Rev. Rul. 57-224

The Internal Revenue Service has been asked (1) whether certain Canadian owned vehicles which operate within the United States are subject to the highway motor vehicle use tax and (2) whether the purchase of a special permit or identification tag for the purpose of paying a State highway use tax or a truck-mile tax constitutes `registration' as contemplated by section 41.4481-3(a) of the Highway Motor Vehicle Use Tax Regulations.

Under the laws of certain States which border on the Dominion of Canada, the Canadian owners of motor vehicles may, within specified limitations, operate their vehicles within those States without paying the usual registration or license fee. However, in those States which levy a highway use tax or a truck-mile tax, these Canadian owners are required to obtain, in connection with the payment of such a tax, special permits or identification plates for all trucks operated within the State.

Section 4481(a) of the Internal Revenue Code of 1954 imposes a tax on the use of certain highway motor vehicles. Section 4481(b) of the Code provides that the tax shall be paid by the person in whose name the highway motor vehicle is, or is required to be, registered under the law of the State in which the vehicle is, or is required to be, registered. Section 4482(c)(1) of the Code defines the term `State' to mean a State, a Territory of the United States, and the District of Columbia.

Section 41.4481-3(a) of the regulations state that-

* * * the term `registered' when used with reference to a highway motor vehicle means-

(1) Registered under the law of any State or Territory of the United States or the District of Columbia, or,

(2) Required to be registered under the law of any State or Territory of the United States in which such highway motor vehicle is operated or situated * * *. Any highway motor vehicle which is operated under a dealer's tag, license, or permit is considered to be registered in the name of such dealer. A highway motor vehicle is not considered to be registered solely by reason of the fact that there has been issued a special permit for operation of the vehicle at particular times and under specified conditions.

It is held that liability for the highway motor vehicle use tax is not incurred by foreign trucking firms on the use of vehicles within the United States unless such vehicles are, or are required to be, registered under the laws of any State in which they are operated. It is further held that compliance with a State law requiring the purchase of a special permit or identification tag for purposes of a State highway use tax law does not constitute `registration' for purposes of the Federal highway motor vehicle use tax.