Rev. Rul. 68-136

Advice has been requested whether the tax imposed by section 4061(b)(1) of the Internal Revenue Code of 1954 on manufacturers' sales of automobile parts and accessories, and the tax imposed by section 4061(a)(1) on parts and accessories sold on or in connection with taxable motor vehicle articles, apply to refrigeration units designed to be installed in truck or trailer bodies.

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

Section 4061(a)(1) of the Code imposes a tax on the sale by the manufacturer, producer, or importer of certain enumerated motor vehicle articles, including in each case parts or accessories therefor sold on or in connection therewith or with the sale thereof. The enumeration in section 4061(a)(1) includes automobile truck bodies and truck trailer and semitrailer bodies.

In U.S. Thermo Control Co. v. United States and Thermo King Corporation v. United States, 372 F.2d 964 (1967), cert. den. 88 S.C. 68 (1967), the United States Court of Claims concluded that refrigeration units designed to be installed in taxable truck or trailer bodies are not subject to the tax imposed by section 4061(b)(1) of the Code when sold by the manufacturer or importer of the units. In view of this decision, the Internal Revenue Service now holds that sales of such refrigeration units are not subject to the tax imposed on automotive parts and accessories by section 4061(b)(1).

Furthermore, in view of the decision in the cases cited above, the Service holds that in computing the tax imposed by section 4061(a)(1) of the Code upon the sale of automobile truck and trailer bodies, the portion of the sale price attributable to refrigeration units sold on or in connection with the sale of such bodies is to be excluded from the tax base.

The conclusions expressed in this Revenue Ruling are applicable only to refrigeration units designed to be installed in taxable truck or trailer bodies. These conclusions are not to be extended so as to exclude from manufacturers excise tax any other article (1) the sale of which is within the scope of section 4061(b)(1) of the Code, or (2) properly includible in the tax base for sales of chassis and bodies subject to the tax imposed by section 4061(a).

Revenue Ruling 63-160, C.B. 1963-2, 489, which holds that the sale of certain electric-powered refrigeration systems designed to be attached to and used in connection with taxable motor vehicles are subject to the tax imposed by section 4061(b) of the Code, is hereby revoked.

Revenue Ruling 64-335, C.B. 1964-2, 413, is hereby modified to conclude with respect to Situation (2) , that the portion of the sale price of the completed truck or trailer body attributable to refrigeration units is to be excluded from the tax base in computing tax liability on the sale or use of such completed body.

¹ Based in part, on Technical Information Release 947, dated December 5, 1967; also released as Technical Information Release 970, dated February 27, 1968.