PART 145—TEMPORARY EXCISE TAX REGULATIONS UNDER THE HIGHWAY REVENUE ACT OF 1982 (PUB. L. 97-424) Authority: 26 U.S.C. 7805. Sections 145.4051-1 and 145.4052-1 also issued under 26 U.S.C. 4051 and 4052. Source: T.D. 7882, 48 FR 14362, Apr. 4, 1983, unless otherwise noted. § 145.4051-1 Imposition of tax on heavy trucks and trailers sold at retail. (a) Imposition of tax In general. (i) Automobile truck chassis and bodies; (ii) Truck trailer and semitrailer chassis and bodies; and (iii) Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. A sale of an automobile truck, truck trailer or semitrailer, shall be considered to be a sale of a chassis and of a body enumerated in this paragraph (a)(1). (2) Special rule applicable to chassis and bodies. (3) Parts or accessories sold on or in connection with chassis, bodies, etc. (4) Exclusions. suitable for use (b) Rate of tax. (c) Separate purchase of truck or trailer and parts and accessories therefor In general. (2) Placed in service. (3) Exceptions. (i) The part or accessory installed is a replacement part or accessory, or (ii) The aggregate price of the parts and accessories (and their installation) described in paragraph (c)(1) of this section with respect to any vehicle does not exceed $200. For purposes of paragraph (c)(3)(i) of this section, a part is a replacement part, regardless of when it is ordered, if its use with a vehicle is as a replacement for a part on such vehicle. For purposes of paragraph (c)(3)(ii) of this section, the term aggregate price of parts and accessories (and their installation) (d) Transitional rule. (e) Definitions. (1) Tractor. (ii) An incomplete chassis cab shall be treated as a tractor if it is equipped with one or more of the following: (A) A device for supplying pressure from the chassis cab to the brake system (air or hydraulic) of the towed vehicle; (B) A mechanism for protecting the chassis cab brake system from the effects of a loss of pressure in the brake system of the towed vehicle; (C) A control linking the brake system of the chassis to the brake system of the towed vehicle; (D) A control in the cab for operating the towed vehicle's brakes independently of the chassis cab's brakes; or (E) Any other equipment designed to make it suitable for use as a tractor. An incomplete chassis cab which is not equipped with any of the devices set forth in paragraphs (e)(1)(ii) (A) through (E) of this section shall be treated as a truck if the purchaser certifies in writing that the vehicle will not be equipped for use as a tractor. (2) Truck. (3) Gross vehicle weight. (ii) A seller must specify or establish a weight rating for each chassis, body, or vehicle sold on or after April 1, 1983 if such article requires no additional manufacture other than (A) the addition of readily attachable articles, such as tire or rim assemblies or minor accessories, (B) the performance of minor finishing operations, such as painting, or (C) in the case of a chassis, the addition of a body. If an article is specially equipped to the purchaser's specifications, such specifications may be used to establish the gross vehicle weight of the article. (iii) A seller shall maintain a record of the gross vehicle weight rating of each truck, trailer and semitrailer sold and excluded from the tax imposed by section 4051(a)(1) by reason of sections 4051(a) (2), (3) and paragraphs (e)(3) (i) through (v) of this section. For this purpose, a record of the serial number of each such article shall be treated as a record of the gross vehicle weight rating of the article if such rating is indicated by the serial number. (iv) If (A) the seller's rating indicated in a label or identifying device affixed to an article, (B) the rating set forth in the sales invoice or warranty agreement, and (C) the advertised rating for that article (or two or more identical articles) are inconsistent, the highest of such ratings will be considered to be the seller's gross vehicle weight rating specified or established for purposes of the tax imposed by section 4051(a)(1). (v) The seller's gross vehicle weight rating must take into account, among other things, the strength of the chassis frame and the axle capacity and placement. The Commissioner may exclude from the gross vehicle weight rating any readily attachable parts to the extent the Commissioner finds that the use of such parts in computing the gross vehicle weight rating is unreasonable. (f) Tax-free sales. (g) Effective date. [T.D. 7882, 48 FR 14362, Apr. 4, 1983, as amended by T.D. 8879, 65 FR 17164, Mar. 31, 2000] § 145.4052-1 Special rules and definitions. (a) First retail sale General rule. (2) Taxable sale. (i) The sale is a tax-free sale under section 4221, (ii) [Reserved]. For sales after June 30, 1998, see § 48.4052-1 of this chapter. (iii) There has been a prior taxable sale of the article. Notwithstanding the preceding clause, the sale of a chassis or body of a trailer or semitrailer (“trailer or semitrailer”) less than six months after a taxable sale of the article shall be treated as a taxable sale. (3) Computation of tax In general. (ii) Exception. (4) Special rule for tax-paid trailer and semitrailer. (i) The subsequent seller has not been repaid any portion of such tax by the previous taxpayer, (ii) The subsequent seller has not provided the previous taxpayer with written consent to allow the previous taxpayer to claim a credit or refund of such tax under section 6416 (a), and (iii) The subsequent seller has records (e.g., invoices) substantiating the amount of tax paid by the previous taxpayer with respect to the prior taxable sale of such article. In no case shall the amount of the credit allowable under this paragraph (a)(4) with respect to an article exceed the tax liability of the subsequent seller with respect to the sale of such article. (5) No installment payments of tax. (6) Certificate. Exemption Certificate I hereby certify that I am ____________ (Title) of ____________, (Name of purchaser) that I am authorized to execute this certificate, and that: (Check appropriate line) ______ the article or articles specified in the accompanying order, or on the reverse side hereof, (or) ______ all orders placed by the purchaser for the period commencing ______________ (Date) (period not to exceed 12 calendar quarters), are purchased either for resale or for lease on a long-term basis. I have filed Form 637 and have received registration number ________. I understand that the fraudulent use of this certificate to secure exemption will subject me and all parties making such fraudulent use to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. (Signature) (Address) (b) Tax treatment of leases Long-term lease. (2) Short-term lease. (3) Computation of tax Long-term lease by manufacturer, producer, or importer. (ii) Long-term lease by persons other than manufacturer, producer, or importer. (c) Use treated as sale In general. (2) Exemption for use in further manufacture. (3) Time of application of tax. (4) Events subsequent to taxable use of article. (5) Computation of tax. (ii) If the seller of an article regularly sells such articles at retail in arm's length transactions, tax liability on its use of any such article shall be computed on its lowest established retail price for such articles in effect at the time of the taxable use. In establishing such price, there shall be included and excluded, as applicable, the charges and readjustments specified in sections 4216(a), 4216(f), and 6416(b)(1) as in effect at the time the tax liability on the use of the article is incurred. If the seller of an article does not regularly sell such articles at retail in arm's length transactions, a constructive price on which the tax shall be computed will be determined by the Commissioner. This price will be established after considering the selling practices and price structures of sellers of similar articles. (iii) In the case of any short-term lease (as defined in paragraph (d)(6) of this section) by any person other than a manufacturer, producer, or importer (or related person as defined in paragraph (d)(2)(ii) of this section) of an article that is deemed to be a taxable use of such article under paragraph (b)(2) of this section, the tax imposed by section 4051(a)(1) shall be computed on a price equal to the sum of— (A) The price (as determined under paragraph (d) of this section) at which such article was sold to the lessor plus the cost of any parts and accessories installed by the lessor (or an agent of the lessor) on such article before the first use or lease by the lessor, plus (B) The product of the sum described in paragraph (c)(5)(iii)(A) of this section and the presumed markup percentage (as defined in paragraph (d)(7) of this section). (d) Determination of price In general. (2) Presumptive retail sales price where tax paid by manufacturer, producer, or importer In general. (A) The price that would (but for this paragraph (d)(2)) be determined under this paragraph (d), and (B) The product of the price determined under paragraph (d)(2)(i)(A) of this section and the presumed markup percentage (as defined in paragraph (d)(7) of this section). (ii) Related person defined In general. (B) Exception for permanent retail establishment. ( 1 ( 2 (3) Retail sales price where tax paid by person other than a manufacturer, producer, importer, or related person In general. (ii) Exception. (A) Such person does not perform any significant activities relating to the processing of the sale of an article, (B) The principal purpose for processing the sale through such person is to avoid or evade the presumed markup under paragraph (d)(2)(i)(B) of this section, and (C) Such person does not have records (e.g., invoices) substantiating that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage as defined in paragraph (d)(7) of this section. (4) Presumptive retail sales price in the case of a lease by a manufacturer, producer, or importer. (i) A constructive sales price established by the Commissioner based on the price at which such article would be sold by a manufacturer, producer, or importer in a sale other than a taxable sale (e.g., a sale to which the exceptions contained in paragraph (a)(2)(ii) of this section applies) on the date the lease is made, and (ii) The product of the constructive sales price referred to in paragraph (d)(4)(i) of this section and the presumed markup percentage as defined in paragraph (d)(7) of this section. (5) Presumptive retail sales price in the case of a long-term lease by any other person. (i) The price (as determined under this paragraph (d)) at which such article was sold to the lessor plus the cost of any parts and accessories installed by the lessor (or an agent of the lessor) on such article before the first use by the lessee or leased in connection with such long-term lease, and (ii) The product of the sum described in paragraph (d)(5)(i) of this section and the presumed markup percentage as defined in paragraph (d)(7) of this section. (6) Long-term and short-term lease defined. (7) Presumed markup percentage In general. (ii) Exceptions. (A) The refurbishing, renovation, or repair of the article causes it to be subject to the tax imposed by section 4051, and (B) Before remanufacture, such article was previously subject to the tax imposed by section 4051 (or section 4061 prior to its repeal). (8) Items excluded from price. (i) The amount of tax imposed under sections 4051(a)(1) and (b)(1); (ii) If stated as a separate charge, the amount of any retail sales tax imposed by any state or political subdivision thereof or the District of Columbia, whether the liability for such tax is imposed on the vendor or vendee; and (iii) The fair market value (including any tax imposed by section 4071) at retail of any tires (not including any metal rim or rim base). For purposes of this paragraph (d)(8)(iii), fair market value at retail shall be determined by the lowest established price for which the vehicle retailer would sell such tires at retail in the ordinary course of trade. The lowest established price is the lowest price for which the vehicle retailer sells, or offers to sell, a single tire to an independent purchaser who would not ordinarily be expected to buy more than one. If the vehicle retailer has no lowest established price the Commissioner will accept any price provided, under the facts and circumstances, such price is not unreasonable. For vehicles sold on or after April 1, 1983, and before October 13, 1985, a price will not be considered unreasonable if it is no more than an amount equal to 50 percent of the manufacturer's suggested retail price. (9) Trade-ins. (10) Sales not at arm's length. (i) One of the parties is controlled (in law or in fact) by the other, or there is common control, whether or not such control is actually exercised to influence the sale price, or (ii) The sale is made pursuant to special arrangements between a seller and a purchaser. In the case of an article sold otherwise than at arm's length, and sold at less than the fair market price, the tax imposed under section 4051(a)(1) or (b)(1) shall be computed on the price for which similar articles are sold at retail in the ordinary course of trade, as determined by the Commissioner. Once such a price has been determined, no further adjustment of such price shall be made. (e) Examples. Example 1. M manufactures trucks that are taxable under section 4051. On July 11, 1988, D, a corporation that is a dealer, purchases one truck from M for $50,000. M does not own any stock in D. Prior to this transaction, D gave M a certificate that meets the specifications detailed in paragraph (a)(6) of this section. The certificate states that the truck will be resold or leased on a long-term basis. M's sale to D is not a taxable sale of the truck (within the meaning of paragraph (a)(2) of this section). On July 20, 1988, D resells the truck to a purchaser, P, for $52,000. The additional $2,000 includes the dealer's mark-up, costs of transporting the truck from M to D, and overhead. No parts or accessories were added to the truck. P did not give D a certificate and did not have an agreement with D under which all vehicles purchased were to be resold. The sale of the truck by D to P is a taxable sale within the meaning of paragraph (a)(3) of this section. Therefore, D has a tax liability of $6,240 (12% × $52,000). Example 2. Assume the same facts as in example (1) except that M owns 80 percent of D's stock. D and M are members of the same controlled group (within the meaning of section 5061(e)(3)). Therefore, D is a related person under paragraph (d)(2)(ii)(A) of this section. On July 20, 1988, D sells the truck to P for $51,000. D does not have records substantiating that the truck was sold for a price that included a markup equal to or greater than the presumed markup percentage. The tax on the sale of the truck to P is determined under paragraph (d)(2)(i) of this section. Therefore, D has a tax liability of $6,240 [(12% × ($50,000 + ($50,000 × 4%))]. Example 3. Assume the same facts as in example (1) except that D does not perform any significant activities relating to the sale. Assume further that the principal purpose for processing the sale through D is to avoid the presumed markup and that D did not sell the truck for a price that included a markup equal to or greater than the presumed markup percentage. D, however, is designated the seller of the truck on the invoice. Pursuant to paragraph (d)(3)(ii) of this section, the price of the truck shall be computed on a price determined under paragraph (d)(2)(i). Therefore, D, the taxpayer, has a tax liability of $6,240 [12% × ($50,000 + ($50,000 × 4%))]. Example 4. Assume the same facts as in example (1) except that on July 20, 1988, D leases the truck for a two-year period ( i.e., Example 5. Assume the same facts as in example (1) except that on July 20, 1988. D leases the truck to L for a six-month period ( i.e., Example 6. Assume the same facts as in example (1) except that D does not give M a certificate. The sale by M to D is a taxable sale of the truck under paragraph (a)(2) of this section. M's tax liability is $6,240 [12% × ($50,000 + ($50,000 × 4%))]. On July 20, 1988, D leases the truck to L, a lessee. The lease has a two-year term. Since the lease to L occurred after a taxable sale of the truck, paragraph (b)(1) of this section does not apply, and the lease is not treated as a taxable sale under this section. Example 7. M manufactures trucks that are taxable under section 4051. On July 11, 1988, M leases a truck to a lessee, L. The lease has a two-year term. The lease is treated as a taxable sale under paragraph (b)(1) of this section and the tax is computed on the price as determined under paragraph (d)(4)(i) of this section. The constructive sales price established by the Commissioner, pursuant to paragraph (d)(4)(i) of this section, is $50,000. M has a tax liability of $6,240 [12% × ($50,000 + ($50,000 × 4%))]. Example 8. Assume the same facts as in example (7) except that the lease has a six-month term. The lease is treated as a taxable use under paragraph (b)(2) of this section and the tax is computed under paragraph (c)(5) of this section. The constructive sales price established by the Commissioner, pursuant to paragraph (c)(5)(i) of this section, is $52,000. M has a tax liability of $6,240 (12% × $52,000). Example 9. M manufactures truck trailers and semitrailers that are taxable under section 4051. On July 5, 1988, D, a dealer, purchases a trailer from M for $10,000. Prior to this transaction, D did not give M a certificate and D did not have an agreement with M to resell all articles purchased. The sale by M to D is a taxable sale of the trailer under paragraph (a)(2) of this section. M has a tax liability of $1,200 (12% × $10,000 + ($10,000 × 0%)). Example 10. Assume the same facts as in example (9) except that on July 12, 1988, D resells the trailer to P, a purchaser, for $10,500 (the additional $500 includes the dealer's markup, costs of transporting the trailer from M to D, and overhead). P did not give D a certificate and P did not have an agreement with D that stipulates that all articles purchased were to be leased on a long-term basis or resold. The sale of the trailer by D to P is a taxable sale within the meaning of paragraph (a)(3) of this section. Therefore, D has a tax liability of $1,260(12% × $10,500). D, however, may file for a credit of $1,200 under section 6402 provided that the requirements of paragraph (a)(4) of this section are met. (f) Other rules made applicable. (1) Section 48.0-2, relating to general definitions and attachment of tax; (2) Paragraphs (a) (2) and (3) of § 48.4061 (a)-1; (3) The exemptions provided by sections 4063 (a) and (d) and the regulations thereunder; (4) Section 4216(f) and the regulations thereunder, relating to the incorporation of used components; and (5) Section 4221 and the regulations thereunder, relating to certain tax-free sales. (g) Effective date In general. (2) Certain sales made prior to November 12, 1985. (3) Certain sales made after November 11, 1985, and before October 1, 1987 Sales not treated as taxable by purchaser and seller. Federal Register (ii) Sales treated as first retail sale by purchaser and seller. [T.D. 7882, 48 FR 14362, Apr. 4, 1983, as amended by T.D. 8050, 50 FR 37351, Sept. 13, 1985; T.D. 8200, 53 FR 16869, May 12, 1988; T.D. 8774, 63 FR 35804, July 1, 1998; T.D. 8879, 65 FR 17164, Mar. 31, 2000] § 145.4061-1 Application to manufacturers tax. The provisions of § 145.4051-1(e) (1) and (2), relating to the definition of tractors and trucks, shall apply to section 4061(a)(1) for sales made on or after January 7, 1983. However, an incomplete chassis cab will be treated as a truck chassis for sales made on or after January 7, 1983, and before April 1, 1983. For purposes of section 4061, gross vehicle weight shall be determined under § 48.4061(a)-1(f)(3) (i) through (iv) for sales made on or after January 7, 1983, and before April 1, 1983.