordingly, it is held that these replacement roofs are subject to the manufacturers excise tax on automobile `parts or accessories,' imposed by section 4061(b) of the Code, when sold by the manufacturer.

The conclusion expressed herein is equally applicable under the provisions of section 48.4061(b)-2 of the regulations, effective January 1, 1964.