Rev. Rul. 80-90
1980-1 C.B. 240, 1980-13 I.R.B. 11.
Internal Revenue Service
Revenue Ruling
CRANES INSTALLED ON TRUCKS; JOB-SITE OPERATIONS
Published: March 31, 1980
26 CFR 48.4061(b)-2: Definition of parts or accessories.
Cranes installed on trucks; job-site operations. The tax imposed by section 4061 does not apply to sales of certain mast and boom type cranes having lifting capacity of 5,000 or 6,000 pounds that are mounted on small trucks and designed for job-site operations rather than for typical loading or unloading duties.
ISSUE
Does the manufacturers excise tax on automotive parts or accessories apply to sales of certain cranes designed to be mounted on trucks?
FACTS
The cranes are of the mast and boom type, and are normally mounted on small trucks in the right rear corner of the body to perform lifting operations at field locations and job-sites. The cranes have lifting capacities of 5,000 or 6,000 pounds, and are available with fixed boom lengths from 9 to 20 feet. They are driven by a truck or carrier battery which provides 30 to 80 minutes of operation. Further, they have a winch speed from 2 to 30 feet per minute, a rotation speed of 1/2 to 1 revolution per minute, and an elevation speed from 2 to 25 feet per minute. Some of the cranes have equipment to eliminate any 'creep' in the hold positions and other equipment to prevent operation of more than one function at a time. The cranes have current selling prices of $4,000 to $7,000.
The lifting capacity of the cranes enables them to lift articles which are too heavy to be transported by the trucks on which the cranes are mounted. In addition, the available load space within the truck body prevents placing such articles on the truck.
LAW AND ANALYSIS
Section 4061(b)(1) of the Internal Revenue Code imposes a manufacturers excise tax on the sale of automotive parts or accesories.
Section 48.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that 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 chassis or body, (2) any article designed to be attached to or used in connection with such chassis or body to add to its utility or ornamentation, and (3) any article the primary use of which is in connection with such chassis or body, whether or not essential to its operation or use.
Section 48.4061(b)-2(a) or the regulations provides further that an article is not a taxable part or accessory even though it is designed to be attached to the vehicle or to be primarily used with it if the article is the load being transported and the primary function of the article is to serve a purpose unrelated to the vehicle as such. On the other hand, an article such as loading or unloading equipment designed to be attached to or to be primarily used with a truck is a taxable part or accessory inasmuch as it contributes to the load-carrying function of the truck.
Rev. Rul. 75-88, 1975-1 C.B. 341, sets forth an administrative test to assist in determining the taxability of cranes of the mast and boom type. In applying this test, it will be presumed that cranes of such type that (1) measure 25 feet or less is extended horizontal reach, from the center line of the mast, without readily removable extensions, and (2) can be mounted on trucks for use in loading or unloading such trucks, are articles that are designed and primarily used for loading and unloading such trucks. Therefore, the tax imposed by section 4061(b)(1) of the Code would apply to such cranes. However, the presumption established by this test is rebuttable if it can be established that such determination is inconsistent with section 48.4061(b)-2(a) of the
regulations.
Rev. Rul. 79-192, 1979-1 C.B. 340, concluded that an article is a part or accessory under section 48.4061(b)-2(a) of the regulations only if it contributes as much or more to the highway transportation function than to the non-transportation function. In other words, an item which contributes primarily to the non-highway transportation function of the vehicle is not taxable.
The cranes in question measure less than 25 feet in extended horizontal reach and can be mounted on trucks for use in loading or unloading the trucks. Thus, the cranes meet (1) and (2) of the test set forth in Rev. Rul. 75-88 and are presumed to be taxable.
However, such determination is inconsistent with section 48.4061(b)-2(a) of the regulations because the cranes are primarily designed for job-site operations rather than as typical loading and unloading cranes. Loading and unloading cranes for small trucks typically have lifting capacities of 1,000 to 2,000 pounds; articulating, folding or extendable booms; a hydraulic pump
power source which permits an indefinite work cycle; faster winch speeds of 60 to 120 feet per minute; faster rotation speeds of 2 to 3 revolutions per minute; faster elevation speeds of 30 to 50 feet per minute; and current selling prices as low as $600 to $700.
HOLDING
The presumption of taxability established under Rev. Rul. 75-88 is rebutted with respect to these cranes. Accordingly, the tax imposed by section 4061(b)(1) of the Code on automotive parts or accessories does not apply to sales of the described cranes.
Rev. Rul. 80-90, 1980-1 C.B. 240, 1980-13 I.R.B. 11.