Rev. Rul. 78-18

Advice has been requested whether the articles described below are subject to the manufacturers excise tax imposed by section 4061(b)(1) of the Internal Revenue Code of 1954 on automotive parts or accessories when sold by the manufacturer.

A company manufactures a computing register that is designed to be installed on the tank meter of a delivery truck. The device automatically registers the quantity of liquid delivered and computes the price and taxes. The operator preselects the product, customer identification code, unit price, and the tax rate. Upon completion of the delivery the device issues an imprinted invoice showing the amount of liquid delivered, unit price, product and customer identification code, amount of sales tax, and total price including tax. The direct measuring of the liquid delivered is done by the tank meter. The device does not regulate or control the flow of the liquid. However, the company also manufactures a presettable counter that is sold as an option for use with the computing register. The counter can be preset by the operator for the amount to be delivered on any sale, thus stopping the flow at the desired quantity. Both articles are primarily used with taxable trucks.

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

Section 48.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that an article shall not be deemed to be a taxable part or accessory even though it is designed to be attached to a vehicle or to be primarily used in connection therewith if the article is in effect part of the load being transported and the primary function of the article is to serve a purpose unrelated to the vehicle as such. However, that section also provides that loading and 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.

Rev. Rul. 69-143, 1969-1 C.B. 280, states that items of equipment installed on or sold with taxable tank bodies to serve as a means of receiving, preserving, transporting, or dispensing the products transported, or that are related to the maintenance, safety, or preservation of the tank bodies, are parts or accessories therefor within the meaning of section 4061(a)(1) of the Code. Meters and fittings are included in the examples of the type of accessorial equipment used with tank bodies. Rev. Rul. 69-567, 1969-2 C.B. 204, holds that separate sales by the manufacturer of accessorial articles of the type enumerated in Rev. Rul. 69-143 are subject to the tax imposed by section 4061(b)(1), 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. 71-484, 1971-2 C.B. 365, states that a device designed to be attached to existing equipment on fuel trucks to control fuel delivery and to imprint delivery tickets is an automotive part or accessory taxable under section 4061(b)(1) of the Code. The article is used in conjunction with the pumping system, meter, and printing head on the trucks and consists of an operating panel, a power package to drive the printing head, and a dispensing valve mounted on the fuel delivery line. Fuel cannot be delivered until the device has been actuated.

The computing register performs functions similar to an office machine that makes computations for billing, and prints out the invoice. It is neither a meter as listed in Rev. Rul. 69-143 nor a control device as described in Rev. Rul. 71-484. In addition, it serves no transportation, loading or unloading, function. Accordingly, the computing register is not an automotive part or accessory within the meaning of section 4061(b) of the Code and sales thereof by the manufacturer are not subject to the tax imposed by that section.

Since the optional presettable counter controls delivery of the liquid, it contributes to the load-carrying function of the truck. Furthermore, the counter is primarily used with taxable trucks. Therefore, it comes within the scope of section 48.4061(b)-2(a) of the regulations and Rev. Rul. 71-484. Accordingly, the optional presettable counter is an automotive part or accessory within the meaning of section 4061(b) of the Code, and sales thereof by the manufacturer are subject to the tax imposed by that section.

When the computing register is sold with the presettable counter as a unit, the tax imposed by section 4061(b)(1) of the Code applies only to that portion of the total sale price of the unit attributable to the presettable counter, provided the reasonableness of such portion can be supported by adequate records. See Rev. Rul. 69-394, 1969-2 C.B. 206, which provides a method of determining the manufacturers tax base and computing tax where taxable and nontaxable articles are sold as a unit at a single price.

Rev. Rul. 69-143 and Rev. Rul. 71-484 are distinguished.