Rev. Rul. 85-95

1985-2 C.B. 204, 1985-27 I.R.B. 6.

EXPORTED TRUCK SUBSEQUENTLY IMPORTED; FIRST RETAIL SALE

Published: July 8, 1985

SECTION 4051.-IMPOSITION OF TAX ON HEAVY TRUCKS AND TRAILERS RETAIL SOLD AT RETAIL, 26 CFR 145.4051-1: Imposition of tax on heavy trucks and trailers sold at retail

  Exported truck subsequently imported; first retail sale. If a truck is sold by a U.S. manufacturer to a retail dealer for export, and the truck is thereafter exported, used in a foreign country, and imported into the U.S., the first retail sale of the truck after importation is subject to the retailers excise tax imposed by section 4051(a) of the Code.

ISSUE

  Does the retailers excise tax imposed by section 4051(a) of the Internal Revenue Code apply if a truck is sold by a United States manufacturer for export to a foreign country, is exported to, and used in, the foreign country, and is subsequently sold to a United States dealer who imports it into the United States and sells it at retail?

FACTS

  X, a United States wholesaler and retailer of used trucks, purchased a used truck in a foreign country for resale in the United States. X sold it in the

United States to a retail customer on February 4, 1984. The truck in question was originally manufactured in the United States. It was sold by the manufacturer on May 1, 1983 for export to a dealer in the foreign country who resold it at retail in the foreign country. The truck was used in the foreign country before X imported it into the United States. The chassis and body of the truck are of a type subject to the retailers excise tax imposed by section 4051(a) of the Code.

LAW AND ANALYSIS

  Section 4051(a) of the Code imposes a 12 percent tax on the first retail sale of automobile truck chassis and bodies that are suitable for use with a vehicle which has a gross vehicle weight of more than 33,000 pounds. The sale of a truck is considered to be the sale of a chassis and body.

  Section 4052(a)(1) of the Code defines the term 'first retail sale' to mean the first sale, for a purpose other than for resale, after manufacture, production, or importation.

  Section 4051(a) of the Code, which became effective April 1, 1983, as added by section 512(b)(1) of Pub. L. No. 97-424, 1983-1 C.B. 405, 408. The tax imposed by section 4051(a) replaced the tax formerly imposed under section 4061(a). Section 4061(a) imposed a tax on certain automotive articles sold by the manufacturer, producer, or importer. The section 4061(a) tax was held to apply to the first sale of a taxable article in the United States by the manufacturer, producer, or importer. Smith v. United States, 319 F.2d 776, 779 (5th Cir. 1963); U.S. Truck Sales Co. v. United States, 229 F.2d 693, 696 (6th Cir. 1956). See, Indian Motorcycle Co. v. United States, 283 U.S. 570, 574 (1931), X-1 C.B. 439, 440 (1931). Articles imported into the United States that were used prior to importation were nevertheless subject to the section 4061(a) tax if the requirements of section 4061(a) were otherwise met. Smith v. United States; Circle Discount Corporation v. United States, 211 F. Supp. 743, 745 (D.D.C. 1962), aff'd per curiam, No. 17,633 (D.C. Cir. 1963); Rev. Rul. 58-297, 1958-1 C.B. 401. In this regard, the court in Smith stated that such a construction of the statute more fully comported with the legislative purpose to provide a comprehensive and convenient mode of reaching all first or initial sales while avoiding the possibility that the same article would be subject to the excise tax more than once.

  The effect of the enactment of section 4051(a) of the Code was to shift the tax from the first sale by the manufacturer, producer, or importer to the first retail sale made by any person. See, H.R. Rep. No. 97-945, 97th Cong., 2d Sess. 14 (1982), 1983-1 C.B. 421, 427. The tax imposed by section 4051(a), like the section 4061(a) tax, applies to the first taxable sale of the article in the United States. See, Smith; U.S. Truck Sales Co. Likewise, articles imported into the United States that were used prior to importation are subject to the tax imposed by section 4051(a) if the requirements of section 4051(a) are otherwise met. See, Smith; Circle Discount Corporation.

  In U.S. Truck Sales Co., the court held that the tax imposed by the predecessor to section 4061(a) of the Code did not apply to the resale in the United States of trucks that had been originally sold tax free in the United States and shipped to a foreign country and used there prior to information. The court reasoned that the tax could not be imposed on the second sale of an article which had already once been subject to the tax, even though that initial sale had been exempted from the tax under another provision of the Code.

  However, articles otherwise taxable that are sold tax free by the manufacturer are subject to the manufacturers excise tax on resale in the United States if returned to the United States in an unused and undamaged condition. Section 48.4221-3d(a)(2) of the Manufacturers and Retailers Excise Tax Regulations. See Rev. Rul. 81-97, 1981-1 C.B. 498.

  In this case, the sale of the used truck by X on February 4, 1984, was the first retail sale of the truck in the United States after importation. The retailers tax was not applicable to the original manufacturer's sale of the vehicle for export since the sale was not a sale at retail. No initial retail sale, taxable or tax-free, occurred prior to the exportation of the truck out of the United States. The first retail sale after the vehicle was subsequently imported into the United States presented the first, and only, opportunity to impose the tax.

HOLDING

  The sale of the truck by X after importation into the United States is subject to the retailers excise tax imposed by section 4051(a) of the Code.

Rev. Rul. 85-95, 1985-2 C.B. 204, 1985-27 I.R.B. 6.