Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 65-8

1965-1 C.B. 476

IRS Headnote

The test for determining whether an amplifier or speaker is suitable for use in connection with a radio or television receiving set, phonograph, or combination thereof, is its common use with such articles, or its actual, practical, commercial fitness for such use, even though not primarily so adapted. The voice coil impedance of a speaker and the rated power output of an amplifier are not controlling factors in determining the taxability of these components.

Revenue Ruling 56-228, C.B. 1956-1, 509, and Revenue Ruling 56-456, C.B. 1956-2, 810, are revoked.

Full Text

Rev. Rul. 65-8

The Internal Revenue Service has reconsidered the voice coil impedance and power output standards set forth in Revenue Ruling 56-228, C.B. 1956-1, 509, and Revenue Ruling 56-456, C.B. 1956-2, 810, for determining the taxability of speakers and amplifiers, respectively.

Section 4141 of the Internal Revenue Code of 1954 imposes a tax upon sales by the manufacturer, producer, or importer of radio receiving sets, television receiving sets, phonographs, combinations of any of the foregoing, radio and television components, and phonograph records.

The term `radio and television components,' as used in section 4141, is defined in the pertinent part of section 4142 of the Code to include amplifiers and speakers (among other articles) which are suitable for use on or in connection with, or as component parts of, any of the articles enumerated in section 4141, whether or not primarily adapted for such use.

Section 48.4142-1(c)(4) of the Manufacturers and Retailers Excise Tax Regulations defines the term `speakers' to include all devices, except earphones, for use in converting electrical impulses to sound, whether or not equipped with coupling units, which are suitable for use on or in connection with, or as component parts of, any radio or television receiving set, phonograph, or combination of any of the foregoing.

Section 48.4142-1(c)(5) of the regulations defines the term `amplifiers' to include all apparatus for the amplification of audio frequency or video frequency impulses which are suitable for use on or in connection with, or as component parts of, any radio or television receiving set, phonograph, or combination of any of the foregoing.

Section 48.4142-1(b) of the regulations defines `suitable for use' to mean commonly used with any radio or television receiving set, phonograph, or combination of any of the foregoing, or having actual, practical, commercial fitness for such use. It is immaterial whether the item is primarily adapted for such use.

Revenue Ruling 56-228 states that speakers with a voice coil impedance rating of eight ohms or more are not considered suitable for use on or in connection with, or as component parts of, any of the articles enumerated in section 4141 of the Code unless they are recommended for such use by the manufacturer.

Revenue Ruling 56-456 holds that amplifiers which have a rated power output of ten watts or more are not suitable for use on or in connection with, or as component parts of, radio or television receiving sets or phonographs.

Due to the extended development of high fidelity and stereophonic sound reproduction in the radio and phonograph industry, the voice coil impedance of speakers and the rated power output of amplifiers can no longer be considered controlling factors for determining whether such articles are suitable for use on or in connection with, or as component parts of, any radio or television receiving set, phonograph, or combination of any of these articles.

Accordingly, it is held that the applicability of the manufacturers excise tax to speakers and amplifiers must be determined upon the basis of their suitability for use with taxable radio or television sets, phonographs, or combinations of any of these articles. Some of the relevant factors are mentioned in the regulations cited above.

Revenue Rulings 56-228 and 56-456, which were issued under prior regulations and based upon different industry situations, are hereby revoked. However, under the authority granted in section 7805(b) of the Code, the revocation of those Revenue Rulings will not apply to speakers or amplifiers sold prior to July 1, 1965.