Rev. Rul. 74-173

Advice has been requested as to the applicability of the manufacturers excise tax on automotive parts or accessories imposed by section 4061(b)(1) of the Internal Revenue Code of 1954 to the article described below.

A company manufacturers a conveyor discharge system that it sells for use with a taxable bottom dump semitrailer. The semitrailer is designed to be towed by a highway truck-tractor equipped with a fifth wheel to haul bituminous road material, sand, gravel, and other bulk materials. The conveyor discharge system is attached to the bottom of the semitrailer by means of pins. When attached, it extends from the normal discharge point to a point behind the semitrailer so as to facilitate the discharge of the load of the semitrailer to the rear by use of a conveyor belt. The conveyor is powered from a truck-tractor transmission by a hydraulic power pack system. The conveyor system can be installed or removed in approximately two hours.

Section 4061(a)(1) of the Code imposes a tax on the sale of certain enumerated motor vehicle articles (including in each case parts or accessories therefor sold on or in connection therewith or with the sale thereof) by the manufacturer, producer, or importer. Among the enumerated articles are chassis and bodies for truck trailers and semitrailers.

Section 4061(b)(1) of the Code imposes a tax upon parts or accessories (other than tires and inner tubes) for any of the articles enumerated in section 4061(a)(1) when sold by the manufacturer, producer, or importer.

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 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. For example, an article such as a towing cradle or loading or unloading equipment designed to be attached to or to be primarily used in connection with a truck is a taxable part or accessory inasmuch as the article contributes to the load-carrying function of the truck.

The conveyor discharge system is designed to be attached to and used in connection with the semitrailer for unloading, which contributes to the load-carrying function of the semitrailer. Therefore, it is a part or accessory within the meaning of section 4061(b)(1) of the Code and sales thereof by the manufacturer are subject to the tax imposed by that section.

However, if a conveyor discharge system is sold on or in connection with a semitrailer by the semitrailer manufacturer, the tax imposed by section 4061(a)(1) of the Code applies to the total price for which the semitrailer and system is sold.