Rev. Rul. 69-195

The Internal Revenue Service has reconsidered the position set forth in Revenue Ruling 59-262, C.B. 1959-2, 249, which relates to the application of the manufacturers excise tax imposed by section 4061(a)(1) of the Internal Revenue Code of 1954 to the sale of dump truck bodies complete with hoists.

The issue is whether dump truck hoists are "parts or accessories" for automobile truck bodies or for automobile truck chassis for purposes of the manufacturers excise tax. These hoists are designed for use on dump trucks to raise and dump loads.

Situation (1). A company manufactures automobile dump truck bodies and purchases from another manufacturer hoists that are designed for use with the bodies of its own manufacture. Similarly, a company manufactures automobile dump truck chassis and purchases from another manufacturer hoists that are designed for use with the chassis of its own manufacture. The body or chassis manufacturer then associates and sells together the bodies or chassis of its own manufacture and the hoists purchased from the other manufacturer. In some instances the hoists are attached to the bodies or chassis at the time of sale, while in other instances the hoists are not attached to the bodies or chassis at the time of the sale.

Situation (2). Another company purchases dump truck bodies or chassis from a body or chassis manufacturer and separately purchases hoists from a hoist manufacturer. The company then sells hoists in the same transaction with bodies or chassis. In some instances the company mounts the bodies and hoists on chassis that are owned by its customers. However, in other instances the hoists are not physically attached to the bodies or chassis at the time of sale.

Section 4061(a)(1) of the Code imposes a tax upon automobile truck chassis and 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) sold by the manufacturer, producer, or importer. Section 4061(b) imposes a tax upon parts or accessories, with certain exceptions not here material, for any of the articles enumerated in section 4061(a) sold by the manufacturer, producer, or importer.

Section 316.4(a) 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 by combining or assembling two or more articles.

Certain automotive articles have such close functional and structural relationship to both truck bodies and truck chassis that it cannot be said they are exclusively "parts or accessories" for truck bodies or "parts or accessories" for truck chassis for purposes of section 4061(a) and (b) of the Code.

Dump truck hoists are articles whose functional and structural characteristics are such as to qualify them as "parts or accessories" for either bodies or chassis, depending on the circumstances of their sale or use. Where a body or chassis manufacturer combines or assembles a hoist purchased from another manufacturer with a body or chassis of his own manufacture, as in situation (1) above, the act of combining or assembling the hoist and the body or chassis, as the case may be, constitutes another step in the manufacture of the body or chassis, and the manufacturer is liable for the manufacturers' excise tax imposed by section 4061(a)(1) on his sale or use of the body or chassis complete with hoist. The fact that the hoist may not be physically attached to the body or chassis is immaterial. Furthermore, where a company purchases automobile truck bodies or chassis and separately purchases hoists and then combines or assembles such articles, as in situation (2) above, it has further manufactured the bodies or chassis, whether or not the hoists are actually attached to the bodies or chassis.

The application of the manufacturers excise tax has been uncertain with respect to the sale or use of articles in situations where (1) a chassis manufacturer combines or assembles with a chassis of his own manufacture a hoist purchased from another manufacturer, and (2) a person purchases automobile truck bodies or chassis, separately purchases hoists, and then combines or assembles such articles. Accordingly, under the authority granted by section 7805(b) of the Code, the conclusions set forth herein will not be applied to any sales or use made prior to July 1, 1969, with respect to the situations described in the preceding sentence.

Revenue Ruling 59-262 is hereby superseded.