Rev. Rul. 74-578

Advice has been requested whether the weight of a certain product that is inserted into a tire is includible in the total weight of the tire for purposes of the tax imposed by section 4071 of the Internal Revenue Code of 1954.

The product in question is inserted or injected into any pneumatic tire in liquid form. It is then cured by heating which results in a soft, resilient solid that replaces the air in tires to provide flat-free service. When cured, it does not adhere to the tire, or alter the characteristics of the tire from those of a pneumatic tire to those of a solid tire. The product is inserted into new, used, and retreaded tires at retail stores, warehouses, and retread facilities.

Section 4071 of the Code imposes upon tires and certain other articles, if wholly or in part of rubber, sold by the manufacturer, producer, or importer, a tax that is based on the weight of the articles. That section provides that the weight shall be based on the total weight, except that in the case of tires such total weight shall be exclusive of metal rims or rim bases. It provides further that total weight of the articles shall be determined under regulations prescribed by the Secretary or his delegate.

Section 48.4071-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that wire, staples, darts, clips, and other material or fastening devices that form a part of the tire or are required for its use must be included in determining the total weight of the tire.

Section 48.4072-1(e) of the regulations defines the term "tires" as including rubber casings, hoops and strips or bands of all kinds designed and shaped or built to form the tread of or to fit a vehicle wheel.

The product described above does not form a part of the tire nor is it required for its use. In addition, it is not a rubber casing, hoop, strip, or band designed and shaped or built to form the tread of or to fit a vehicle wheel.

Accordingly, the weight of the product in a new tire sold by the manufacturer thereof is not includible in the total weight of the tire for purposes of the tax imposed by section 4071 of the Code. Further, where a dealer, distributor or other person inserts the product into a tire, such person has not further manufactured the tire and incurs no liability for manufacturers excise tax on his sale or use thereof.