Rev. Rul. 76-506

Advice has been requested regarding application of the manufacturers excise tax imposed by section 4061(a)(1) of the Internal Revenue Code of 1954 to the articles described below.

Article (1). A "V"-shaped hopper designed to transport sand, salt, cinders, or calcium chloride. The hopper sides slope to a conveyor in the bottom that carries the material to a distributor mechanism, located at the rear, that spreads the material on streets and highways for ice and snow control. This hopper is available in different models that are designed to be either attached to a highway truck chassis, placed in the dump box of a highway dump truck, or placed in the box of a pickup truck. The hoppers are either hydraulically or mechanically operated by means of a power take-off or a separate engine, depending on the model. The hoppers are available in lengths from 8 to 14 feet.

Article (2). A semitrailer designed for use with a highway tractor to transport granular materials on highways. It consists of a two compartment "V"-shaped hopper with an integrated semitrailer frame, retractable landing gear, fifth wheel king pin, air brakes, lights, and a tandem axle assembly located under the rear end of frame. The hopper sides slope to two conveyors in the bottom that carry the material to a distributor mechanism that spreads the material on highways. This unit is hydraulically operated by means of a separate engine. The operation of the engine, the rate of feed, and the width and direction of the spread are controlled from the tractor cab.

Section 4061(a)(1) of the Code imposes a tax upon the sale by the manufacturer, producer, or importer of certain enumerated motor vehicle articles including automobile truck, truck trailer, and semitrailer chassis and bodies.

Section 4061(a)(2) of the Code excludes certain articles from the tax imposed by section 4061(a)(1) including (1) automobile truck chassis and bodies suitable for use with a vehicle having a gross vehicle weight of 10,000 pounds or less, and (2) truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 10,000 pounds or less, and that is suitable for use with a towing vehicle having a gross vehicle weight of 10,000 pounds or less.

Rev. Rul. 165, 1953-2 C.B. 422, holds that hoppers or beds that are primarily designed or adapted to be mounted on or pulled behind trucks or tractors and equipped with power driven devices, used solely in spreading fertilizers or other materials on farms, or in the construction, maintenance of, or spreading ice control materials on highways, streets, sidewalks, etc., are not taxable automobile truck bodies or automobile parts or accessories within the purview of section 3403 of the Internal Revenue Code of 1939 (section 4061 of the 1954 Code).

Rev. Rul. 72-479, 1972-2 C.B. 544, holds that although a standard dump truck body, when equipped with a certain self-feeding spreading device, may temporarily be unsuitable for general use in transporting property over the highway, the designed utility of the body is not affected. Accordingly, the sale of the truck body with the spreading device attached is subject to the tax imposed by section 4061(a) of the Code. Further, Rev. Rul. 72-479 distinguishes such body from the hoppers and beds described in Rev. Rul. 165 in that the latter articles are primarily designed for use in spreading materials over streets and highways. Rev. Rul. 72-479 states that such hoppers and beds, because of their special design, are not suitable for general use in transporting property over the highway.

The hoppers described in Articles (1) and (2) above are truck or semitrailer bodies even though they are equipped with a mechanism specially designed to spread salt, etc. Although the form of the hoppers and the conveyor systems limit their load carrying capacity and usefulness, they do perform the function of transporting a load over the public highways from a supply point to the point of spreading on the street or highway surface.

Therefore, they are subject to the tax imposed by section 4061(a)(1) of the Code subject to the limitations in section 4061(a)(2). The conveyor mechanism helps unload the body and is accordingly also taxable under section 4061(a)(1) when sold as a part of the body. See Rev. Rul. 74-173, 1974-1 C.B. 310, which holds that 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) applies to the total price for which the semitrailer and system is sold.

The distributor mechanism, however, applies sand, salt, cinders, calcium chloride, or granular materials and thus performs functions other than in connection with the transportation of property. Therefore, no tax attaches to that part of the selling price of the complete unit that is reasonably attributable to such equipment, provided such part is billed separately on the customer's invoice or can otherwise be adequately substantiated.

The semitrailer chassis described in Article (2) is designed to transport the hopper over highways in combination with a taxable tractor. Such chassis is therefore subject to the tax imposed by section 4061(a)(1) of the Code unless excluded from the tax under the provisions of section 4061(a)(2).

Pursuant to the authority granted by section 7805(b) of the Code, the conclusion set forth herein with respect to the hopper bodies will not be applied to sales made by manufacturers prior to April 1, 1977.

Rev. Rul. 165 is revoked (however, section 4063(a)(2) of the Code currently provides exemptions for certain types of equipment designed for handling feed, seed or fertilizer on farms). Rev. Rul. 72-479 is modified to remove the distinction made therein between the hoppers and beds described in Rev. Rul. 165 and the standard dump truck body described in Rev. Rul. 72-479.