Rev. Rul. 78-187

The Internal Revenue Service has considered the effect of the Tax Reform Act of 1976 on the conclusion in Rev. Rul. 69-143, 1969-1 C.B. 280, that a purchaser of a bare tank body who installs accessorial equipment therein has further manufactured the body and, on its sale or use thereof, is subject to the tax imposed by section 4061(a)(1) of the Internal Revenue Code of 1954.

Rev. Rul. 69-143 also concludes that where a taxable tank body is sold by the manufacturer thereof fitted with, or in combination with, items of accessorial equipment required for the bodies to accomplish the purpose for which they are intended, such items are parts or accessories within the meaning of section 4061(a)(1) of the Code, and the total sale price of the body and equipment is subject to the tax imposed by that section.

The following items are set forth in Rev. Rul. 69-143 as examples of the type of accessorial equipment used with tank bodies:

 Air compressor                      Ladder Air receiver

Section 4061(a)(1) of the Code imposes a tax upon the sale 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 4063(d) of the Code, as added by section 2109 of the Tax Reform Act of 1976, Pub. L. 94-455 [1976-3 C.B. (Vol. 1) 1, 380], provides that the tax imposed by section described in section 4061(a)(1) if before such resale such article was 4061 shall not apply to the resale on or after October 4, 1976, of any article merely combined with certain enumerated articles. Among the articles enumerated is loading and unloading equipment.

Rev. Rul. 69-567, 1969-2 C.B. 204, concludes that where articles of the type discussed in Rev. Rul. 69-143 are sold separately by the manufacturer thereof, such sales are subject to the tax on automotive parts or accessories imposed by section 4061(b)(1) of the Code if the articles are designed for use or are primarily used with taxable tank bodies or any other articles enumerated in section 4061(a)(1).

Rev. Rul. 69-143 states that among the purposes of the accessorial equipment required for the bodies to accomplish the purpose for which they are intended is the receiving and dispensing of products. Although other stated purposes of some of the equipment may relate to preserving and transporting products, or to the maintenance, safety, or preservation of the bodies, most of the articles listed in Rev. Rul. 69-143 perform, or aid in the performance of, a loading and unloading function.

Thus, most of such accessorial equipment used with taxable tank bodies is loading and unloading equipment for purposes of the exemption provided by section 4063(d) of the Code. Under that section, the installation of such loading and unloading equipment on a bare tank body other than by the body or vehicle manufacturer, before resale or use of the body, is not further manufacture of the body. Further, the installation on a tank body of the other articles listed in Rev. Rul. 69-143 that are not items of loading or unloading equipment are not significant and, therefore, are also not further manufacture of the body.

Accordingly, a purchaser of a tax-paid bare tank body, who, before resale or use of the body, installs such accessorial equipment therein is not a manufacturer, and is not liable for the tax imposed by section 4061(a)(1) of the Code on its sale or use on or after October 4, 1976, of such body.

Where articles of the type discussed in Rev. Rul. 69-143 are sold separately by the manufacturer thereof, the conclusion of Rev. Rul. 69-567 is applicable.

Rev. Rul. 69-143 is modified to indicate that a purchaser of a tax-paid bare tank body who merely installs such accessorial equipment therein is not liable for the tax imposed by section 4061(a)(1) of the Code on its sale or use on or after the effective date of section 4063(d) of the Code.