Par. 9. New §§ 48.4051-0, 48.4051-1, and 48.4051-2 are added to subpart H to read as follows:
(a) Imposition of tax. Section 4051 imposes a tax on the first retail sale of the following articles (including in each case parts or accessories sold on or in connection with the article or with the sale of the article):
(1) Automobile truck chassis and bodies.
(2) Truck trailer and semitrailer chassis and bodies.
(3) Tractors of the kind chiefly used for highway transportation in combination with a truck trailer or semitrailer.
(b) Tax base and rate of tax. The tax is the applicable percentage of the price for which the article is sold. The applicable percentage is prescribed in section 4051(a)(1). For rules for the determination of price, see paragraph (d)(4) of this section and § 145.4052-1(d) of this chapter.
(c) Liability for tax —(1) In general. Except as provided in paragraph (c)(2) of this section, the person that makes the first retail sale (as defined in § 48.4052-1(a)) of a taxable article listed in paragraph (a) of this section is liable for the tax imposed by section 4051. This person is referred to as the retailer in this section and § 48.4051-2.
(2) Exceptions; cross references. For cases in which a person other than the retailer is liable for the tax imposed under paragraph (a) of this section, see §§ 48.4051-1(d)(2)(ii) and (iii) (relating to chassis and bodies sold for use as a component part of a highway vehicle) and § 48.4051-1(e)(6)(ii) (relating to certain chassis completed as tractors).
(d) Special rules —(1) Separate taxation of chassis and body. If a chassis is a component part of a highway vehicle, the taxability of the chassis is determined independently of, and without regard to, the body that is installed on the chassis. If a body is a component part of a highway vehicle, the taxability of the body is determined independently of, and without regard to, the chassis on which the body is installed.
(2) Chassis and bodies sold for use as a component part of a highway vehicle —(i) In general. A chassis or body listed in paragraph (a) of this section is taxable under section 4051 only if such chassis or body is sold for use as a component part of a highway vehicle that is an automobile truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. A chassis or body that is not listed in paragraph (a) of this section (for example, a chassis or body of a passenger automobile) is not taxable under section 4051 even though such chassis or body is used as a component part of a highway vehicle.
(ii) Retailer; conditions for avoidance of liability. The retailer is not liable for tax on a chassis or body if, at the time of the first retail sale, the retailer—
(A) Has obtained from the buyer a certificate described in paragraph (d)(2)(iv) of this section stating, among other things, that the buyer will use the chassis or body as a component part of a vehicle that is not a highway vehicle;
(B) Has no reason to believe that any information in the certificate is false; and
(C) Has not received a notification from the IRS under paragraph (d)(2)(iv) of this section with respect to the buyer or the type of chassis or body.
(iii) Liability of buyer. If a buyer that provides a certificate described in paragraph (d)(2)(iv) of this section uses the chassis or body to which the certificate relates as a component part of a highway vehicle, the buyer is liable for the tax imposed on the first retail sale of such chassis or body.
(iv) Form of certificate. The certificate described in this paragraph (d)(2)(iv) consists of a statement that is signed under penalties of perjury by a person with authority to bind the buyer, is in substantially the same form as the model certificate in paragraph (d)(2)(v) of this section, and includes all the information necessary to complete the model certificate. The IRS may withdraw the right of a buyer to provide a certificate under this section if the buyer uses the chassis or body to which a certificate relates other than as stated in the certificate. The IRS may notify any retailer that the buyer's right to provide a certificate has been withdrawn. The IRS may also notify a retailer that sales of a specified type or types of chassis or bodies may not be made tax-free under this paragraph (d)(2) until further notification. The certificate may be included as part of any business records used to document a sale.
(v) Model Certificate.
Certificate
(To support the tax-free sale of a chassis or body that is to be used as a component part of a non-highway vehicle)
The undersigned buyer of a chassis or body listed in section 4051 (“Buyer”) hereby certifies the following under penalties of perjury:
1.
Seller's name, address, and employer identification number
2.
Buyer's name, address, and employer identification number
3.
Date and location of sale to Buyer
4. The article(s) listed below will not be used as a component part of a highway vehicle. If the article is a chassis, Buyer has listed the chassis Vehicle Identification Number. If the article is a body, Buyer has listed the body's identification number.
5. Buyer understands that it must be prepared to establish, by evidence satisfactory to an examining agent, how Buyer used the article.
6. Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.
7. Buyer understands that if it uses a chassis or body listed in this certificate as a component part of a highway vehicle, Buyer is liable for the tax imposed by section 4051 of the Internal Revenue Code.
8. Buyer understands that Buyer may be liable for the section 6701 penalty (relating to aiding and abetting an understatement of tax liability) if this is an erroneous certification.
9. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this statement to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing this certificate
Title of person signing
Signature and date signed
(3) Sale of a completed unit. A sale of an automobile truck, truck trailer, or semitrailer is considered a sale of a chassis and of a body listed in paragraph (a) of this section.
(4) Equipment installed on chassis or bodies. For purposes of section 4051, the sale price of a chassis or body includes any amount paid for equipment or machinery that is installed on and is an integral part of the chassis or body. Equipment or machinery is an integral part of a chassis or body if the equipment or machinery contributes to the highway transportation function of the chassis or body. Examples of machinery or equipment that contributes to the highway transportation function of a chassis or body are loading and unloading equipment; towing winches; and all other machinery or equipment that contributes to the maintenance or safety of the vehicle, the preservation of cargo (other than refrigeration units), or the comfort or convenience of the driver or passengers.
(5) Vehicle use. In determining whether a tractor, a truck body or chassis, or a truck trailer or semitrailer chassis or body is subject to the tax imposed by section 4051, the use (whether commercial, personal, recreational, or otherwise) of an article is immaterial.
(e) Explanation of terms and exclusions; tractors, trucks, trailers —(1) Tractor. The term tractor means a highway vehicle primarily designed to tow a vehicle, such as a truck trailer or semitrailer. A vehicle equipped with air brakes and/or a towing package will be presumed to be a tractor unless it is established, based on all the vehicle's characteristics, that the vehicle is not primarily designed to tow a vehicle. However, a vehicle that is not equipped with air brakes and/or a towing package is a tractor if the vehicle is primarily designed to tow a vehicle.
(2) Truck. The term truck means a highway vehicle primarily designed to transport its load on the same chassis as the engine even if it is also equipped to tow a vehicle, such as a trailer or semitrailer.
(3) Primarily designed. The term primarily means principally or of first importance. Primarily does not mean exclusively. The function for which a vehicle is primarily designed is evidenced by physical characteristics such as the vehicle's capacity to tow a vehicle, carry cargo, and operate (including brake) safely when towing or carrying cargo. Towing capacity depends on the vehicle's gross vehicle weight (GVW) rating and gross combination weight (GCW) rating and whether the vehicle is configured to tow a trailer or semitrailer. Cargo carrying capacity depends on the vehicle's GVW rating and the configuration of the vehicle's bed or platform. If a vehicle is capable of more than one function, such as towing a vehicle and carrying cargo on the same chassis as the engine, the physical characteristics of the vehicle determine the purpose for which the vehicle is primarily designed. A vehicle that can both carry cargo on its chassis and tow a trailer is either a truck or tractor depending on which function is of greater importance.
(4) Trailer —(i) In general. The term trailer means a non-self-propelled vehicle hauled, towed, or drawn by a separate truck or tractor. A trailer consists of a chassis and a body. A chassis is the frame that supports the trailer's suspension, axles, wheels, tires, and brakes. A body is the structure usually installed on the trailer chassis to accommodate the intended load of the trailer. In some instances, the body may itself constitute all or part of the intended load.
(ii) Truck trailer. The term truck trailer means a trailer that carries all of its weight and the weight of its load on its own chassis.
(iii) Semitrailer. The term semitrailer means a trailer, the front end of which is designed to be attached to, and rest upon, the vehicle that tows it. A portion of the semitrailer's weight and load also rests upon the towing vehicle.
(5) Incomplete chassis cab; classification as a truck. An incomplete chassis cab is classified as a truck at the time of its sale if, at such time—
(i) The incomplete chassis cab is not equipped with any of the features listed in paragraph (e)(7) of this section; and
(ii) The seller—
(A) Has obtained from the buyer a certificate described in paragraph (e)(8) of this section stating, among other things, that the buyer will equip the incomplete chassis cab as a truck;
(B) Has no reason to believe that any information in the certificate is false; and
(C) Has not received a notification under paragraph (e)(8) of this section with respect to the buyer.
(6) Incomplete chassis cab; classification as a tractor —(i) In general. An incomplete chassis cab is classified as a tractor at the time of its sale if, at such time—
(A) The incomplete chassis cab is equipped with any of the features listed in paragraph (e)(7) of this section; or
(B) The seller fails to satisfy one or more of the conditions set forth in paragraph (e)(5)(ii) of this section.
(ii) Completion as a tractor. If no tax is imposed under section 4051(a)(1) on the sale of an incomplete chassis cab classified as a truck under paragraph (e)(5) of this section and the purchaser completes the incomplete chassis cab as a taxable tractor, the purchaser is liable for tax under section 4051(a)(1) on the purchaser's sale or use of the taxable tractor.
(7) Incomplete chassis cab; features. The features referred to in paragraphs (e)(5)(i) and (e)(6)(i)(A) of this section are the following:
(i) A device for supplying air or hydraulic pressure or electric or other power from the incomplete chassis cab to the brake system of a towed vehicle.
(ii) A mechanism for protecting the incomplete chassis cab brake system from the effects of a loss of pressure in the brake system of a towed vehicle.
(iii) A control linking the brake system of the incomplete chassis cab to the brake system of a towed vehicle.
(iv) A control in the incomplete chassis cab for operating a towed vehicle's brakes independently of the incomplete chassis cab's brakes.
(v) Any other equipment designed to establish or enhance the incomplete chassis cab's use as a tractor.
(8) Incomplete chassis cab; certificate —(i) In general. The certificate described in this paragraph (e)(8) consists of a statement that is signed under penalties of perjury by a person with authority to bind the buyer, is in substantially the same form as the model certificate in paragraph (e)(8(ii) of this section, and includes all the information necessary to complete the model certificate. The IRS may withdraw the right of a buyer of vehicles to provide a certificate under this section if the buyer uses the vehicles to which a certificate relates other than as stated in the certificate. The IRS may notify any seller that the buyer's right to provide a certificate has been withdrawn. The certificate may be included as part of any business records normally used to document a sale.
(ii) Model Certificate.
Certificate
(To support the completion of an incomplete chassis cab as a truck)
The undersigned buyer of articles listed in section 4051 (“Buyer”) hereby certifies the following under penalties of perjury:
1.
Seller's name, address, and employer identification number
2.
Buyer's name, address, and employer identification number
3.
Date and location of sale to Buyer
4. Buyer certifies that Buyer will complete these incomplete chassis cabs listed below as trucks:
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5. Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.
6. Buyer understands that if Buyer completes an incomplete chassis cab listed in this certificate as a taxable tractor described in section 4051(a)(1)(E) and then uses it or sells it, Buyer may be liable for the tax imposed by section 4051 on this sale or use. See 26 CFR 48.4051-1(e)(6)(ii) and 145.4052-1(c).
7. Buyer understands that Buyer may be liable for the section 6701 penalty (relating to aiding and abetting an understatement of tax liability) if this is an erroneous certification.
8. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this statement to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing this certificate
Title of person signing
Signature and date signed
(f) Exclusions —(1) In general. Tax is not imposed by section 4051 on the first retail sale of the following articles:
(i) Automobile truck chassis or bodies that have practical and commercial fitness for use with a vehicle that has a GVW of 33,000 pounds or less.
(ii) Truck trailer and semitrailer chassis or bodies that have practical and commercial fitness for use with a truck trailer or semitrailer that has a GVW of 26,000 pounds or less.
(iii) Tractors that have—
(A) A GVW of 19,500 pounds or less; and
(B) A GCW of 33,000 pounds or less.
(2) Practical and commercial fitness. A chassis or body possesses practical fitness for use with a vehicle if it performs its intended function up to a generally acceptable standard of efficiency with the vehicle, and a chassis or body possesses commercial fitness for use with a vehicle if it is generally available for use with the vehicle at a price that is reasonably competitive with other articles that may be used for the same purpose. A truck chassis that has practical and commercial fitness for use with a vehicle having a GVW of 33,000 pounds or less is not subject to the tax imposed by section 4051 regardless of the body actually mounted on the chassis. A truck trailer or semitrailer chassis that has practical and commercial fitness for use with a vehicle having a GVW of 26,000 pounds or less is not subject to tax regardless of the body actually mounted on the chassis. A taxable chassis or body, as the case may be, remains subject to tax—
(i) Even if an exempt body is mounted on a taxable chassis or a taxable body is mounted on an exempt chassis; and
(ii) The resulting vehicle is a highway vehicle.
(3) Gross vehicle weight. (i) The term gross vehicle weight means the maximum total weight of a loaded vehicle. Except as otherwise provided in this paragraph (f)(3), the maximum total weight is the GVW rating of the article as specified by the manufacturer on the Manufacturer's Statement of Origin (or comparable document) or by the retailer of the completed article on a comparable document. In determining the GVW, the following rules apply:
(A) The GVW rating must take into account, among other things, the strength of the chassis frame, the axle capacity and placement, and, if an article is specially equipped to the buyer's specifications, those specifications.
(B) The manufacturer or retailer of an article listed in paragraph (a) of this section must specify the article's GVW rating at the time the article requires no additional manufacture other than—
( 1 ) The addition of readily attachable articles, such as tire or rim assemblies or minor accessories;
( 2 ) The performance of minor finishing operations, such as painting; or
( 3 ) In the case of a chassis, the addition of a body.
(C) If the IRS finds that a GVW rating by the manufacturer or a later seller is unreasonable in light of the facts and circumstances in a particular case, that GVW rating will not be used for purposes of section 4051.
(D) The IRS may exclude from a GVW rating any readily attachable parts to the extent the IRS finds that the use of such parts in computing the GVW rating results in an inaccurate GVW rating.
(E) If the following or similar ratings are inconsistent, the highest of these ratings is the GVW rating:
( 1 ) The rating indicated in a label or identifying device affixed to an article.
( 2 ) The rating set forth in sales invoice or warranty agreement.
( 3 ) The advertised rating for that article (or identical articles).
(ii) The retailer must keep a record of the GVW rating for each chassis, body, or vehicle it sells. For this purpose, a record of the serial number of each such article is treated as a record of the GVW rating of the article if such rating is indicated by the serial number. The GVW rating must be retained as part of the retailer's records for each of its chassis, bodies, or vehicles.
(4) Gross combination weight. (i) The term gross combination weight means the GVW of the tractor plus the GVW of any trailer or semitrailer that the tractor may safely tow. Unless a particular rating is unreasonable in light of the facts and circumstances in a particular case, the IRS will consider the GCW of a tractor to be the highest GCW rating specified on any of the following documents:
(A) The Manufacturer's Statement of Origin (or comparable document) or a comparable document of a seller of the completed tractor.
(B) A label or identifying device affixed to the completed tractor by the manufacturer or the seller.
(C) A sales invoice or warranty agreement.
(D) An advertisement for the tractor (or identical tractors).
(ii) The retailer must keep a record of the GCW rating for each tractor it sells. The GCW rating must be retained as part of the retailer's records for each of its tractors.
(g) Example. The following example illustrates the application of paragraphs (e)(1), (2), (3), and (4) of this section:
Example.
(1) Facts. (i) A vehicle has the capacity to tow truck trailers and semitrailers (trailers) that have a GVW of 20,000 pounds. The vehicle has a standard chassis cab (4-door with crew cab), accommodating five passengers, and is outfitted with certain luxury features. The cab has an electric trailer brake control that connects to the brakes of a towed trailer and to a hook up for trailer lights. The vehicle has two storage boxes behind the cab that can accommodate incidental items such as small tools and vehicle repair equipment.
(ii) The vehicle has a GVW rating of 23,000 pounds and a GCW rating of 43,000 pounds. The vehicle is equipped with hydraulic disc brakes with a four wheel automatic braking system, a 300 horsepower engine, and a six-speed automatic transmission. The front axle of the vehicle has an 8,000 pound rating and the rear axle has a 15,000 pound rating.
(iii) The vehicle has three types of hitching devices: A removable ball gooseneck hitch, a fifth wheel hitch, and a heavy duty trailer receiver hitch. The vehicle's platform, which is approximately 139 inches long, is designed with a rectangular well to accommodate the gooseneck and fifth wheel hitches (bed hitches). This platform slopes at the rear of the rectangular well and has tie down hooks. Optional removable steel stake rails can be placed around the platform.
(2) Analysis. (i) Some characteristics of the vehicle such as its chassis cab with a GVW rating of 23,000 pounds, a 300 horsepower engine, a front axle with an 8,000 pound rating, and a rear axle with a 15,000 pound rating are consistent with either a cargo carrying or a towing function. In this case, however, the vehicle also has a GCW rating of 43,000 pounds and its engine, brakes, transmission, axle ratings, electric trailer brake control, trailer hook up lights, and hitches enable it to tow a trailer that has a GVW rating of 20,000 pounds.
(ii) When the vehicle's bed hitches are used to tow, the cargo carrying capacity of the vehicle is limited to the storage boxes behind the cab and is minimal in comparison to the GVW rating of the towed truck trailer or semitrailer. Neither the steel stake bed rails nor the tie down hooks significantly increase cargo carrying capacity when either of the bed hitches is used. Even if neither of the vehicle's two bed hitches is used, the design of the vehicle significantly reduces its cargo carrying capacity when compared to the cargo carrying capacity of a pickup truck body or a flatbed truck body installed on a comparable chassis. The significant reduction in cargo carrying capacity resulting from the vehicle's platform with its rectangular well and sloping platform at the rear of the rectangular well is evidence that the vehicle is not primarily designed to carry cargo. By accommodating the bed hitches, however, this platform configuration increases the vehicle's towing capacity and, in conjunction with the other features described above, makes it possible to safely tow a trailer with a GVW rating of 20,000 pounds.
(3) Conclusion. The vehicle's physical characteristics, which maximize towing capacity at the expense of carrying capacity, establish that the vehicle is primarily designed to tow a vehicle, such as a truck trailer or semitrailer, rather than to carry cargo on its chassis. Thus, the vehicle is a tractor.
(h) Effective/applicability date. This section applies on and after the date of publication of these regulations in the Federal Register as final regulations.