Rev. Rul. 59-381

Advice has been requested whether the manufacturers excise tax on automobile parts or accessories or the manufacturers excise tax on radio and television components applies to sales of certain remote speaker switch units.

A manufacturer of automobile radio speakers also manufactures remote speaker switch units which he sells as `rear-deck switch assemblies' and `rear-deck kits' for use in installing a rear seat radio speaker in an automobile. A rear deck switch assembly consists of a three-way switch with mounting bracket, three attached lengths of wire, nuts, bolts, and screws. However, when a speaker grill is added to such an assembly, the unit is referred to as a rear-deck kit. When the articles in a unit are assembled and connected to an automobile radio and a rear seat speaker, the three-way switch permits operation of the speaker in the automobile radio alone, the rear-seat speaker alone, or both speakers together. The three-way switch is designed to be attached to an automobile dash board or instrument panel.

Section 4061(b) of the Internal Revenue Code of 1954 imposes a tax upon the sale by the manufacturer, producer, or importer of parts or accessories (other than tires and inner tubes and other than automobile radio and television receiving sets) for any of the motor vehicle articles enumerated in section 4061(a) of the Code. Section 4141 of the Code imposes a tax upon sales by the manufacturer, producer, or importer of radio and television components and other enumerated articles (including in each case parts or accessories therefor sold on or in connection with the sale thereof).

Section 40.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides, in part, that the term `parts or accessories' includes any article designed to be attached to or used in connection with an automobile truck or bus chassis or body, or other automobile chassis or body, or taxable tractor to add to its utility or ornamentation, and 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.

It is the position of the Internal Revenue Service that kits consisting of a combination of articles which upon assembly constitute articles primarily designed or adapted for use on motor vehicle articles enumerated in section 4061(a) of the Code are automobile parts or accessories within the meaning of section 4061(b) of the Code.

The rear-deck switch assemblies or kits, described above, are designed and adapted primarily for use in automobiles. Therefore, it is held that separate sales by the manufacturer of such assemblies or kits are subject to the manufacturers excise tax on automobile parts or accessories imposed by section 4061(b) of the Code.

Revenue Ruling 59-301, page 291, this Bulletin, holds that rear seat speakers which are suitable for use in connection with automobile radio receiving sets, irrespective of whether they are sold `bare' or equipped with special housings, grills, and control knogs which merely constitute parts or accessories for the speakers, are radio and television components as defined in section 4142 of the Code, the sales of which are subject to the manufacturers excise tax imposed by section 4141 of the Code. Accordingly, when the rear-deck switch assemblies or kits are sold by the manufacturer on or in connection with the sale of such speakers, the manufacturers excise tax on radio and television components imposed by section 4141 of the Code applies to the total sale price of the speakers, including the assemblies or kits.