Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 65-52

1965-1 C.B. 459

IRS Headnote

A license holder, designed to be mounted on the outside of an automotive vehicle to display a license, registration, or inspection form, comes within the meaning of the term `parts or accessories' as defined by section 48.4061(b)-2(a) of the Manufacturers and retailers Excise Tax Regulations. Therefore, it is subject to the manufacturers excise tax imposed by section 4061(b) of the Internal Revenue Code of 1954, when sold by the manufacturer. However, a reflector flare kit and a kerosene and fusee flare kit are not automobile `parts or accessories' and, therefore, are not subject to the tax.

Full Text

Rev. Rul. 65-52

Advice has been requested concerning the applicability of the manufacturers excise tax on automobile `parts or accessories' to sales by the manufacturer of the articles described below.

Article 1 .-This article, which is referred to as a license holder, is designed to be mounted on the outside of an automotive vehicle to display a license, registration, or inspection form. It is five and one-half inches in diameter and five-eighths of an inch in depth and is constructed so as to contain a four-inch transparent plastic lens which will allow the forms to be always visible. This article is flanged and has four holes by means of which it may be mounted flush on the outside of a vehicle.

Article 2 .-This article is a reflector flare kit containing three reflex reflector flare panels, each having two reflectors and a separate base. Each kit also contains two red flags, 12 inches by 12 inches, and a flexible metal flagstaff for each flag. These warning signal items are designed to be placed on the ground in front of, alongside, or in back of a vehicle which is stopped on the highway.

Article 3 .-This article is a kerosene and fusee flare kit containing warning devices for use by motorists. Each kit contains three kerosene flare pots with snuffer caps, two red flags and flagstaffs, three spike fusees, and two fusee holders.

Section 4061(b) of the Internal Revenue Code of 1954 imposes a tax on 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 articles enumerated in section 4061(a) of the Code.

Section 48.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that,  in general, the term `parts or accessories' includes-

(1) any article the primary use of which is to improve, repair, replace, or serve as a component part of an automobile, truck or bus chassis or body, or other automobile chassis or body, or taxable tractor,

(2) any article designed to be attached to or used in connection with such chassis, body, or tractor to add to its utility or ornamentation, and

(3) 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 license holder, article 1 , is designed to be attached to and used in connection with a taxable motor vehicle article to add to its utility or ornamentation. Accordingly, the holder comes within the meaning of the term `parts or accessories' as defined by section 48.4061(b)-2(a) of the regulations. Therefore, it is held that the license holder is subject to the manufacturers excise tax on automobile `parts or accessories,' imposed by section 4061(b) of the Code, when sold by the manufacturer.

On the other hand, the reflector flare kit and the kerosene and fusee flare kit, articles 2 and 3 , are not designed to be attached to motor vehicles or to add to the utility or ornamentation of such vehicles. Accordingly, these articles are not automobile `parts or accessories' within the meaning of the regulations. Therefore, they are not subject to the manufacturers excise tax imposed by section 4061(b) of the Code.

The conclusion expressed herein is equally applicable under the provisions of section 40.4061(b)-2 of the regulations, effective with respect to sales made prior to January 1, 1964.