Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 59-11

1959-1 C.B. 304

IRS Headnote

Certain kits, known as `prefabricated truck body frames,' from which truck bodies may be constructed by assembling the frame components and adding certain materials, are considered to be automobile parts or accessories, and the sales of such kits are subject to the manufacturers excise tax imposed by section 4061(b) of the Internal Revenue Code of 1954. The person who purchases such kits and produces truck bodies by adding panels, floors, etc., is considered to be the manufacturer of complete truck bodies and is liable for the manufacturers excise tax imposed by section 4061(a)(1) of the Code on his sales or use of the complete bodies.

Full Text

Rev. Rul. 59-11

Advice has been requested concerning the applicability of the manufacturers excise tax to sales of certain kits, known as `prefabricated truck body frames.'

These kits contain five prefabricated components; namely, a floor frame, two side frames, a front end frame, and a roof frame. The kits are sold to truck body builders who assemble them into body frames which are further manufactured by attaching panels, laying the floors, adding roof materials, and finishing the trimmings to produce complete truck bodies.

Section 4061(b) of the Internal Revenue Code of 1954 imposes a tax upon sales by the manufacturer, producer, or importer of parts or accessories (with certain exceptions not here material) for any of the articles enumerated in section 4061(a) of the Code. Automobile truck bodies are among the articles enumerated in section 4061(a) of the Code. Section 316.55 of Regulations 46, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides, in part, that the term `parts or accessories' for an automobile truck or other automobile chassis or body includes any article the primary use of which is to improve, repair, replace, or serve as a component part of such vehicle or article.

Components such as those described above, the primary use of which is to serve as component parts of automobile truck bodies, are considered to be parts or accessories for such truck bodies. Therefore, it is held that the manufacturer's sale of the kit containing the prefabricated components, which may be assembled by the purchaser into a body frame, is subject to the tax on parts or accessories imposed by section 4061(b) of the Code.

However, under the provisions of section 4220 of the Code (Section 4221(a)(1) as amended by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, C.B. 1958-3, 92) and the applicable regulations, these kits may be sold by the manufacturer tax-free to truck builders for use in manufacturing of truck bodies.

It is further held that the person who purchases such kits and builds truck bodies by adding panels, floors, etc., is considered to be the manufacturer of the complete bodies and is liable for the manufacturers excise tax imposed by section 4061(a)(1) of the Code on his sales or use of such complete bodies.