Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 68-64

1968-1 C.B. 470

IRS Headnote

The weight of metal or porcelain studs inserted in or sold with a tire by the tire manufacturer, producer, or importer is includible in the total weight of the tire for purposes of the tax imposed by section 4071(a) of the Internal Revenue Code of 1954. However, where the studs are inserted in or sold with a tire by any other person, such person incurs no liability for the tax.

Full Text

Rev. Rul. 68-64

A question has been asked whether the weight of tire studs inserted in or sold with a tire is includible in the total weight of the tire for purposes of the tax imposed by section 4071 of the Internal Revenue Code of 1954.

Tire manufacturers produce tires with small holes in the tread designed to accept metal or porcelain studs. Studded tires are intended to provide better traction for vehicles operated on ice or snow. The studding operation involves inserting tungsten carbide pins (encased in a jacket which may be plastic, aluminum, or steel) or porcelain pins into the tire tread by use of a pressure gun or similar tool. Depending upon the type and size of the tire and the requirements of the purchaser, anywhere from 70 to 150 such pins or studs are inserted in the tread.

Section 4071 of the Code imposes upon tires and certain other articles, if wholly or in part of rubber, sold by the manufacturer, producer, or importer, a tax that is based upon the weight of the articles. That section provides that the weight shall be based on total weight, except that in the case of tires such total weight shall be exclusive of metal rims or rim bases. It provides further that total weight of the articles shall be determined under regulations prescribed by the Secretary or his delegate.

Section 48.4071-2(a)(1) of the Manufacturers and Retailers Excise Tax Regulations provides that metal rims or rim bases are not to be included in determining the total weight of a tire. However, the wire, staples, darts, clips, and other material or fastening devices which form a part of the tire or are required for its use must be included in determining the total weight of the tire.

In the case of a studded tire, the studs form a part of the tire and are required for the tire's use as a studded tire. Therefore, it is held that the weight of the metal or porcelain studs inserted in or sold with a tire by the tire manufacturer, producer, or importer is includible in the total weight of the tire for purposes of the tax imposed by section 4071(a) of the Code.

It is further held that where an independent dealer or distributor, a tire manufacturer's retail outlet, or any person other than the tire manufacturer inserts studs in a tire or sells studs with a tire, such person has not further manufactured the tire and, accordingly, incurs no liability for manufacturers excise tax on his sale thereof.