Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 63-33

1963-1 C.B. 194

IRS Headnote

A company manufactures and sells so-called `power-drive reel trailers' which are designed for transporting heavy cable reels of the type used by utility companies. In addition to the chassis frame, rear axle assembly, and single front wheel, each trailer includes two `drive arms' which provide a means for transporting a cable reel and for loading and unloading the reel. Power for these hydraulically operated arms is provided by a gasoline engine and related equipment mounted on the trailer. Held , the manufacturers excise tax imposed by section 4061(a) of the Internal Revenue Code of 1954 applies to the price for which the complete trailers (including the equipment mounted thereon) are sold by the manufacturer.

Full Text

Rev. Rul. 63-33

Advice has been requested concerning the applicability of the manufacturers excise tax on motor vehicle articles to sales by the manufacturer of the trailers described below.

A company manufactures and sells so-called `power-drive reel trailers,' which are designed to be used by telephone and electric power companies, etc., for the purpose of transporting heavy cable reels. The fabricated steel chassis frame of each trailer is mounted on an axle assembly with dual wheels and a single front wheel which can be raised or lowered. Each trailer is equipped with retractable manually operated stabilizers, electric brakes, a towing eye, and break-away chains.

Two `drive arms,' which pivot around the axle, provide a means for transporting a cable reel and for hydraulically raising or lowering the reel. While a reel is being transported, it is supported by these arms, which are mounted on seamless steel tubes in such a way that the arms can be adjusted from side to side to accommodate various reel widths. The power for these hydraulically operated arms is provided by a gasoline engine, which is mounted on the chassis along with a hydraulic pump, a gear reducer, controls, and other related equipment. In loading a cable reel, the operator hydraulically lowers the drive arms, manually slides them apart to accept the reel, rolls the reel into position, slides the arms to engage the reel arbor and drive holes, and hydraulically raises the reel onto the trailer.

After being transported to the desired location, the reel can be hydraulically lowered and unloaded. However, the cable can be unloaded without removing the reel from the trailer, since the power system permits the use of the trailer for `paying out' or `taking up' cable under the desired tension in connection with the stringing of transmission lines. If equipped with an attachment, the trailer also can be used for pulling underground cables from their conduits.

Section 4061(a)(1) of the Internal Revenue Code of 1954 imposes a tax on the sale by the manufacturer, producer, or importer of chassis and bodies for automobile trucks and truck trailers and semitrailers (including in each case parts or accessories therefor sold on or in connection therewith or with the sale thereof).

Section 40.4061(a)-1(e)(1) of the Manufacturers and Retailers Excise Tax Regulations provides, in part, that a trailer or semitrailer chassis or body primarily designed for highway use in combination with a taxable truck, bus, or tractor is subject to the tax imposed by section 4061(a)(1). The tax attaches even though the trailer or semitrailer may have equipment to perform functions other than in connection with the transportation of property or persons. However, no tax under section 4061(a) attaches to that part of the selling price of the complete unit which is reasonably attributable to such equipment provided that such part of the selling price is billed separately on the invoice to the customer or can be otherwise established by adequate records.

General purpose pole trailers, combination pole and cable reel trailers, transformer trailers, tilt-top implement trailers, reel dollies, pole dollies, and highway logging dollies are cited in section 40.4061(a)-1(e)(2)(i) of the regulations as examples of trailers and semitrailers which are subject to the tax imposed by section 4061(a)(1) of the Code.

The `power-drive reel trailer' described above is a type of trailer which comes within the scope of the articles which are taxable under section 4061(a) of the Code, as contemplated by sections 40.4061(a)-1(e)(1) and 40.4061(a)-1(e)(2)(i) of the regulations.

Devices which are mounted on taxable motor vehicle articles to load and unload those vehicles come within the provisions of section 4061(a) of the Code, which imposes the tax upon certain enumerated `articles (including in each case parts or accessories therefor sold on or in connection therewith or with the sale thereof).' Such loading and unloading equipment augments the utility of the taxable articles. This is true even though that equipment also may be used to perform other functions in addition to loading and unloading.

In the instant case, the gasoline engine, hydraulic pump, gear reducer controls, and other related equipment are mounted on and sold as integral parts of the taxable trailer to perform a function in connection with loading and unloading cable reels. Therefore, those articles are `parts or accessories' for the taxable trailer within the meaning of section 4061(a) of the Code rather than nontaxable equipment `which performs a function other than in connection with the transportation of property or persons' within the meaning of section 40.4061(a)-1(e)(1) of the regulations.

Accordingly, it is held that the manufacturers excise tax on motor vehicle articles, imposed by section 4061(a) of the Code, applies to the price for which the complete `power-drive reel trailers' (including the equipment mounted thereon) are sold by the manufacturer.