Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 78-19

1978-1 C.B. 350

IRS Headnote

Preformed armature coils. Preformed armature coils that are susceptible of use in a variety of industrial and automotive applications and are sold for use in rebuilding used armatures are not taxable parts or accessories under section 4061(b)(1) of the Code. Further, under section 4063(c), the rebuilt armatures are not subject to the tax.

Full Text

Rev. Rul. 78-19

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

A company manufactures copper armature coils of the "hair-pin" type. The coils are fabricated by cutting lengths of copper wire and bending the pieces into "U" shaped forms. As such, the coils are susceptible of use in a variety of industrial and automotive applications. The company generally packages the coils and sells them to rebuilders of armatures. By a process of further shaping, coating, baking, and welding, the coils are attached to the cylindrical cores and commutators of the used armatures being rebuilt. Many of the armatures are of the type that are taxable automotive parts or accessories under section 4061(b)(1) of the Code.

Section 4061(b)(1) of the Code imposes a tax upon parts or accessories (other than tires and inner tubes) for any of the articles enumerated in section 4061(a)(1), when sold by the manufacturer, producer, or importer. Included among the articles enumerated in section 4061(a)(1) are automobile truck and bus chassis and tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer.

Section 4063(c) of the Code provides that the tax imposed under section 4061(b) shall not apply in the case of rebuilt parts or accessories.

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, or (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.

Preformed coils of the type described above are articles of general use within the meaning of section 48.4061(b)-2(b) of the regulations. Therefore, they are not parts or accessories subject to the tax imposed by section 4061(b)(1) of the Code. Accordingly, the company in this case is not liable for the tax imposed by section 4061(b)(1) on its sales of the preformed coils.

Furthermore, under section 4063(c) of the Code, the rebuilders of the armatures incur no liability for tax under section 4061(b)(1) on their sales of the armatures.