Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 72-18

1972-1 C.B. 335

IRS Headnote

Offset flush valves and shut-off or "butterfly" valves drilled to meet truck industry standards for use on truck and semitrailer tank bodies are "parts or accessories" subject to the manufacturers tax.

Full Text

Rev. Rul. 72-18

Advice has been requested whether the valves described below are subject to the manufacturers excise tax on automotive parts or accessories imposed by section 4061(b)(1) of the Internal Revenue Code of 1954.

A company manufactures and sells two types of valves. One type is an outlet flush valve used in a tank for discharging viscous liquids such as asphalt, chemicals, and resins. The other type is a shut-off or "butterfly" valve designed for handling liquid, gaseous, or dry products. Each valve is available in various metals and sizes dependent upon the use and the product to be handled. The valves are used on industrial tanks, but in many instances the bodies of the valves are drilled to meet truck industry standards for use on truck and semitrailer tank bodies.

Section 4061(b)(1) of the Code imposes a tax on parts or accessories (other than tires and inner tubes) for any of the articles enumerated in section 4061(a)(1) sold by the manufacturer, producer, or importer. Among the articles enumerated in section 4061(a)(1) of the Code are chassis and bodies for trucks and semitrailers.

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 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.

Section 48.4061(b)-2(b) of the regulations provides that the term "parts or accessories" does not include articles which are not used primarily in the manufacture, repair, etc., of automobile trucks, or tractors, but have a general use in the manufacture, repair, etc., of various articles. The outlet flush valves and the shut-off valves not drilled to truck industry standards are not "parts or accessories," but are articles of general use within the meaning of section 48.4061(b)-2(b) of the regulations. Therefore, it is held that sales by the manufacturer of these valves are not subject to the manufacturers excise tax. When the valves are drilled to meet truck industry standards, however, they become articles that are designed to be attached to and primarily used in connection with taxable truck and semitrailer tank bodies. Therefore, it is further held that these valves are "parts or accessories," as defined in section 48.4061(b)-2(a) of the regulations, and are subject to the tax imposed by section 4061(b) of the Code when sold by the manufacturer.