Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 63-79

1963-1 C.B. 196

IRS Headnote

The manufacturers excise tax on motor vehicle articles, imposed by section 4061(a)(1) of Internal Revenue Code of 1954, applies to the price for which so-called `mobile machine shop bodies' are sold by the manufacturer. However, the tax does not apply to the price for which the manufacturer sells the machine shop equipment installed in the bodies, provided such equipment is billed separately on the invoices to the customers at a bona fide price or the price can be otherwise established by adequate records.

Full Text

Rev. Rul. 63-79

Advice has been requested concerning the applicability of the manufacturers excise tax on motor vehicle articles to sales by the manufacturer of the so-called `mobile machine shop bodies' described below.

A manufacturer produces certain automobile truck bodies which are specially designed and constructed so as to accommodate machine shop equipment. The manufacturer equips each body with machine equipment such as lathes, grinders, and drill presses. The bodies are designed to be mounted on highway-type chassis furnished by the manufacturer's customers. The bodies, together with the equipment, are sold by the manufacturer for use as mobile shops which may be driven over the highways from one job site to another.

The general design of the bodies is such that all interior work areas are accessible from the ground, thereby permitting work in the area immediately surrounding the shop. When the upper sections of the sides of the bodies are raised, they form an extension of the roof area over the work space at the sides of the shop. When the lower sections of the sides of the bodies are lowered, they form extensions of the body floor area. These extensions of the floor area are suitable for use as work benches for the mechanics standing on the ground. Many of these bodies are provided with sections of canvas which are used during inclement weather when the sides of the body are extended or opened so as to form an enclosure for the working area of the shop.

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, trailers, and semitrailers (including in each case parts or accessories therefore sold on or in connection therewith or with the sale thereof).

Section 40.4061(a)-(1)(d) of the Manufacturers and Retailers Excise Tax Regulations provides 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.

The bodies described above are designed for the primary purpose of transporting machine shop equipment over the highways from one job site to another. Therefore, they are held to be taxable automotive truck bodies within the meaning of section 4061(a)(1) of the Code. Since the bodies are designed for the transportation of property over the highway, they are not `nonhighway vehicles,' as that term is used in the regulations.

The articles of machine shop equipment installed in or on the bodies are in the nature of articles of property being transported in the bodies and are not parts or accessories for the bodies. Accordingly, where the manufacturer of a body of the type described sells such body with machine shop equipment installed, manufacturers excise tax liability is not incurred with respect to that part of the total selling price properly attributable to the sale of the machine shop equipment, provided a separate bona fide price for the equipment is shown on the sales invoice or can be otherwise established by reference to adequate records.