Rev. Rul. 69-143

Advice has been requested whether the manufacturers excise tax imposed on motor vehicle articles by section 4061(a)(1) of the Internal Revenue Code of 1954 is applicable to sales of certain automobile truck, trailer, and semitrailer tank bodies under the circumstances described below.

A company manufactures and sells tank bodies for automobile trucks, trailers, and semitrailers. The bodies are designed for transporting liquid products such as gasoline, fuel oil, milk, and water. The company sells the bodies either in a completed state or as "bare" tank bodies. The completed bodies contain the accessorial equipment required for the bodies to accomplish the purpose for which they are intended. This equipment serves some purpose related either to the operation of the bodies in receiving, preserving, transporting, and dispensing the products carried, or to the maintenance, safety, or preservation of the bodies. "Bare" tank bodies are bodies which do not contain the accessorial equipment necessary for the body to accomplish the purpose for which it is intended. On some occasions the manufacturer sells "bare" tank bodies in combination with the necessary accessorial equipment, but without the equipment being installed in the body.

The following are examples of the type of accessorial equipment used with tank bodies:

Air compressor Ladder Air receiver Manifold Barrel skids Meters and fittings Faucets Nozzles Fire extinguisher Pipelines and fittings Gas engine Pump and fittings Hose Strainers Hose carrier Valves and fittings Hose couplings Water separator Hose reels

Three questions have been presented with respect to sales of truck, truck trailer, and semitrailer tank bodies:

Question 1. Are sales of "bare" tank bodies (i.e. tank bodies without necessary accessorial equipment) subject to the tax imposed by section 4061(a)(1) of the Code?

Question 2. To what extent are sales of fully equipped tank bodies subject to the tax imposed by section 4061(a)(1) of the Code?

Question 3. To what extent are sales of "bare" tank bodies in combination with accessorial equipment suitable for use therewith subject to the tax imposed by section 4061(a)(1) of the Code?

Section 4061(a)(1) of the Code imposes a tax on sales by the manufacturer, producer, or importer of automobile truck bodies, truck trailer and semitrailer bodies, and other enumerated motor vehicle articles (including in each case parts or accessories therefor sold on or in connection therewith or with the sale thereof).

Section 316.4 of Regulations 46, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides that the term "manufacturer" includes a person who produces a taxable article from scrap, salvage, or junk material, as well as from new or raw material, (1) by processing, manipulating, or changing the form of an article, or (2) by combining or assembling two or more articles. The section also provides that a manufacturer who sells a taxable article in a knockdown condition, but complete as to all component parts, is liable for the tax.

Items of equipment installed on or sold with taxable tank bodies to serve as a means of receiving, preserving, transporting, or dispensing the products transported, or which are related to the maintenance, safety, or preservation of the tank bodies, are "parts or accessories therefor" within the meaning of section 4061(a)(1) of the Code.

In answer to question 1, "bare" tank bodies (that is, tank bodies complete except for the accessorial equipment required to make them operable) are truck, truck trailer, or semitrailer bodies, within the meaning of section 4061(a)(1) of the Code, and are subject to the tax imposed by that section, when sold by the manufacturer.

If, as in question 2, a tank body is sold by the manufacturer thereof fitted with accessorial equipment, the total sale price of the body and equipment is subject to the tax imposed by section 4061(a)(1) of the Code.

In question 3, a "bare" tank body is sold by the manufacturer in combination with accessorial equipment suitable for use with the body. Such items of equipment are "parts or accessories" for the body, and the equipment is sold "on or in connection" with the sale of the body, within the meaning of section 4061(a)(1) of the Code, even though some of the articles of equipment may not be "parts or accessories" for purposes of section 4061(b)(1) when sold separately. Accordingly, the total sale price of the body and equipment is subject to the tax imposed by section 4061(a)(1).

A purchaser of a "bare" tank body who installs accessorial equipment therein has further manufactured the body and is subject to the tax imposed by section 4061(a)(1) of the Code on his sale or use of the further manufactured body.

Under the authority granted by section 7805(b) of the Code, this Revenue Ruling will not be applied to accessorial equipment sold "on or in connection" with sales of the described tank bodies prior to July 1, 1969. Also, this Revenue Ruling will not be applied to accessorial equipment sold on or in connection with sales of the described tank bodies pursuant to firm contracts of sale entered into prior to March 31, 1969, regardless of when deliveries are made.