Rev. Rul. 69-205

The Internal Revenue Service has been asked whether a chassis produced by a manufacturer of self-propelled mobile homes is an automobile truck chassis subject to tax under section 4061(a)(1) of the Internal Revenue Code of 1954, or whether it is an automobile chassis other than those taxable under paragraph (1) and therefore subject to tax under section 4061(a)(2) of the Code, under the circumstances described below.

A mobile home manufacturer purchases truck-type chassis components such as engine, springs, axles, brakes, and tires. He combines these components with, or assembles them on, a thirty-foot frame constructed of two-by-eight-inch channel iron to produce a motor vehicle chassis. The manufacturer then installs a body, complete with living quarters, that comes within the scope of the exemption afforded bodies for self-propelled mobile homes by section 4063(a)(1) of the Code, as amended by the Excise Tax Reduction Act of 1965, Public Law 89-44, C.B. 1965-2, 568, at 588.

A tax is imposed by paragraph (1) of section 4061(a) of the Code upon the sale by the manufacturer, producer, or importer of certain articles including automobile truck chassis and bodies, and by paragraph (2) upon the sale of automobile chassis and bodies other than those taxable under paragraph (1). Paragraphs (1) and (2) each provide that the sale of a complete vehicle shall be considered the sale of a chassis and of a body enumerated in the specific paragraph.

Section 201(a) of the Excise Tax Reduction Act of 1965, C.B. 1965-2, 568, at 569, amended paragraph (2) of section 4061(a) of the Code to impose lower rates of tax on articles enumerated therein than on articles enumerated in paragraph (1).

The following comment regarding the foregoing provisions of law is made in Senate Report No. 324, Eighty-ninth Congress, C.B. 1965-2, 676, at 693:

"Combination of chassis and body.--Since the 10-percent manufacturers' excise tax is retained for truck and bus chassis, bodies, and trailers, while the rates applicable to passengers car chassis and bodies are gradually reduced to 1 percent, questions may arise with respect to the imposition of tax on the sale of a chassis which may be used interchangeably with either a passenger automobile or truck body. To provide for such cases, both the House bill and your committee's bill amend the statute to provide that the sale of a passenger automobile is to be considered as a sale of a passenger car chassis and of a passenger car body. A similar rule is provided in the case of a sale of a truck or bus. Thus, where the completed unit is a passenger car, the chassis will be classified as a passenger car chassis even though it could have been used with a truck body. Where a chassis is sold by the manufacturer without a body being mounted on it, it is intended that the category for the chassis be determined on the basis of all of the facts available including the predominant use of such types of chassis in the industry."

Thus, the determination whether a motor vehicle chassis produced by a manufacturer of mobile homes is an article subject to tax under section 4061(a)(1) of the Code or under section 4061(a)(2) is governed by the body mounted on the chassis, regardless of the chassis' characteristics. If mobile home bodies were not exempted from tax by section 4063(a)(1), they would be taxable as automobile bodies subject to tax under section 4061(a)(2) of the Code, since they are bodies other than those taxable under section 4061(a)(1). The classification of the bodies as 4061(a)(2) articles, despite the exemption, is relevant in determining the classification of the chassis.

It is held that the chassis in the instant case is an automobile chassis subject to tax under section 4061(a)(2) of the Code when sold by its manufacturer in combination with the nontaxable body.