Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 60-80

1960-1 C.B. 497

IRS Headnote

The ordinary painting of articles by the manufacturer, producer, or importer thereof is considered to be a manufacturing expense incident to placing the articles in condition ready for sale. Therefore, any amount charged for such painting must be included in the tax base, even though separately billed. However, the charge for certain special painting or lettering in addition to ordinary painting, if contracted for and billed separately, may be excluded from the tax base.

Full Text

Rev. Rul. 60-80

Advice has been requested concerning the applicability of the manufacturers excise tax on motor vehicle articles to the amount charged by the manufacturer, producer, or importer for the ordinary painting of automobile truck bodies.

A company manufactures automobile truck bodies. Its customers are given an option to purchase these truck bodies with only a prime coat of paint or with the prime coat and a finishing coat of paint. An additional amount is charged the customer for the finishing coat of paint and this amount is invoiced as a separate item from the charge for the truck body itself. In some cases, a customer may request that, in addition to the desired finishing coat, the manufacturer paint on the body special lettering or illustrations of the type which serve to advertise the customer's business. A separate charge also is made for this special painting.

Section 4061(a)(1) of the Internal Revenue Code of 1954 imposes a tax upon the price for which certain enumerated articles, including automobile truck bodies, are sold by the manufacturer, producer, or importer.

Section 4216(a) of the Code provides, in part, that in determining, for purposes of the manufacturers excise tax, the price for which an article is sold, there shall be included any charge for coverings and containers of whatever nature, and any charge incident to placing the article in condition packed ready for shipment.

In determining the price for which an article is sold, for the purpose of computing the manufacturers excise tax, any charge which is required by the manufacturer, producer, or importer to be paid as a condition to the sale of the taxable and which is not one of the charges which may be excluded under the provisions of section 4216(a) of the Code, is includible in the sale price upon which the tax is based.

Generally, manufacturers of automobile chassis, bodies, cabs, etc., adopt what they term `stock colors.' Moreover, the manufacturers' sales prices usually include a charge attributable to this customary painting. Thus, for purposes of computing the manufacturers excise tax, an amount charged for such painting may not be excluded in determining the sales price of the article.

For example, if a manufacturer usually paints his chassis or bodies black, and he receives an order for a red chassis or body and makes an additional charge because of having to take the article out of production and give it special attention, such painting would be considered to be ordinary painting, since the chassis or body as sold would normally be painted some color. The fact that a greater charge is made for one color than for another does not afford justification for allowing an exclusion of the additional amount charged for such painting in determining the sales price.

Accordingly, it is held that the charge for ordinary painting of articles by the manufacturer, producer, or importer thereof is considered to be attributable to a manufacturing expense incident to placing the articles which are sold in condition ready for sale. Therefore, any amount charged for such painting, whether for only a prime coat or for both the prime coat and a finishing coat, must be included in the tax base, even though separately billed.

However, if, an addition to the ordinary painting described above the manufacturer and his customer separately contract for special painting and lettering, such as that intended to advertise the customer's business, any separately billed charge for this special painting and lettering may be excluded in determining the taxable sale price of the article.