Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 60-40

1960-1 C.B. 416

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

The manufacturers excise tax imposed by section 4061(b) of the Internal Revenue Code of 1954 applies to sales by importers of certain automobile radio spare parts arranged into so-called `service packages' or `kits' which are designed, adapted, and sold specifically for use as repair or replacement parts for particular models of imported automobile radio receiving sets. Such service packages or kits do not contain any tubes, condensers, resistors, transistors, or vibrators.

Full Text

Rev. Rul. 60-40

Advice has been requested whether the sales of certain automobile radio spare parts are subject to either the manufacturers excise tax on radio and television components or the manufacturers excise tax on automobile parts or accessories.

A company which imports and sells several models of foreign made automobile radio receiving sets also imports various spare parts for such foreign made radio sets. These spare parts are sold by the company, arranged into groups, which are referred to as `service packages' or `kits', for use as repair or replacement parts. The service packages or kits do not contain any tubes, condensers, resistors, transistors, or vibrators.

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 the sale by the manufacturer, producer, or importer of radio receiving sets, automobile radio receiving sets, 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 4141 of the Code defines the term `radio television components' to mean chassis, cabinets, tubes, speakers, amplifiers, power supply units, antennae of the `built-in' type, which are suitable for use on or in connection with, or as component parts of, any of the articles enumerated in section 4141, whether or not primarily adapted for such use.

Section 40.4061(b)-2 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.

The parts contained in the service packages or kits do not include taxable radio or television components as defined in section 4142 of the Code, nor can the parts be assembled into a taxable radio receiving set or component. Therefore, the company's separate sales of the service packages or kits for repair and replacement purposes are not subject to the manufacturers excise tax imposed by section 4141 of the Code.

However, these service packages or kits are designed, adapted, and sold specifically for use as repair or replacement parts for particular models of automobile radio receiving sets. Therefore, such service packages or kits or parts are considered to be automobile parts or accessories within the meaning of section 4061(b) of the Code. Accordingly, it is held that sales by the company of these service packages or kits are subject to the manufacturers excise tax imposed by that section.