[Code of Federal Regulations]

[Title 26, Volume 16]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 26CFR48.4061(b)-3]



[Page 92]

 

                       TITLE 26--INTERNAL REVENUE

 

    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 

                               (CONTINUED)

 

PART 48_MANUFACTURERS AND RETAILERS EXCISE TAXES--Table of Contents

 

 Subpart H_Motor Vehicles, Tires, Tubes, Tread Rubber, and Taxable Fuel

 

Sec.  48.4061(b)-3  Rebuilt, reconditioned, or repaired parts or 

accessories.



    (a) Rebuilt parts or accessories. Rebuilding of automobile parts or 

accessories, as distinguished from reconditioning or repairing, 

constitutes manufacturing, and the rebuilder of such parts or 

accessories is liable for the tax imposed by section 4061(b) with 

respect to his sales of such rebuilt parts or accessories. Reboring or 

other machining, rewinding, and comparable major operations constitute 

rebuilding. The person owning the part or accessory being rebuilt is the 

manufacturer of the article and is liable for the tax on his sale of the 

rebuilt part or accessory. The tax attaches whether the machining or 

other operation is performed by the rebuilder himself or by some other 

person in his behalf. For example, the tax attaches with respect to 

sales of (1) rebuilt batteries, (2) rebabbited or machined connecting 

rods, (3) reassembled clutches after operations such as the resurfacing 

of clutch plates, (4) rewound armatures, (5) reassembled generators with 

armatures rewound by or for the person reassembling the generator, (6) 

reground or remetalized crankshafts, and (7) engines in which blocks are 

machined (such as cylinders rebored or new sleeves inserted with or 

without cylinders being rebored) or new blocks installed. For provisions 

relating to the sale price of rebuilt parts or accessories, see Sec.  

48.4062(b)-1.

    (b) Reconditioned parts or accessories. The mere disassembling, 

cleaning, and reassembling (with any necessary replacements of worn 

parts) of automobile parts or accessories, such as fuel pumps, water 

pumps, carburetors, distributors, shock absorbers, windshield-wiper 

motors, brake shoes, clutch disks, voltage regulators, and other parts 

or accessories, are regarded as reconditioning operations rather than 

the manufacturing or production of rebuilt parts or accessories. The 

sale of a reconditioned part or accessory is not subject to tax if 

previous to the reconditioning there had been a prior sale of such part 

or accessory in the United States. Any new taxable parts or accessories 

produced, or purchased tax free for use in further manufacture, and used 

as replacements in reconditioning such units are subject to tax when 

used by the reconditioner.

    (c) Repaired parts or accessories. The tax does not apply to the 

amount paid for the repair of automobile parts or accessories for the 

owner thereof. Repairing consists of the restoration, whether by 

rebuilding or reconditioning, of an owner's part or accessory to usable 

condition for his own use rather than for sale. The person who performs 

the repairing must retain in his possession evidence or documents from 

which the nontaxable nature of the operation can be ascertained. Any 

person engaged in rebuilding parts or accessories for purposes of sale 

incurs liability for tax with respect to his own use of any part or 

accessory rebuilt by him for sale.