Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 72-64

1972-1 C.B. 333

IRS Headnote

The manufacturers tax on motor vehicles applies to that portion of the sale price of a "brush chipper" attributable to the trailer chassis on which the brush chipping machinery is mounted.

Full Text

Rev. Rul. 72-64

Advice has been requested concerning the applicability of the manufacturers excise tax imposed by section 4061(a) of the Internal Revenue Code of 1954, to sales by the manufacturer of the "brush chipper" described below.

A company manufactures mobile equipment designed to be towed over the highway from one job site to another. The unit reduces tree limbs and brush to small chips. It is self-trailing with two trailing wheels, a third rest wheel, and a rear leg support. The brush chipper portion consists of a chipping and blower assembly attached to a trailer chassis that is constructed of one-piece electrically welded six-inch steel channel, heavily reinforced at all points of stress. The chipper components are flushed mounted to the chassis frame surface for maximum ground clearance.

The trailer chassis is equipped with the rest wheel and support leg, leaf springs, fenders, safety chains, a two-inch hitch, tail, stop, and identification lights, turn signals, license plate bracket and light, and reflectors. A 5,200-pound capacity forged axle provides mountings for two wheels equipped with 7:00 X 15, 6-ply tires.

The chipping portion of the brush chipper is used to reduce tree branches and brush to small chips. As the cutting knives reduce the brush and limbs to chips, the blower system disperses the chips on the ground or into the body of an attendant motor vehicle.

Section 4061(a)(1) of the Code imposes a tax upon the manufacturer, producer, or importer of various motor vehicle articles, including truck trailer and semitrailer chassis and bodies.

Section 48.4061(a)-1(e) of the Manufacturers and Retailers Excise Tax Regulations states that a trailer or semitrailer chassis or body primarily designed for highway use in combination with a taxable truck, bus, or tractor is subject to the tax imposed by section 4061(a)(1) of the Code. The tax attaches even though the trailer or semitrailer may have equipment to perform functions other than in connection with the transportation of property or persons. However, no tax under section 4061(a) of the Code attaches to that part of the selling price of the complete unit which is reasonably attributable to such equipment.

The design and construction of the brush chipper described above indicates that it consists of a trailer chassis with brush chipping equipment mounted thereon. The construction of the trailer chassis is such as to indicate that it is primarily designed to transport the brush chipper over the highways in combination with a taxable motor vehicle.

Therefore, it is held that the manufacturers excise tax imposed by section 4061(a) of the Code applies to that portion of the sale price of the brush chipper attributable to the trailer chassis. However, no tax under section 4061(a) of the Code attaches to that portion of the selling price of the brush chipper which is reasonably attributable to the chipping and blower assembly, provided that such part of the selling price is billed separately on the invoice to the customer or can be otherwise established by adequate records.