Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 62-98

1962-2 C.B. 231

IRS Headnote

A `two and one-half ton, six-by-six' chassis and the chassis and body of a `quarter ton, four-by-four' truck, which are manufactured according to military specifications, are considered to be designed for use both on and off the highway. Therefore, the chassis and the trucks are taxable motor vehicle articles for purposes of the manufacturers excise tax imposed by section 4061(a)(1) of the Internal Revenue Code of 1954.

Full Text

Rev. Rul. 62-98

Advice has been requested whether the articles described below are taxable motor vehicle articles for purposes of the manufacturers excise tax imposed by section 4061(a)(1) of the Internal Revenue Code of 1954.

Situation (1) . A company manufactures and sells certain `two and one-half ton, six-by-six' automobile truck chassis which are constructed according to military specifications for general use in transporting personnel or cargo or in performing special transportation tasks for the Armed Forces. These chassis are designed to accommodate various types of bodies, including personnel, cargo, cargo van, dump, shop, medical van, gasoline tank, and water tank bodies. They also are adaptable for use as wreckers or as truck-tractors.

When specified by the purchasing agency, the manufacturer will furnish and install modification kits which allow the chassis to be used under extreme or unusual conditions of climate, weather, and terrain, and to perform special military services without interfering with the use, operation, and performance of the chassis under normal operating conditions.

The front-axle drive mechanisms on these chassis are designed to provide for automatic engagement in the event the rear axles lose traction. The chassis are capable of traveling at maximum speeds of from 55 to 65 miles per hour, and they are equipped with necessary head lamps, stop lamps, and tail lamps to permit general use on the highway.

Situation (2) . Another company manufactures and sells a `quarter-ton, four-by-four' lightweight automobile truck which also is constructed according to military specifications. These specifications generally require that the vehicle be durable enough to withstand rugged cross-country use but that it be light enough to be used in the air-borne phases of amphibious operations. These specifications require that the vehicle be an all-wheel drive vehicle capable of transporting its rated cross-country payload, which consists of military supplies, equipment, or personnel, at relatively high rates of speed over all types of roads and hilly cross-country terrain. The trucks must be able to ford hard-bottom water crossings with the engine completely submerged. They must be able to transport the rated highway payload, while towing the applicable trailed load, over prepared roads. The trucks are equipped with the necessary head lamps, etc., to permit general use on the highway.

Section 4061(a)(1) of the Code imposes a tax upon the sale by the manufacturer, producer, or importer of certain enumerated articles, including chassis and bodies for automobile trucks. A sale of an automobile truck shall, for purposes of this paragraph, be considered to be a sale of the chassis and of the body.

Section 40.4061(a)-(1)(d) of the Manufacturers and Retailers Excise Tax Regulations provides, in part, that a chassis or body which is not designed for highway use is not subject to the tax imposed by section 4061(a) of the Code.

Revenue Ruling 57-440, C.B. 1957-2, 721, holds, in part, that the manufacturers excise tax imposed by section 4061(a)(1) of the Code shall not apply to sales by the manufacturer, producer, or importer of any motor vehicle article, regardless of width, which is designed or adapted by the manufacturer for purposes predominantly other than the transportation of persons or property on the highway even though incidental highway use may occur.

Although the articles described in situations (1) and (2) above are intended for use over rough terrain and for military use off the highway, they have features which render them equally suitable for highway use. For example, they are designed to transport personnel and cargo over the highways; they are capable of attaining relatively high speeds; and they are designed with the head lamps, etc., required for use on the highways. Therefore, these articles are considered to be designed for use both on and off the highway, rather than for purposes predominantly other than highway use.

Accordingly, it is held that, for purposes of the manufacturers excise tax imposed by section 4061(a)(1) of the Code, the chassis described in situation (1) and the truck chassis and body described in situation (2) are taxable motor vehicle articles.