Rev. Rul. 68-672

Advice has been requested concerning the applicability of the manufacturers excise tax on motor vehicle articles, imposed by section 4061(a)(1) of the Internal Revenue Code of 1954, to sales by the manufacturer of the articles described below.

A company manufactures and sells three-wheel street-sweepers. These articles vary in width from 106 to 132 inches and are steered by a single rear wheel. The gutter brooms with which they are equipped are not retractable, and the vehicles are not equipped with springs. These factors limit the speed of the sweepers to 25 miles per hour.

The street-sweepers are equipped with elevator assemblies for loading, front dumping action, and a hopper capacity which varies from three to four and one-half cubic yards. However, because of such design features as steering configuration, etc., and because of their low maximum speed, the hauling capabilities of these vehicles is limited, and they are not ordinarily used to transport debris to the ultimate dump site. Rather, they collect debris, and dump it either in a dumping spot on the street or at a centralized local dump site, and a frontend loader is used to lift the debris into a pick-up truck or similar vehicle, for transportation to the ultimate dump site.

Section 4061(a)(1) of the Code imposes a tax upon the sale by the manufacturer, producer, or importer of certain enumerated motor vehicle articles, including automobile truck chassis and bodies.

Section 48.4061(a)-1(d) of the Manufacturers and Retailers Excise Tax Regulations provides that a chassis or body which is not designed for highway use is not subject to the tax imposed by section 4061 of the Code. Examples of vehicles that are not designed for highway use are: Road graders, bulldozers, power shovels, earth movers, farm tractors, motor-driven vehicles designed and adapted for use in pulling or drawing vehicles around the premises of factories or railway stations, and small trucks for handling baggage and trunks at railway stations.

The design and function of the chassis and body of the described three-wheel street-sweeper are such as to manifest that the vehicles are not designed for use in the transportation of persons or property over the highway. Accordingly, they are nonhighway vehicles of the type described in section 48.4061(a)-1(d) of the regulations, and are not subject to the tax imposed by section 4061(a) of the Code when sold by the manufacturer or importer thereof.

Compare Revenue Ruling 63-191, C.B. 1963-2, 478, which holds that street-sweeper vehicles that are designed and constructed not only to sweep the streets, but also to load the sweepings and transport the sweepings over the highway, are subject to the tax imposed by section 4061(a)(1) of the Code.