Rev. Rul. 64-337

Advice has been requested concerning the applicability of the manufacturers excise tax on automobile "parts or accessories" to the manufacturer's sales of the "converters" described below.

A company manufactures and sells converters (sometimes referred to as "inverters") for use in converting either 6-volt or 12-volt storage battery direct current to 110-volt, 60-cycle, alternating current. These converters have capacities ranging from 10 to 200 watts.

The converters are equipped either with cords and a plug designed for insertion into a cigarette lighter receptacle or with cables designed to be attached directly to a storage battery. They contain outlets into which the plugs of various articles may be inserted. Some models are designed for stationary mounting under the instrument panels on automobiles.

The converters are advertised for use on automobiles, boats, trailers, etc., to provide a source of power for electric shavers, drills, lights, radios and television sets, dictation machines, tape recorders, soldering irons, hand vacuum cleaners, etc.

Section 4061(b) of the Internal Revenue Code of 1954 imposes a tax upon 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 48.4061(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 converters (inverters) described above are designed to be attached to or used in connection with taxable motor vehicles to add to their utility. Furthermore, the primary use of such converters is in connection with such vehicles. Therefore, they are automobile "parts or accessories" as defined by section 48.4061(b)-2(a) of the regulations. It is immaterial that the articles to be plugged into the converters are not primarily used in connection with taxable motor vehicles.

Accordingly, it is held that these converters 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.

This Revenue Ruling will not be applied to sales of converters prior to April 1, 1965, under the authority set forth in section 7805(b) of the Code.