Excise Tax; Tractors, Trailers, Trucks, and Tires; Definition of Highway Vehicle, 18544-18558 [2016-06881]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 81, Number 62 (Thursday, March 31, 2016)]
[Proposed Rules]
[Pages 18544-18558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06881]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 81, No. 62 / Thursday, March 31, 2016 / 
Proposed Rules

[[Page 18544]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 41, 48, and 145

[REG-103380-05]
RIN 1545-BE31


Excise Tax; Tractors, Trailers, Trucks, and Tires; Definition of 
Highway Vehicle

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations relating to the 
excise taxes imposed on the sale of highway tractors, trailers, trucks, 
and tires; the use of heavy vehicles on the highway; and the definition 
of highway vehicle related to these and other taxes. These proposed 
regulations reflect legislative changes and court decisions regarding 
these topics. These proposed regulations affect manufacturers, 
producers, importers, dealers, retailers, and users of certain highway 
tractors, trailers, trucks, and tires.

DATES: Written and electronic comments and requests for a public 
hearing must be received by June 29, 2016.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-103380-05), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered to: 
CC:PA:LPD:PR Monday through Friday between the hours of 8 a.m. and 4 
p.m. to: CC:PA:LPD:PR (REG-103380-05), Courier's Desk, Internal Revenue 
Service, 1111 Constitution Avenue NW., Washington, DC, or sent 
electronically via the Federal eRulemaking Portal at https://www.regulations.gov (IRS REG-1103380-05).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Celia Gabrysh, at (202) 317-6855; concerning submissions of comments or 
a request for a hearing Regina Johnson at (202) 317-6901 (not toll-free 
numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collection of information should be 
sent to the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, 
Washington, DC 20224. Comments on the collection of information should 
be received by May 31, 2016. Comments are specifically requested 
concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal Revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information;
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    The collections of information in these proposed regulations are in 
Sec.  48.4051-1(e)(8), describing the certificate the seller of an 
incomplete chassis cab must have to substantiate a tax-free sale; Sec.  
48.4051-1(f)(3)(ii), describing the record of gross vehicle weight 
(GVW) a seller of a truck, trailer, or tractor must maintain to 
substantiate taxable and nontaxable sales; Sec.  48.4051-1(f)(4)(ii), 
describing the record of gross combination weight (GCW) a seller of a 
tractor must maintain to substantiate taxable and nontaxable sales; 
Sec.  48.4052-1(c), describing the certificate a seller of a truck, 
trailer, or tractor for resale or long term leasing must have to 
substantiate a tax-free sale; Sec.  48.4052-2(b), describing the 
certificate a seller of a trailer must have to avoid the four percent 
price markup for resale within six months; Sec.  48.4073-1(c), 
describing the certificate a taxable tire manufacturer must have to 
make a tax-free sale to the Department of Defense or the Coast Guard; 
Sec.  48.4221-7(c), describing the certificate a manufacturer must have 
to make a tax-free sale of a taxable tire when sold for use or in 
connection with the sale of another article manufactured by the 
purchaser and sold by the purchaser in a sale that meets the 
requirements of section 4221(e)(2); and Sec.  48.4221-8(c), describing 
the certificate a taxable tire manufacturer must have to make a tax-
free sale of taxable tires for intercity, local and school buses. This 
information is required to obtain a tax benefit and meet a taxpayer's 
recordkeeping obligations under section 6001. This information will be 
used by the IRS to substantiate claims for tax benefits. The likely 
recordkeepers are businesses.
    Estimated total annual reporting and/or recordkeeping burden: 750 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper varies from .10 hour to .40 hours, depending on individual 
circumstances, with an estimated average of .25 hours.
    Estimated number respondents and/or recordkeepers: 3,000.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains proposed amendments to the Highway Use Tax 
Regulations (26 CFR part 41), the Manufacturers and Retailers Excise 
Tax Regulations (26 CFR part 48), and the Temporary Excise Tax 
Regulations Under The Highway Revenue Act of 1982 (Pub. L. 97-424) (26 
CFR part 145).

[[Page 18545]]

Tractors, Trailers, and Trucks

    Before April 1, 1983, section 4061 imposed a tax on the 
manufacturer's sale of certain highway-type tractors, chassis, and 
bodies for highway-type trailers and trucks, and related parts and 
accessories for these articles. The Highway Revenue Act of 1982, Public 
Law 97-424 (96 Stat. 2097) (the 1982 Act), changed this tax to a 12 
percent tax under section 4051(a)(1) on the first retail sale of 
certain highway-type tractors and chassis and bodies for highway-type 
trailers and trucks. In addition, the 1982 Act replaced the tax on the 
manufacturer's sale of related parts and accessories with a tax on the 
installation of parts and accessories on a vehicle containing a taxable 
article within six months after the vehicle was first placed in service 
(unless the aggregate price of the parts and the cost of installation 
was less than $200). Section 4051(a)(5) provides that the sale of a 
truck, truck trailer, or semitrailer is to be considered as the sale of 
a chassis and of a body.
    Under the 1982 Act, a chassis or body suitable for use with (1) a 
truck with a GVW of 33,000 pounds or less or (2) a trailer with a GVW 
of 26,000 pounds or less is generally exempt from tax. All tractors of 
the kind chiefly used for highway transportation in connection with 
trailers and semitrailers were taxable under the 1982 Act regardless of 
their GVW.
    On April 4, 1983, temporary regulations were published in the 
Federal Register (48 FR 14361; TD 7882) to implement this new retail 
tax. Subsequent amendments to these regulations were published in the 
Federal Register on September 13, 1985 (50 FR 37350; TD 8050); May 12, 
1988 (53 FR 16867; TD 8200); and July 1, 1998 (63 FR 35799; TD 8774). 
Collectively, these regulations are referred to in this preamble as 
``the temporary regulations.''
    One provision in the temporary regulations provided that tax was 
not imposed on tractors, chassis, and bodies when they were sold for 
resale or long-term lease if the buyer was registered by the IRS. 
Section 1434(b)(2) of the Taxpayer Relief Act of 1997, Public Law 105-
34 (111 Stat. 788) (the 1997 Act), provided that IRS registration could 
not be a prerequisite for these tax-free sales. Subsequently, the 
temporary regulations were amended to reflect this statutory provision 
on March 31, 2000 (65 FR 17149; TD 8879). The 1997 Act also increased 
from $200 to $1,000 the aggregate dollar value of parts and accessories 
that may be installed on section 4051 articles without incurring a tax 
liability.
    Section 11112 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA), Public Law 
109-59 (119 Stat. 1144), added new section 4051(a)(4), that provides an 
exemption for small tractors from the tax on tractors.

Tires

    Before January 1, 1984, section 4071 imposed a tax on the 
manufacturer's sale of highway and nonhighway tires, tubes, and tread 
rubber. Effective that date, the 1982 Act repealed most of these taxes 
but retained a tax on certain heavy highway-type tires based on the 
weight of the tires.
    Section 869 of the American Jobs Creation Act of 2004, Public Law 
108-357 (118 Stat. 1418) (2004 Act), changed section 4071 from a tax 
based on the weight of a tire to a tax based on the maximum rated load 
capacity of a tire in excess of 3,500 pounds. A special rate of tax was 
provided for super single tires. A super single tire was defined as a 
single tire greater than 13 inches in cross-section width designed to 
replace two tires in a dual fitment.
    Section 1364(a) of the Energy Policy Act of 2005, Public Law 109-58 
(119 Stat. 594), amended the definition of a super single tire to 
exclude any tire designed for steering.

Definition of Highway Vehicle

    Generally, section 4051 imposes a tax only on components of highway 
vehicles. Similarly, the tax imposed by section 4481 on the use of 
certain heavy vehicles applies only to highway vehicles. Sections 6421 
and 6427 allow a credit or payment related to the tax imposed on fuel 
(including gasoline or diesel fuel) in many cases if the fuel is used 
other than as a fuel in a highway vehicle.
    Existing regulations define highway vehicle with exceptions 
provided for (1) certain specially-designed mobile machinery for 
nontransportation functions, (2) certain vehicles specially designed 
for off-highway transportation, and (3) certain trailers and 
semitrailers specially designed to perform nontransportation functions 
off the public highway. Section 851 of the 2004 Act generally codified 
the regulatory exception for item (1) and codified, with substantial 
changes, the regulatory definitions of items (2) and (3).

 Reason for These Regulations

    Many of the existing regulations relating to tractors, trailers, 
trucks, and tires do not reflect current law. These proposed 
regulations reflect changes to the Internal Revenue Code since 1982, 
address several court decisions, remove numerous obsolete regulations, 
and also afford the public the opportunity to comment on those 
provisions of the temporary regulations that are restated and 
unchanged.

Explanation of Provisions

Definition of Highway Vehicle

    Proposed Sec.  48.0-5 defines a highway vehicle as any self-
propelled vehicle, or any truck trailer or semitrailer, designed to 
perform a function of transporting a load over public highways. This 
proposed section also provides exceptions for specified mobile 
machinery, off-highway vehicles, and non-transportation trailers and 
semitrailers for purposes of the tax on the sale of heavy vehicles 
(section 4051), the highway use tax (section 4481), and the credits and 
payments allowed for certain nontaxable uses (sections 6421 and 6427). 
The exception for mobile machinery restates section 4053(8) (as added 
by the 2004 Act) and the exceptions for off-highway vehicles and non-
transportation trailers and semitrailers restate section 7701(a)(48)(A) 
and (B) (as added by the 2004 Act). Also, Notice 2005-4, 2005-1 C.B. 
289, announced that existing regulations regarding certain vehicles 
specially designed for off-highway transportation would be revised so 
that they will not apply to calendar quarters beginning after October 
22, 2004. These proposed regulations make that change.
    The proposed regulations provide two examples that illustrate the 
definition of highway vehicle. The first example concerns the off-
highway vehicle exception and characterizes an asphalt semitrailer 
similar to the trailers and semitrailers described in Flow Boy, Inc. v. 
United States, 83-1 U.S.T.C. ]16,395, aff'd, 54 A.F.T.R.2d 84-6545, 84-
1 U.S.T.C. ]16,418 (10th Cir. 1984), and Gateway Equip. Corp. v. United 
States, 247 F. Supp. 2d 299 (W.D.N.Y. 2003), as a highway vehicle. 
Relying on the then-existing regulations, the Flow Boy and Gateway 
courts held that the asphalt trailers and semitrailers in question were 
not highway vehicles. In 2004, Congress added section 7701(a)(48) to 
the Code, which provides a statutory definition of the term ``off-
highway vehicles.'' Under section 7701(a)(48)(A), a vehicle is not 
treated as a highway vehicle if such vehicle is specially designed for 
the primary function of transporting a particular type of load over the 
public highway and because of this special design, such vehicle's 
capability to transport a load over the

[[Page 18546]]

public highway is substantially limited or impaired. The enactment of 
section 7701(a)(48) effectively disqualified an asphalt semitrailer 
similar to the ones described in Flow Boy and Gateway from the off-
highway exception because its special design does not substantially 
limit or impair its capability to transport a load over a public 
highway. The example in the proposed regulations illustrates the 
analysis of whether a vehicle is a highway vehicle under section 
7701(a)(48).
    The second example concerns the mobile machinery exception and 
reflects the decision in Florida Power & Light Co. v. United States, 
375 F.3d 1119 (Fed. Cir. 2004), which holds that a vehicle that can 
perform more than one transportation function is not specially designed 
to serve ``only'' as a mobile carriage and mount. See also Schlumberger 
Technology Corp. and Subsidiaries v. United States, 55 Fed. Cl. 203 
(2003).

Retail Tax on Tractors, Trailers, and Trucks

    The proposed regulations reorganize and partially restate the 
temporary regulations that address the retail tax on tractors, 
trailers, and trucks. Proposed Sec.  48.4051-1(e) revises the 
definitions of tractor and truck and provides a model certificate for a 
seller to establish the tax status of an incomplete chassis cab. If the 
buyer of an incomplete chassis cab certifies to the seller that the 
buyer will not complete the incomplete chassis cab as a taxable 
tractor, the seller may treat the sale of the incomplete chassis cab as 
the sale of a truck or small tractor. Consequently, no tax is imposed 
on the sale of an incomplete chassis cab when accompanied by a 
qualifying certificate. In the absence of this certificate, the seller 
must treat the sale of an incomplete chassis cab as the sale of a 
taxable tractor. This rule generally restates Sec.  145.4051-1(e)(1) 
and is consistent with the interpretation of the existing rule in 
Freightliner of Grand Rapids, Inc. v. United States, 351 F. Supp. 2d 
718, 723 (2004).
    Consistent with the temporary regulations, the proposed regulations 
define the terms tractor and truck by reference to the primary design 
of a vehicle. For purposes of determining whether a vehicle is 
``primarily designed'' as a tractor or a truck, proposed Sec.  48.4051-
1(g) also includes an example and reflects Rev. Rul. 2004-80 (2004-2 CB 
164), which applied the primarily designed test to determine whether a 
vehicle was a tractor or a truck.
    The definition of truck trailer in proposed Sec.  48.4051-
1(e)(4)(ii) would include any manufactured home on a frame that has 
axles and wheels. This definition classifies a manufactured home of the 
type at issue in Horton Homes, Inc. v. United States, 357 F.3d 1209 
(11th Cir. 2004), as a truck trailer because all of its load and weight 
is carried on its own chassis and it is designed to be towed. A 
consequence of this characterization is that the vehicle that tows this 
manufactured home is a tractor as defined in section 4051(a)(1)(E). 
Thus, under the proposed regulations, toters, as the vehicles that tow 
these manufactured homes are known in the industry, would be taxable as 
tractors. While this result is different from the decision in Horton 
Homes, which held that toters are not taxable tractors, that decision 
expressly noted that ``Congress did not define `trailers or 
semitrailers,' [in the statute] nor has the Treasury promulgated 
regulations defining those terms'' and thus applied a dictionary 
definition of the term ``trailer'' to determine whether toters are 
taxable. Id. at 1212 n.6. These proposed regulations fill in the 
regulatory gap faced by the Eleventh Circuit by providing a definition 
of ``trailer'' that will clarify the determination of whether a vehicle 
is a taxable tractor.
    Proposed Sec.  48.4051-1(f) provides exclusions from the tax 
imposed by section 4051 for certain trucks and trailers that are below 
a certain GVW and tractors that are below a certain GVW and a certain 
GCW. Proposed Sec.  48.4051-1(f) defines GVW and GCW and also provides 
the related recordkeeping requirements to support these exclusions.
    Proposed Sec.  48.4051-2 modifies the temporary regulations to 
reflect the statutory increase in the aggregate dollar value of parts 
and accessories that may be installed on a taxable article without 
incurring a tax liability.
    Proposed Sec.  48.4052-1 supplements the existing definition of 
taxable sale to include the resale of an unused article that had been 
previously sold tax-free.

Chassis Characterization

    The proposed regulations provide that if a chassis is a component 
part of a highway vehicle, the taxability of the chassis is determined 
independent of, and without regard to, the body that is installed on 
the chassis. Likewise, if a body is a component part of a highway 
vehicle, the taxability of the body is determined independent of, and 
without regard to, the chassis on which the body is installed. This 
proposed rule is contrary to the result in Rev. Rul. 69-205 (1969-1 CB 
277), which holds that an otherwise taxable chassis is not taxable if a 
motorhome body is installed on the chassis. This revenue ruling 
predates and is inconsistent with the language in section 4051(a)(1), 
which lists a chassis and a body as separate taxable articles. This 
revenue ruling will be obsoleted after publication of the final 
regulations.

Taxable Tires

    Effective January 1, 2005, section 4071 imposes a tax on taxable 
tires for each ten pounds of the maximum rated load capacity that 
exceeds 3,500 pounds. The proposed regulations reflect this change and 
remove references in existing regulations to tread rubber, inner tubes, 
and the determination of a tire's weight. The proposed regulations also 
define rated load capacity and super single tire, and address multiple 
load ratings and the consequences of tampering with a tire's maximum 
load rating. The proposed regulations also provide rules under section 
4073 for making tax-free sales of tires for the exclusive use of the 
Department of Defense and the Coast Guard. In addition, the proposed 
regulations provide model certificates to support these sales, as well 
as sales of tires by manufacturers for use on or in connection with the 
sale of another article manufactured by the purchaser and sold by the 
purchaser in a sale that meets the requirements of section 4221(e)(2) 
and sales of taxable tires to be used on intercity, local, and school 
buses (section 4221(e)(3)).

Proposed Applicability Date

    The regulations generally are proposed to apply on and after the 
date of publication of a Treasury decision adopting these rules as 
final regulations in the Federal Register.

Availability of IRS Documents

    The IRS revenue rulings and the notice cited in this preamble are 
published in the Internal Revenue Cumulative Bulletin and are available 
at www.irs.gov.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory flexibility 
assessment is not required. It also has been determined that section 
553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does 
not apply to these regulations. It is hereby certified that the 
collection of information in these regulations will not have a 
significant economic impact on a substantial number of small entities. 
This certification is based on the fact

[[Page 18547]]

that the time required to secure and maintain the required information 
is minimal (estimated at an average of 15 minutes) and taxpayers would 
ordinarily already collect and retain much of this information for 
other business purposes such as accounting, insurance, and marketing. 
Also, truck manufacturers presently provide the GVW and gross combined 
weight to truck dealers for purposes unrelated to federal excise tax. 
Therefore, a Regulatory Flexibility Analysis under the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to 
section 7805(f) of the Internal Revenue Code, this notice of proposed 
rulemaking has been submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the ADDRESSES heading. 
The Treasury Department and the IRS request comments on all aspects of 
the proposed regulations. All comments will be available at 
www.regulations.gov or upon request. A public hearing may be scheduled 
if requested in writing by any person that timely submits written 
comments. If a public hearing is scheduled, notice of the date, time, 
and place for the hearing will be published in the Federal Register.

Drafting Information

    The principal author of these regulations is Celia Gabrysh, Office 
of Associate Chief Counsel (Passthroughs and Special Industries). 
However, other personnel from the IRS and the Treasury Department 
participated in their development.

List of Subjects

26 CFR Part 41

    Excise taxes, Motor vehicles, Reporting and recordkeeping 
requirements.

26 CFR Parts 48 and 145

    Excise taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 41, 48, and 145 are proposed to be 
amended as follows:

PART 41--EXCISE TAX ON USE OF CERTAIN HIGHWAY MOTOR VEHICLES

0
Paragraph 1. The authority citation for part 41 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *


Sec.  41.4482(a)-1  [Amended]

0
Par. 2. Section 41.4482(a)-1(a)(2) is amended by removing the language 
``Sec.  48.4061(a)-1(d)'' and adding ``Sec.  48.0-5'' in its place.

PART 48--MANUFACTURERS AND RETAILERS EXCISE TAXES

0
Par. 3. The authority citation for part 48 is amended by adding entries 
in numerical order to read in part as follows:


    Authority: 26 U.S.C. 7805 * * *

    Section 48.4051-1 also issued under 26 U.S.C. 4051(a).
    Section 48.4051-2 also issued under 26 U.S.C. 4051(b).
* * * * *
    Section 48.4052-2 also issued under 26 U.S.C. 4052(b).
* * * * *
    Section 48.4071-3 also issued under 26 U.S.C. 4071(b).
* * * * *


Sec.  48.0-1  [Amended]

0
Par. 4. Section 48.0-1, fourth sentence, is amended by removing the 
language ``highway-type tires'' and adding ``taxable tires'' in its 
place.


Sec.  48.0-2  [Amended]

0
Par. 5. In Sec.  48.0-2, paragraph (b)(5), first sentence, is amended 
by removing the language ``In the case of a lease,'' and adding 
``Except as provided in Sec.  48.4052-1(e), in the case of a lease,'' 
in its place.
0
Par. 6. Section 48.0-4 is added to subpart A to read as follows:


Sec.  48.0-4  Highway vehicle and mobile machinery.

    (a) Overview. (1) The definitions of highway vehicle and mobile 
machinery in this section apply for purposes of this part and part 41 
of this chapter. See Sec.  41.4482(a)-1(a)(2) of this chapter.
    (2) The taxes imposed by sections 4051 and 4481 do not apply to 
mobile machinery (as defined in paragraph (b)(3)(iii) of this section), 
and the tax imposed by section 4071 does not apply to tires of a type 
used exclusively on such mobile machinery. In addition, for purposes of 
determining whether use of a vehicle qualifies as off-highway business 
use under section 6421(e)(2)(C) (relating to uses in mobile machinery), 
mobile machinery (as defined in this section) satisfies the design-
based test of section 6421(e)(2)(C)(iii). To qualify as off-highway 
business use, however, the use of the vehicle must also satisfy the 
use-based test of section 6421(e)(2)(C)(iv).
    (b) Highway vehicle--(1) In general. Except as otherwise provided 
in paragraph (b)(3) of this section, highway vehicle means any self-
propelled vehicle, or any truck trailer or semitrailer, designed to 
perform a function of transporting a load over public highways.
    (2) Explanation. (i) A vehicle consists of a chassis, or a chassis 
and a body if the vehicle has a body, but does not include the 
vehicle's load.
    (ii) Except as otherwise provided in paragraph (b)(3) of this 
section, in determining whether a vehicle is a highway vehicle, it is 
immaterial whether--
    (A) The vehicle can perform functions other than transporting a 
load over the public highways;
    (B) The vehicle is designed to perform a highway transportation 
function for only a particular kind of load, such as passengers, 
furnishings and personal effects (as in a house, office, or utility 
trailer), a special type of cargo, goods, supplies, or materials, or 
machinery or equipment specially designed to perform some off-highway 
task unrelated to highway transportation; and
    (C) In the case of a vehicle specially designed to transport 
machinery or equipment, such machinery or equipment is permanently 
mounted on the vehicle.
    (iii) Examples of vehicles that are designed to perform a function 
of transporting a load over the public highways are passenger 
automobiles, motorcycles, buses, motor homes, and highway-type trucks, 
truck tractors, trailers, and semitrailers.
    (iv) Examples of vehicles that are not designed to perform a 
function of transporting a load over the public highways are farm 
tractors, bulldozers, road graders, and forklifts.
    (v) The term public highway includes any road (whether a federal 
highway, state highway, city street, or otherwise) in the United States 
that is not a private roadway.
    (vi) The term transport includes tow.
    (3) Exceptions--(i) Certain vehicles specially designed for off-
highway transportation--(A) In general. The term highway vehicle does 
not include a vehicle if the vehicle is specially designed for the 
primary function of transporting a particular type of load other than 
over a public highway and

[[Page 18548]]

because of this special design such vehicle's capability to transport a 
load over a public highway is substantially limited or impaired.
    (B) Determination of vehicle's design. For purposes of paragraph 
(c)(3)(i)(A) of this section, a vehicle's design is determined solely 
on the basis of its physical characteristics.
    (C) Determination of substantial limitation or impairment. For 
purposes of paragraph (c)(3)(i)(A) of this section, in determining 
whether substantial limitation or impairment exists, account may be 
taken of factors such as the size of the vehicle, whether the vehicle 
is subject to the licensing, safety, and other requirements applicable 
to highway vehicles, and whether the vehicle can transport a load at a 
sustained speed of at least 25 miles per hour. It is immaterial that a 
vehicle can transport a greater load off the public highway than the 
vehicle is permitted to transport over the public highway.
    (ii) Nontransportation truck trailers and semitrailers. The term 
highway vehicle does not include a truck trailer or semitrailer if it 
is specially designed to function only as an enclosed stationary 
shelter for the carrying on of an off-highway function at an off-
highway site.
    (iii) Mobile machinery. The term highway vehicle does not include 
any vehicle that consists of a chassis--
    (A) To which there has been permanently mounted (by welding, 
bolting, riveting, or other means) machinery or equipment to perform a 
construction, manufacturing, processing, farming, mining, drilling, 
timbering, or similar operation if the operation of the machinery or 
equipment is unrelated to transportation on or off the public highways;
    (B) That has been specially designed to serve only as a mobile 
carriage and mount (and a power source, where applicable) for the 
particular machinery or equipment involved, whether or not such 
machinery or equipment is in operation; and
    (C) That, by reason of such special design, could not, without 
substantial structural modification, be used as a component of a 
vehicle designed to perform a function of transporting any load other 
than that particular machinery or equipment or similar machinery or 
equipment requiring such a specially designed chassis.
    (c) Examples. The following examples illustrate the rules of this 
section:

    Example 1; Off-highway transportation.  (1) Facts. (i) A tri-
axle semitrailer that is used in highway construction, maintenance, 
and repair work also hauls highway construction and repair materials 
to job sites. The semitrailer's floor is equipped with a continuous 
rubber belt attached to a steel slatted roller chain that carries 
payload to the rear tailgate at a controllable discharge rate. The 
semitrailer has insulated double sidewalls and a baffled hopper. 
This equipment enables the semitrailer to transport and unload hot-
mix asphalt, asphalt-related materials, and low-slump concrete for 
highway construction and repair. When used as an asphalt 
transporter, the semitrailer unloads the asphalt at the job site 
through the rear tailgate into a trailing asphalt paving machine. 
The semitrailer is designed to perform a function of transporting a 
load over public highways.
    (ii) A highway tractor tows the semitrailer at normal highway 
speeds. The semitrailer complies with all federal and state 
regulations governing highway use, may be legally operated on the 
public highways when loaded within legal weight limits (80,000 
pounds), and does not exceed state maximum highway length, width, or 
height limitations. Loaded to its capacity with asphalt, the 
combined weight of the semitrailer, the asphalt, and the tractor 
exceeds 100,000 pounds. Special state permits may be purchased to 
operate the tractor/semitrailer combination above the legal weight 
limit on public highways.
    (2) Analysis. For purposes of the exception provided by 
paragraph (b)(3)(i) of this section for vehicles specially designed 
for off-highway transportation, paragraph (b)(3)(i)(B) of this 
section provides that a vehicle's design is determined solely on the 
basis of its physical characteristics. The physical characteristics 
of this semitrailer include insulated double sidewalls, a baffled 
hopper, and an unloading mechanism on the floor of the trailer that 
moves hot road building materials to the back of the trailer and 
delivers these materials into a paving machine at controlled rates. 
Examples of the type of machinery or equipment that contribute to 
the highway transportation function are unloading equipment and 
machinery that contribute to the preservation of the cargo. The 
semitrailer's conveyor discharge system and insulated walls are 
designed to contribute to the highway transportation functions of 
unloading (discharge conveyor system) and preserving (insulated 
sidewalls) the load. This equipment is not designed for the job-site 
function of applying asphalt or low-slump concrete.
    (3) Conclusion. The semitrailer is not a vehicle described in 
paragraph (b)(3)(i)(A) of this section. The semitrailer's physical 
characteristics, such as sidewalls, a hopper, and the unloading 
mechanism, demonstrate that this semitrailer is capable of 
transporting asphalt or low-slump concrete over a public highway 
without substantial limitation or impairment.
    Example 2; Mobile machinery.  (1) Facts. A chassis manufacturer 
built a truck chassis with a reinforced chassis frame, a heavy-duty 
engine, and a structure to accommodate the manufacturer's mounting 
of drilling equipment on the chassis and the use of that drilling 
equipment off the highways. The manufacturer also bolted a pintle-
type trailer hitch to a beam that is welded to, and operates as a 
rear cross member of, the chassis frame rails. The truck is designed 
to perform a function of transporting a load over public highways.
    (2) Analysis. This chassis can perform two functions. First, the 
chassis serves as a mobile carriage and mount for the drilling 
equipment installed on its bed. Second, the chassis can tow a 
trailer because it has a pintle-type trailer hitch. These dual 
capabilities demonstrate that the chassis was not specially designed 
to serve only as a mobile carriage and mount for its machinery.
    (3) Conclusion. The chassis fails to meet the test in paragraph 
(c)(3)(iii) of this section for treatment as mobile machinery 
because the chassis is not specially designed to serve only as a 
mobile carriage and mount for the drilling equipment. A similar 
conclusion would apply if the manufacturer reinforced the chassis to 
make the chassis capable of towing a trailer, but the manufacturer 
did not install the pintle hook.

    (d) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.
0
Par. 7. Section 48.4041-8 is amended as follows:
0
1. Paragraph (b)(2)(ii), first sentence, is amended by removing the 
language ``A self-propelled'' and adding ``Before January 1, 2005, a 
self-propelled'' in its place.
0
2. Paragraph (b)(2)(iv) is added.
    The addition reads as follows:


Sec.  48.4041-8  Definitions.

* * * * *
    (b) * * *
    (2) * * *
    (iv) Off-highway transportation vehicles after December 31, 2004. 
For a description of certain vehicles that are not treated as highway 
vehicles after December 31, 2004, see Sec.  48.0-5(b)(3).
* * * * *
0
Par. 8. The heading for subpart H is revised to read as follows:

Subpart H--Motor Vehicles, Tires, and Taxable Fuel

0
Par. 9. New Sec. Sec.  48.4051-0, 48.4051-1, and 48.4051-2 are added to 
subpart H to read as follows:


Sec.  48.4051-0  Overview; Heavy trucks, tractors, and trailers sold at 
retail.

    Sections 48.4051-1, 48.4051-2, and 48.4052-1 provide guidance under 
sections 4051 and 4052 relating to the tax on the first retail sale of 
certain truck and trailer chassis and bodies and certain tractors. This 
guidance includes rules relating to the imposition of tax, liability 
for tax, exclusions, and definitions. For rules under sections 4051 and 
4052 on the treatment of leases, uses treated as sales, and the 
determination of price for which an

[[Page 18549]]

article is sold, see Sec.  145.4052-1 of this chapter.


Sec.  48.4051-1  Imposition of tax; Heavy trucks, tractors, and 
trailers sold at retail.

    (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 Sec.  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 Sec.  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 Sec.  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 Sec. Sec.  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 Sec.  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

[[Page 18550]]

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:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
VIN:                                 VIN:
------------------------------------------------------------------------
VIN:                                 VIN:
------------------------------------------------------------------------
VIN:                                 VIN:
------------------------------------------------------------------------
VIN:                                 VIN:
------------------------------------------------------------------------


[[Page 18551]]

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.

[[Page 18552]]

    (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.


Sec.  48.4051-2  Imposition of tax; parts and accessories.

    (a) Parts or accessories sold on or in connection with the sale of 
chassis, bodies, and tractors--(1) In general. (i) The tax imposed by 
section 4051 applies to parts or accessories sold on or in connection 
with, or with the sale of, any article specified in Sec.  48.4051-1(a). 
The tax applies whether or not the parts or accessories are separately 
billed by the retailer.
    (ii) If a taxable chassis or body is sold by the retailer without 
parts or accessories that are considered equipment essential for the 
operation or appearance of the taxable article, the sale of these parts 
or accessories by the retailer to the buyer of the taxable article will 
be considered, in the absence of evidence to the contrary, to have been 
made in connection with the sale of the taxable article even though 
they are shipped separately, whether at the same time or on a different 
date.
    (iii) Parts and accessories that are spares or replacements are not 
subject to the tax described in paragraph (a)(1)(i) of this section.
    (2) Example. The following example illustrates the application of 
this paragraph (a):

    Example.  X buys from Retailer a chassis in a sale subject to 
the tax imposed by section 4051. At the time of the sale, bumpers 
were not attached to the chassis; rather, they had been ordered from 
Retailer and delivered to X at a later date. For purposes of the tax 
imposed by section 4051, the price of the chassis includes the price 
of the bumpers, regardless of when the Retailer delivered the 
bumpers or billed X for the bumpers.

    (b) Parts or accessories not sold on or in connection with the sale 
of chassis, bodies, and tractors--(1) In general. Section 4051(b)(1) 
imposes a tax on the installation of a part or accessory on a taxable 
article specified in Sec.  48.4051-1(a) within six months after the 
article was first placed in service. However, the tax imposed by 
section 4051(b)(1) does not apply if--
    (i) The part or accessory is a replacement part or accessory; or
    (ii) The aggregate price of non-replacement parts and accessories 
(and their installation) for any vehicle does not exceed $1,000.
    (2) Application and rate of tax. The tax is the applicable 
percentage of the price of the part or accessory and its installation. 
The applicable percentage is prescribed in section 4051(b)(1).
    (3) Liability for tax. The owner, lessee, or operator of the 
vehicle on which the parts or accessories are installed is liable for 
this tax. The owner(s) of the trade or business that installs the parts 
or accessories is secondarily liable for this tax.
    (4) Definitions--(i) First placed in service. For purposes of this 
section, a vehicle is first placed in service on the date on which the 
owner of the vehicle took actual possession of the vehicle. This date 
can be established by the delivery ticket signed by the owner or other 
comparable document indicating delivery to, and acceptance by, the 
owner.
    (ii) Replacement part. The term replacement part means an item that 
is substantially similar to and intended to take the place of a vehicle 
part that has worn out or broken down, regardless of when it is 
ordered.
    (5) Example. The following example illustrates the application of 
this paragraph (b). Assume that during the periods described, the rate 
of tax is 12 percent of the price of the part or accessory and its 
installation.

    Example.  X bought a vehicle in a sale that was subject to the 
tax imposed by section 4051 and first placed it in service on 
September 1, 2013. On October 1, 2013, X purchases and has installed 
non-replacement parts at a cost of $750. On November 1, 2013, X 
purchases and has installed additional non-replacement parts at a 
cost of $450. On December 1, 2013, X purchases and has installed 
additional non-replacement parts and accessories at a cost of $900. 
Although the price of each separate purchase and installation is 
less than $1,000, the aggregate price exceeds the $1,000 limit on 
November 1, 2013. Accordingly, on November 1, 2013, X is liable for 
tax of $144 (12 percent x ($750 + $450)) on account of the 
installations on October 1, and November 1, 2013. On December 1, 
2013, X is liable for a tax of $108 (12 percent x $900) on account 
of the installation on that date. To report its liability X must 
file Form 720, Quarterly Federal Excise Tax Return, for the fourth 
calendar quarter of 2013 by January 31, 2014.

    (c) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.

0
Par. 10. Section 48.4052-1 is revised to read as follows:


Sec.  48.4052-1  Definition; first retail sale.

    (a) In general. For purposes of the tax imposed by section 4051, 
first retail sale means a taxable sale defined in paragraph (b) of this 
section.
    (b) Taxable sale; in general. A sale of an article described in 
Sec.  48.4051-1(a) is a taxable sale except in the following cases:
    (1) The sale is an exempt sale. A sale is an exempt sale if--
    (i) The sale is a tax-free sale under section 4221;
    (ii) The sale is of a used article that had previously been sold 
tax-free under section 4221; or
    (iii) The article is sold for resale or leasing in a long-term 
lease and, at the time of sale, the seller--
    (A) Has obtained from the buyer a certificate described in 
paragraph (d) of this section stating, among other things, that the 
buyer will either resell the vehicle or lease it in a long-term lease;
    (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)(1) of this section with respect to the buyer.
    (2) There has been a prior sale of the article that is not an 
exempt sale. The previous sentence does not apply if the prior sale is 
described in paragraph (c)(1) of this section.
    (c) Special rule for trailers and semitrailers--(1) In general. A 
sale is described in this paragraph (c)(1) if the sale--
    (i) Is a sale of a chassis or body of a truck trailer or 
semitrailer (``trailer or semitrailer'');
    (ii) Is not an exempt sale; and
    (iii) Occurs less than six months after the first sale of the 
trailer or semitrailer that is not an exempt sale.
    (2) Credit. In the case of a sale described in paragraph (c)(1) of 
this

[[Page 18553]]

section, any tax paid by the prior seller on account of its sale (and 
not at any time refunded to or credited against any other liability of 
the prior seller) is treated as a payment on behalf of the person (the 
subsequent seller) liable for the tax on the sale described in 
paragraph (c)(1) of this section. The subsequent seller may claim such 
payment as a credit against its liability for tax on the sale described 
in paragraph (c)(1) of this section if the following conditions are 
met:
    (i) The claim is made on Form 720, ``Quarterly Federal Excise Tax 
Return'' (or such other form as the IRS may designate) in accordance 
with the instructions for that form.
    (ii) The subsequent seller has not been repaid any portion of the 
tax by the prior seller and has not provided the prior seller with a 
written consent to the allowance of a credit or refund.
    (iii) The subsequent seller has records substantiating the amount 
of tax paid by the prior seller on its sale of the truck trailer or 
semitrailer.
    (d) Certificate--(1) In general. The certificate referred to in 
paragraph (b)(1)(iii) of this section is 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 
provided in paragraph (d)(3) of this section, and contains all 
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.
    (2) Effect of use other than as stated in certificate. If a buyer 
that provides a certificate described in paragraph (b)(1)(iii)(A) of 
this section uses or leases (in a short term lease) an article listed 
in the certificate, the sale of such article to the buyer is treated as 
the first retail sale of the article and the buyer is liable for the 
tax imposed on such sale. If the conditions of paragraph 
(b)(1)(iii)(A), (B), and (C) of this section are satisfied, the seller 
will not be liable for the tax imposed on such sale.
    (3) Model certificate.

Certificate

(To support nontaxable sale of articles listed in section 4051 for 
resale or long term lease under section 4052 of the Internal Revenue 
Code)
    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. The articles listed below will be either resold by Buyer or 
leased on a long term basis by Buyer. 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 each article bought 
under this certificate was used.
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 or leases (in a short term 
lease) an article listed in this certificate, Buyer will be liable 
for the tax imposed by section 4051(a)(1) on the article. See 26 CFR 
48.4051-1 and 145.4052-1(c).
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

    (e) No installment payment of tax. If a lease is a taxable sale 
under Sec.  145.4052-1(b) of this chapter or an installment sale (or 
another form of sale under which the sales price is paid in 
installments), then the liability for the entire tax arises at the time 
of the lease or installment sale. No portion of the tax is deferred by 
reason of the fact that the sales price is paid in installments.
    (f) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.
0
Par. 11. Section 48.4061(a)-1 is amended as follows:
0
1. Paragraph (d)(2)(ii), first sentence, is amended by removing the 
language ``A self-propelled'' and adding ``Before January 1, 2005, a 
self-propelled'' in its place.
0
2. Paragraph (d)(2)(iv) is added.
    The addition reads as follows:


Sec.  48.4061(a)-1  Imposition of tax; exclusion for light-duty trucks, 
etc.

* * * * *
    (d) * * *
    (2) * * *
    (iv) Off-highway transportation vehicles after October 21, 2004. 
For a description of certain vehicles that are not treated as highway 
vehicles after October 21, 2004, see Sec.  48.0-5(b)(3).
* * * * *

Subpart H [Amended]

0
Par. 12. Subpart H is amended by revising the undesignated center 
heading reading ``Tires, Tubes, and Tread Rubber'' to read ``Tires''.
0
Par. 13. Section 48.4071-1 is revised to read as follows:


Sec.  48.4071-1  Tires; imposition of tax.

    (a) In general. (1) Tax is imposed by section 4071 on the sale by 
the manufacturer of a taxable tire with a maximum rated load capacity 
greater than 3,500 pounds.
    (2) See Sec.  48.4072-1(b) for the definition of the term taxable 
tire.
    (b) Tax base and computation of tax. The tax base is equal to the 
number of 10-pound increments, rounded down to the nearest ten pounds, 
by which the maximum rated load capacity exceeds 3,500 pounds. The tax 
is determined by multiplying this tax base by the rate of tax specified 
in section 4071(a). Thus, for example, a taxable tire with a maximum 
rated load capacity of 4,005 pounds is treated as having a maximum 
rated load capacity of 4,000 pounds and a tax base of 50 ((4000 - 
3,500) / 10). The tax imposed on the tire is the rate of tax under 
section 4071(a) times 50.
    (c) Liability for tax. The manufacturer of a taxable tire is liable 
for the tax imposed by section 4071.
    (d) Effective/applicability date. This section applies on and after 
the date of

[[Page 18554]]

publication of these regulations in the Federal Register as final 
regulations.
0
Par. 14. Section 48.4071-2 is revised to read as follows:


Sec.  48.4071-2  Determination of maximum rated load capacity.

    (a) In general. For purposes of the tax imposed by section 4071, 
the maximum rated load capacity is the maximum rated load rating 
inscribed on a taxable tire's sidewall provided the inscription meets 
the standards prescribed by the National Highway Traffic Safety 
Administration in its regulations. If a taxable tire has multiple 
maximum load ratings, the taxable tire's highest maximum load rating is 
the taxable tire's maximum rated load capacity for purposes of the tax.
    (b) Tampering. In the event of any tampering with, or the 
appearance of tampering with, the inscription of a taxable tire's 
maximum rated load capacity as described in paragraph (a) of this 
section, the tire's maximum rated load capacity is the maximum rated 
load capacity of a comparable tire.
    (c) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.
0
Par. 15. Section 48.4071-3 is amended by:
0
1. Revising the section heading and paragraph (a).
0
2. Revising paragraph (c)(1).
0
3. Adding paragraph (e).
0
4. Removing the undesignated authority citation at the end of the 
section.
    The revisions and addition read as follows:


Sec.  48.4071-3  Imposition of tax on tires delivered to manufacturer's 
retail outlet.

    (a) General rule. If a tire manufacturer delivers a taxable tire it 
manufactured to one of its retail outlets, the manufacturer is liable 
for the tax imposed by section 4071 on this tire in the same manner as 
if the tire had been sold upon delivery to the retail outlet. The 
amount of tax is computed under Sec.  48.4071-1.
* * * * *
    (c) * * *
    (1) Delivery--(i) Delivery options. A manufacturer of taxable tires 
may, at its option, treat either of the following events as 
constituting delivery to a retail outlet:
    (A) Delivery of taxable tires to a common carrier (or, where the 
taxable tires are transported by the manufacturer, the placing of the 
taxable tires into the manufacturer's highway vehicle) for shipment 
from the plant in which the taxable tires are manufactured, or from a 
regional distribution center of taxable tires, to a retail outlet or to 
a location in the immediate vicinity of a retail outlet primarily for 
future delivery to the retail outlet.
    (B) Arrival of the taxable tires at the retail outlet, or, where 
shipment is to a location in the immediate vicinity of a retail outlet 
primarily for future delivery to the retail outlet, the arrival of the 
taxable tires at such location.
    (ii) Delivery election. A manufacturer that has elected to treat 
one of the events listed in paragraph (c)(1)(i)(A) or (B) of this 
section as constituting delivery to a retail outlet may not use a 
different criterion for a later return period unless the manufacturer 
obtains permission from the IRS in advance.
* * * * *
    (e) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.


Sec.  48.4071-4  [Removed]

0
Par. 16. Section 48.4071-4 is removed.
0
Par. 17. Section 48.4072-1 is amended by:
0
1. Revising paragraphs (b), (c), and (d).
0
2. Amending paragraph (e) by removing the second, third, and fourth 
sentences.
0
3. Revising paragraphs (f), (g), and (h).
0
4. Removing the undesignated authority citation at the end of the 
section.
    The revisions and addition read as follows:


Sec.  48.4072-1  Definitions.

* * * * *
    (b) Taxable tire--(1) In general. The term taxable tire means a 
tire--
    (i) Of the type used on highway vehicles;
    (ii) That is wholly or in part made of rubber; and
    (iii) That is marked pursuant to federal regulations for for 
highway use.
    (2) Recapped and retreaded tires. The term taxable tire includes a 
used tire that is recapped or retreaded (whether from shoulder-to-
shoulder or bead-to-bead) only if--
    (i) The used tire had not previously been sold in the United 
States;
    (ii) The used tire is recapped or retreaded outside the United 
States; and
    (iii) When imported into the United States, the recapped or 
retreaded tire meets the requirements of section (b)(1) of this 
section.
    (c) Tires of the type used on highway vehicles. The term tires of 
the type used on highway vehicles means tires (other than tires of a 
type used exclusively on mobile machinery (within the meaning of Sec.  
48.0-5(c))) of the type used on--
    (1) Highway vehicles; or
    (2) Vehicles of the type used in connection with highway vehicles.
    (d) Rated load capacity. The term rated load capacity means the 
maximum load a tire is rated to carry at a specified inflation 
pressure.
* * * * *
    (f) Super single tire. The term super single tire means a single 
tire greater than 13 inches in cross section width designed to replace 
two tires in a dual fitment. The term does not include any tire 
designed for steering or an all position tire.
    (g) Examples. The following examples illustrate the application of 
this section.

    Example 1. (1) Facts. (i) A foreign tire manufacturer 
manufactures a tire that meets the Federal Motor Vehicle Safety 
Standard for truck tires prescribed by the DOT. The tire is not of a 
type used exclusively on mobile machinery (within the meaning of 
Sec.  48.0-5(c)). This tire is partially made of rubber. The foreign 
manufacturer marks this tire for highway use pursuant to DOT 
regulations. The foreign manufacturer sells the tire for use in the 
foreign country.
    (ii) After use in the foreign country, a tire importer buys the 
tire and imports it into the United States. At the time of 
importation, the tread on this tire's casing meets the criteria for 
minimal tread on trucks used in interstate commerce as prescribed by 
the DOT.
    (2) Analysis. The imported tire is a taxable tire because the 
tire is of the type used on a highway vehicle and is not of a type 
used exclusively on mobile machinery, the tire is wholly or in part 
made of rubber, and the tire is marked pursuant to federal 
regulations for highway use.
    Example 2. (1) Facts. A tire manufacturer pays the tax imposed 
by section 4071(a) when it sells a tire that is (1) of the type used 
on highway vehicles; (2) wholly or in part made of rubber; and (3) 
marked pursuant to federal regulations for highway use. The tire 
does not have any design features to indicate that it is a tire of a 
type used exclusively on mobile machinery (within the meaning of 
Sec.  48.0-5(b)(3)(iii)). The purchaser of this tire puts the tire 
on mobile machinery described in Sec.  48.0-5(b)(3)(iii).
    (2) Analysis. A tire that is ``of the type used on highway 
vehicles'' and ``not of a type used exclusively on mobile 
machinery'' retains those characteristics regardless of how the tire 
is actually used. Therefore, the characterization of a tire as a 
taxable tire is not changed because the tire is actually used on a 
vehicle that is mobile machinery.
    (h) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.


Sec.  48.4073  [Removed]

0
Par. 18. Reserved Sec.  48.4073 is removed.
0
Par. 19. Section 48.4073-1 is revised to read as follows:

[[Page 18555]]

Sec.  48.4073-1  Exemption for tires sold for the exclusive use of the 
Department of Defense or the Coast Guard.

    (a) In general. Tax is not imposed by section 4071 on the sale of a 
taxable tire if--
    (1) The manufacturer of the taxable tire meets the registration 
requirements of section 4222; and
    (2) The sale of the taxable tire is to the Department of Defense or 
the Coast Guard for the exclusive use of the Department of Defense or 
the Coast Guard,
    (b) Sales for resale. A manufacturer may sell a taxable tire tax-
free under section 4073 and this section only if the sale is directly 
made to either the Department of Defense or the Coast Guard for such 
agency's exclusive use. Accordingly, a sale may not be made taxfree to 
a dealer for resale to the Department of Defense or the Coast Guard for 
its exclusive use, even though it is known at the time of sale by the 
manufacturer that the article will be so resold.
    (c) Certificate--(1) Effect of certificate. A manufacturer will not 
be liable for tax on the sale of a taxable tire if, at the time of the 
sale, the manufacturer has obtained from the buyer an unexpired 
certificate described in paragraph (c)(2) of this section and has no 
reason to believe any information in the certificate is false. A buyer 
that provides an erroneous certificate described in paragraph (c)(2) of 
this section is liable for any tax imposed on the sale to which the 
certificate relates.
    (2) Form of certificate. The certificate described in this 
paragraph (c)(2) is a statement by the Department of Defense or the 
Coast Guard that is signed under penalties of perjury by a person with 
authority to bind the Department of Defense or the Coast Guard, is in 
substantially the same form as the model certificate provided in 
paragraph (c)(3) of this section, and contains all information 
necessary to complete the model certificate. A new certificate or 
notice that the current certificate is invalid must be given if any 
information in the current certificate changes. The certificate may be 
included as part of any business records normally used to document a 
sale.
    (3) Model Certificate.

Certificate

(To support the tax-free sales of tires to the Department of Defense or 
the Coast Guard under section 4073 of the Internal Revenue Code)
    The undersigned buyer of taxable tires (``Buyer'') hereby certifies 
the following under penalties of perjury:

1.---------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Manufacturer'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 tire(s) to which this certificate applies will be for the 
exclusive use of Buyer (that is, the Department of Defense or the 
Coast Guard).
5. This certificate applies to Buyer's purchases from Manufacturer 
as follows (complete as applicable):
    a. A single purchase on invoice or delivery ticket number __.
    b. All purchases between __ (effective date) and __ (expiration 
date), a period not exceeding 12 calendar quarters after the 
effective date, under account or order number(s) __. If this 
certificate applies only to Buyer's purchases for certain locations, 
check here __ and list the locations.

-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------

6. Buyer will provide a new certificate to the Manufacturer if any 
information in this certificate changes.
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

    (d) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.
0
Par. 20. Section 48.4073-2 is revised to read as follows:


Sec.  48.4073-2  American National Red Cross.

    (a) For the exemption allowed to the American National Red Cross 
from the tax imposed by section 4071, see the Secretary's 
Authorization, 1979-1 C.B. 478 (See Sec.  601.601(d)(2)(ii)(b) of this 
chapter.)
    (b) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.


Sec. Sec.  48.4073-3 and 48.4073-4  [Removed]

0
Par. 21. Sections 48.4073-3 and 48.4073-4 are removed.


Sec.  48.4081-1  [Amended]

0
Par. 22. Section 48.4081-1(b) is amended by removing the language 
``Sec.  48.4061(a)-1(d)'' in the definition of Diesel-powered highway 
vehicle and adding ``Sec.  48.0-5'' in its place.
0
Par. 23. Section 48.4221-7 is amended by:
0
1. Revising the section heading and paragraph (a).
0
2. Removing paragraph (b) and redesignating paragraph (c) as paragraph 
(b).
0
3. Revising redesignated paragraph (b)(2).
0
4. Adding new paragraph (c).
    The revisions and addition read as follows:


Sec.  48.4221-7  Tax-free sale of tires for use on other articles.

    (a) In general. Under section 4221(e)(2), tax is not imposed by 
section 4071 on the sale of a taxable tire if--
    (1) The taxable tire is sold for use by the purchaser for sale on 
or in connection with the sale of another article manufactured or 
produced by the purchaser;
    (2) The other article is to be sold by the purchaser--
    (i) In a tax-free sale for export, for use as supplies for vessels 
or aircraft, to a state or local government for its exclusive use, or 
to a nonprofit educational organization for its exclusive use; or
    (ii) For any of such purposes in a sale that would be tax-free but 
for the fact that the other article is not subject to tax under section 
4051 or 4064;
    (3) The registration requirements of section 4222 and the 
regulations thereunder are met; and
    (4) The proof, described in paragraph (b) of this section, of the 
disposition of the other article, is timely received by the 
manufacturer.
    (b) * * *
    (2) Required information--(i) In general. The information referred 
to in paragraph (b)(1) of this section is a statement that is signed 
under penalties of perjury by a person with authority to bind the 
purchaser, is in substantially the same form as the model certificate 
provided in paragraph (b)(2)(ii) of this section, and contains all 
information necessary to complete the model certificate. For purchasers 
that are not required to be registered under section 4222, the IRS may 
withdraw the right of a purchaser of a taxable tire to provide a 
certificate under this section if the purchaser uses the tire to which 
a

[[Page 18556]]

certificate relates other than as stated in the certificate. The IRS 
may notify any manufacturer to whom such purchaser has provided a 
certificate that the purchaser'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 nontaxable sale of taxable tires by the manufacturer 
when sold for use on or in connection with the sale of another article 
manufactured or produced by the buyer and sold by the buyer in a sale 
that meets the requirements of section 4221(e)(2))
    The undersigned buyer of taxable tires (``Buyer'') hereby certifies 
the following under penalties of perjury:

1.---------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Manufacturer's name, address, employer identification number, and 
registration number

2.---------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Buyer's name, address, employer identification number, and 
registration number (if required)

3.---------------------------------------------------------------------
     Date and location of sale to Buyer

4. The taxable tire(s) listed below, by its (their) United States 
Department of Transportation identification number(s), are covered 
by this certificate

------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------

5. The taxable tire(s) listed in this certificate that were 
purchased or shipped on the date specified in entry 3 have been used 
on or in connection with the sale of __ (describe product sold by 
Buyer) by Buyer and such sale was-- (complete line (i), (ii), (iii), 
or (iv), whichever is applicable)
    (i) for export by __ (Name of carrier) to __ (Name of foreign 
country or possession) and was so exported on __ (Date). (A copy of 
the bill of lading or other proof of exportation is attached.)
    (ii) for use as supplies on __ (Name of vessel or aircraft) that 
is registered in __ (Name of country in which vessel or aircraft is 
registered).
    (iii) to __ (Name of state or local government).
    (iv) to __ (Name and address of the nonprofit educational 
organization).
6. Buyer understands that it must be prepared to establish, by 
evidence satisfactory to an examining agent, how each tire bought 
under this certificate was used.
7. Check here __ if Buyer is not required to be registered with the 
Internal Revenue Service because Buyer is a state or local 
government, a foreign person buying for export, or the United 
States.
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

    (c) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.
0
Par. 24. Section 48.4221-8 is amended by:
0
1. Revising the section heading and paragraph (a).
0
2. Removing the second paragraph (b), Registration requirements for 
tires, tubes, and tread rubber; vendees purchasing tax-free.
0
3. Revising paragraphs (c) and (d).
0
4. Removing paragraphs (e) and (f).
    The revisions read as follows:


Sec.  48.4221-8  Tax-free sales of tires used on intercity, local, and 
school buses.

    (a) In general. Under section 4221(e)(3), tax is not imposed by 
section 4071 on the sale of a taxable tire for use by the buyer on or 
in connection with a qualified bus, as defined in paragraph (b) of this 
section, if--
    (1) The registration requirements of section 4222 and the 
regulations thereunder are met;
    (2) At the time of sale, the manufacturer of the taxable tire--
    (i) Possesses a certificate (in the form described in paragraph 
(c)(2) of this section) from the buyer of a taxable tire, in which, 
among other things, the buyer certifies that the buyer will use the 
taxable tire on or in connection with a qualified bus;
    (ii) Has no reason to believe that any information in the 
certificate described in paragraph (c) of this section is false; and
    (iii) Has not received a notification from the IRS under paragraph 
(c)(2) of this section with respect to the buyer.
* * * * *
    (c) Certificate--(1) Effect of certificate. A manufacturer will not 
be liable for tax on the sale of a taxable tire if the conditions of 
paragraph (a)(2) of this section are satisfied. In such a case, a buyer 
that provides an erroneous certificate described in paragraph (c)(2) of 
this section is liable for any tax imposed on the sale to which the 
certificate relates.
    (2) In general. The certificate referred to in paragraph (a)(2) of 
this section is 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 provided in paragraph (c)(3) of this 
section, and contains all information necessary to complete the model 
certificate. For purchasers that are not required to be registered 
under section 4222, the IRS may withdraw the right of a buyer of a 
taxable tire to provide a certificate under this section if the buyer 
uses the tires to which a certificate relates other than as stated in 
the certificate. The IRS may notify any manufacturer to whom the buyer 
has provided a certificate 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.
    (3) Model certificate.

Certificate

(To support the nontaxable sale of taxable tires used on intercity, 
local, and school buses)
    The undersigned buyer of taxable tires (``Buyer'') hereby certifies 
the following under penalties of perjury:

1.---------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Manufacturer's name, address, employer identification number, and 
registration number

2.---------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Buyer's name, address, employer identification number, and 
registration number

3.---------------------------------------------------------------------
     Date and location of sale to Buyer

4. The taxable tire(s) listed below, by its (their) United States 
Department of Transportation identification number(s), will be used 
on intercity, local, and school buses.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------


5. Buyer understands that it must be prepared to establish, by 
evidence

[[Page 18557]]

satisfactory to an examining agent, how each tire bought under this 
certificate was used.
6. Check here ___ if Buyer is not required to be registered with the 
Internal Revenue Service because Purchaser is a state or local 
government or the United States.
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

    (d) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.


Sec.  48.6416(c)-1  [Removed]

0
Par. 25. Section 48.6416(c)-1 is removed.
0
Par. 26. For each section listed in the tables, remove the language in 
the ``Remove'' column from wherever it appears in the paragraph and add 
in its place the language in the ``Add'' column as set forth below:

------------------------------------------------------------------------
             Section                    Remove                Add
------------------------------------------------------------------------
Sec.   48.4071-3(b) Second        tires or tubes....  taxable tires.
 sentence.
Fourth sentence.................  tires or inner      taxable tires.
                                   tubes.
Fifth sentence..................  tires.............  taxable tires.
Sixth sentence..................  taxable tires. and  taxable tires.
                                   inner tubes.
Sec.   48.4071-3(c)(1)            tires or inner      taxable tires.
 Introductory text.                tubes.
Sec.   48.4071-3(c)(1)(i).......  tires or inner      taxable tires.
                                   tubes.
                                  tires or tubes....  taxable tires.
                                  tires and inner     taxable tires.
                                   tubes.
Sec.   48.4071-3(c)(2)(i) Second  tires and inner     taxable tires.
 sentence.                         tubes.
Third sentence..................  tires or inner      taxable tires.
                                   tubes.
Fourth sentence.................  Tires and inner     Taxable tires.
                                   tubes.             taxable tires.
                                  tires and tubes...
Seventh sentence................  tires and inner     taxable tires.
                                   tubes.             taxable tires
                                  tires and tubes...
                                  tires or tubes....
Eighth sentence.................  tires and inner     taxable tires.
                                   tubes.
                                  tire or inner tube
Sec.   48.4071-3(c)(2)(ii) First  tires and tubes...  taxable tires.
 sentence (Example).
Third sentence (Example)........  tires and inner     taxable tires.
                                   tubes.
Fourth sentence (Example).......  tires or inner      taxable tires.
                                   tubes.
                                  tires and tubes...
Sec.   48.4071-3(c)(3)(i).......  tire or inner tube  taxable tire.
Sec.   48.4071-3(c)(3)(ii)......  tire or inner tube  taxable tire.
Sec.   48.4071-3(d)(1) First      tires and inner     taxable tires.
 sentence.                         tubes.
Second sentence.................  tires or inner      taxable tires.
                                   tubes.
Sec.   48.4071-3(d)(2)..........  tires and inner     taxable tires.
                                   tubes.
Sec.   48.4071-3(d)(3)(i) First   tire or inner tube  taxable tire.
 sentence.
Second sentence.................  tire or inner tube  taxable tire.
Sec.   48.4071-3(d)(3)(ii) Third  tires and tubes     taxable tires.
 sentence (Example).               (each of the two
                                   times it appears).
Fourth sentence (Example).......  tires or inner      taxable tires.
                                   tubes.
Sec.   48.4081-1(b).............  48.4061(a)-1(d)...  48.0-5 of this
                                                       chapter
Redesignated Sec.   48.4221-      tire or inner tube  taxable tire.
 7(b)(1).
Second sentence.................  tire or inner tube  taxable tire.
Third sentence..................  tire or inner tube  taxable tire.
Sec.   48.6421-4(c).............  48.4061(a)-1(d)...  48.0-5
------------------------------------------------------------------------

PART 145--TEMPORARY EXCISE TAX REGULATIONS UNDER THE HIGHWAY 
REVENUE ACT OF 1982 (PUB. L. 97-424)

0
Par. 27. The authority citation for part 145 is amended by adding the 
following entry in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805.* * *

    Section 145.4052-1 also issued under 26 U.S.C. 4052.

0
Par. 28. Section 145.4051-1 is revised to read as follows:


Sec.  145.4051-1  Imposition of tax on heavy trucks, tractors, and 
trailers sold at retail.

    (a) For rules relating to the imposition of the tax imposed by 
section 4051 and related rules on the tax base, liability for tax, 
explanation of terms, and exclusions, see Sec.  48.4051-1 through Sec.  
48.4052-2 of this chapter.
    (b) This section applies on and after the date on which these 
regulations are published as final regulations in the Federal Register.
0
Par. 29. Section 145.4052-1 is amended by:
0
1. Revising paragraph (a).
0
2. Adding two sentences after the first sentence in paragraph (d)(1).
0
3. Removing the last sentence in paragraph (d)(8)(iii).
0
4. Revising paragraph (g).
    The revisions read as follows:


Sec.  145.4052-1  Special rules and definitions.

    (a) First retail sale. For the definition of first retail sale, see 
Sec.  48.4052-1 of this chapter.
* * * * *
    (d) * * * (1) * * *. Total consideration paid for a chassis or body 
includes charges for equipment installed on the chassis or body. See 
Sec.  48.4051-1(d)(4). * * *
* * * * *
    (g) Effective/applicability date. This section applies on and after 
the date of publication of these regulations in the Federal Register as 
final regulations.


Sec.  145.4061-1  [Removed]

0
Par. 30. Section 145.4061-1 is removed.

[[Page 18558]]

0
Par. 31. For each section listed in the tables, remove the language in 
the ``Remove'' column and add in its place the language in the ``Add'' 
column as set forth below:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Sec.   145.4052-1(b)(1) First     Sec.   145.4051-1.  Sec.   48.4051-1
 sentence.                                             of this chapter.
Second sentence.................  paragraph (a)(2)    Sec.   48.4052-
                                   of this section.    1(b) of this
                                                       chapter.
Sec.   145.4052-1(b)(2).........  Sec.   145.4051-1.  Sec.   48.4051-1
                                                       of this chapter.
                                  paragraph (a)(2)    Sec.   48.4052-
                                   of this section.    1(b) of this
                                                       chapter.
Sec.   145.4052-1(c)(1).........  Sec.   145.4051-1.  Sec.   48.4051-1
                                                       of this chapter.
Sec.   145.4052-1(c)(5)(ii).....  4216(a), 4216(f)..  4052(b)(1)(A) and
                                                       (B), 4216(a).
Sec.   145.4052-1(d)(1) Fourth    Installation......  installation.
 sentence.
------------------------------------------------------------------------


John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-06881 Filed 3-30-16; 8:45 am]
 BILLING CODE 4830-01-P