Rev. Rul. 65-197

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

Many types and models of mechanical, electric, and electromechanical tachometers designed for use in measuring the speed of rotating shafts in internal combusion engines, are being manufactured. Although some of these tachometers are suitable for use with certain nonautomotive engines, many possess a number of design features commonly found in automotive-type tachometers which make them suitable for automotive use. Some of these tachometers are advertised for automotive use, but no such claims are made for others.

Basically, each of these tachometers consists of two component parts, a meter and a sender (or transmitter). The meter portions of those suitable for automotive use have dials calibrated with speeds ranging from zero to a maximum (depending upon the model) of from 3,000 to 10,000 revolutions per minute. Some of the meter cases are so designed that they may be mounted on the steering post or on top of the dash rather than in an instrument panel hole, and are equipped to provide illumination of the dials.

The sender portions of some of the tachometers are designed in various models to permit selection based upon the number of cylinders in the engine and the voltage of the ignition system. Some models are designed for use with battery-distributor and magneto-ignition systems and others are designed for use with transistorized ignition systems. Some of the senders are designed for use with engines equipped with built-in tachometer take-offs.

Section 4061(b) of the Internal Revenue Code of 1954, as in effect prior to the enactment of the Excise Tax Reduction Act of 1965, Public Law 89-44, page 568, this Bulletin, 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 motor vehicle 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 articles 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.

Analysis of available technical data reveals that the following are some of the design features commonly present in tachometers intended for automotive use: (1) flange for panel mounting, or brackets for dash or steering post mounting, (2) `take-off to engine' ratio of approximately one-to-one or two-to-one, (3) dial range of not more than 10,000 revolutions per minute, and (4) provision for internal illumination.

Tachometers which are held out by the manufacturer as being suitable for automotive use are presumed to be automobile `parts or accessories' within the meaning of section 4061(b) of the Code, regardless of the use to which they may be put. Furthermore, tachometers which are not held out for automotive use, but which possess any of the design features listed under (1) through (4) above, are also presumed to be automotive `parts or accessories', unless the manufacturer can establish to the satisfaction of the Service that such tachometers are not suitable for automotive use.

Revenue Ruling 63-23, C.B. 1963-1, 206, at 210, which holds, in part, that a tachometer used to measure the speed of rotation on nonautomotive engines is not taxable as an automobile part or accessory is hereby modified to the extent it may be interpreted as holding that the sole criterion is an end use test.