Rev. Rul. 68-571

The Internal Revenue Service has been asked whether tops or cabs of the type described below are automotive parts or accessories subject to the manufacturers excise tax imposed by section 4061(b)(1) of the Internal Revenue Code of 1954.

Type 1 . Fabric, metal, or fiberglass half-tops or half-cabs used to enclose the front seat area only. Also, enclosed full-length fabric, metal, or fiberglass tops or cabs with side windows in the front seat area only. These tops or cabs are sold for use with multi-purpose vehicles of the `Bronco,' `Jeep,' or `Scout' type. When one of these tops or cabs is installed on a multi-purpose vehicle, the vehicle is considered to be primarily designed for the transportation of property and is taxable under section 4061(a)(1) of the Code. Rev. Rul. 66-308, C.B. 1966-2, 467.

Type 2 . Enclosed full-length or convertible fabric, metal, or fiberglass tops or cabs with side windows in the front and back seat areas. These tops or cabs are also sold for use with multi-purpose vehicles of the `Bronco,' `Jeep,' or `Scout' type. After installation of one of these tops or cabs, the vehicle is considered to be primarily designed for the transportation of persons, and is taxable under section 4061(a)(2) of the Code. Rev. Rul. 66-308.

Section 4061(b) of the Code provides as follows:

(1) Except as provided in paragraph (2), there is hereby imposed upon parts or accessories (other than tires and inner tubes) for any of the articles enumerated in subsection (a)(1) sold by the manufacturer, producer, or importer a tax equivalent to 8 percent of the price for which so sold, except that on and after October 1, 1972, the rate shall be 5 percent.

(2) No tax shall be imposed under this subsection upon any part or accessory which is suitable for use (and ordinarily is used) on or in connection with, or as a component part of, any article enumerated in subsection (a)(2) or a house trailer.

The effect of section 4061(b)(2) of the Code is to except from the tax imposed by section 4061(b)(1) any part or accessory that is suitable for use and ordinarily used with articles enumerated in section 4061(a)(2) (passenger car bodies and chassis, etc.) even though the part or accessory may also be used on articles enumerated in section 4061(a)(1) (truck bodies and chassis, etc.).

Since the vehicles, after installation of the tops or cabs described in Type 1 , are taxable under section 4061(a)(1) of the Code, such tops or cabs are subject to the tax on parts or accessories imposed by section 4061(b)(1) when sold by the manufacturer, producer, or importer thereof. However, since the vehicles equipped with the tops or cabs described in Type 2 are taxable under section 4061(a)(2), such tops or cabs are not subject to the tax imposed by section 4061(b)(1).

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.