[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: 26CFR48.4071-3]



[Page 102-104]

 

                       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.  48.4071-3  Imposition of tax on tires and tubes delivered to 

manufacturer's retail outlet.



    (a) General rule. If, on or after October 1, 1966, a tire or inner 

tube is delivered by the manufacturer thereof to a retail outlet of the 

manufacturer, the manufacturer is liable for tax in respect of the tire 

or tube at the rate set forth in section 4071 in the same manner as if 

the tire or tube had been sold at the time it was delivered to the 

retail outlet. The amount of tax payable shall be computed in accordance 

with the provisions of paragraph (b)(2) of Sec.  48.4071-1, and of Sec.  

48.4071-2.

    (b) Definition of retail outlet. For purposes of this section, the 

term ``retail outlet'' includes the term ``retail store.'' A retail 

outlet is a facility maintained by a manufacturer for selling tires or 

tubes at retail. A facility may be a retail outlet even though some 

sales are made at wholesale at such facility; see paragraph (d)(1) of 

this section. A facility may also be considered to a retail outlet for 

the purposes of this section notwithstanding that its main activity is 

in another area than selling tires or inner tubes. For example, if a 

manufacturer operates a facility for both automotive repair and the 

selling of tires at retail, the facility is considered a retail outlet 

for the purposes of this section even if the primary activity of the 

facility is automotive repair. No facility is considered a retail outlet 

for the purposes of this section if it is determined that less than 15 

percent of the taxable tires and inner tubes removed from such facility 

are sold at retail by such facility. The determination described in the 

preceding sentence is made on the basis of the experience of a 

representative



[[Page 103]]



period, of at least 12 consecutive calendar months during the 2-year 

period immediately preceding the first day included in the return period 

for which tax under section 4071(b) is reported. If a facility has not 

been in existence during such a 12-month period, the determination is 

made on the basis of the available experience of the manufacturer. See 

also paragraph (c)(3) of this section, relating to imposition of tax 

where a retail outlet is maintained as an adjunct to a production 

facility or distribution center.

    (c) Delivery--(1) In general. A manufacturer of tires or inner tubes 

may, at its option, treat either of the following events as constituting 

delivery to a retail outlet:

    (i) Delivery of tires or inner tubes to a common carrier (or, where 

the tires or tubes are transported by the manufacturer, the placing of 

the tires or tubes into the manufacturer's over-the-road vehicle) for 

shipment from the plant in which the tires or tubes are manufactured, or 

from a regional distribution center of tires and inner tubes, to a 

retail outlet or to a location in the immediate vicinity of a retail 

outlet primarily for future delivery to the retail outlet.

    (ii) Arrival of the tires or tubes 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 

tires or tubes at such location.



In its excise tax return for the first return period beginning after 

September 30, 1966, a manufacturer of tires or inner tubes must elect to 

determine the date of delivery to retail outlets in accordance with one 

of the two subdivisions of this paragraph (c)(1) and must determine the 

dates of all deliveries made to all retail outlets in accordance with 

the subdivision which the manufacturer has elected to apply. The 

election may be made in a statement attached to the return for such 

period. Having elected to treat one of the events listed in subdivision 

(i) or (ii) of this paragraph (c)(1) as constituting delivery to a 

retail outlet for purposes of its return for the first return period 

after September 30, 1966, the manufacturer may not use a different 

criterion for a subsequent return period unless permission of the 

district director is obtained in advance.

    (2) Deliveries made in the immediate vicinity of a retail outlet 

primarily for future delivery to the retail outlet. (i) For purposes of 

this section, any delivery which is made in the immediate vicinity of a 

retail outlet primarily for future delivery to the retail outlet is 

deemed to be a delivery to the retail outlet. For the purpose of the 

preceding sentence, a location is considered to be in the immediate 

vicinity of a retail outlet if the distance between the location and the 

retail outlet is sufficiently small so that it is feasible to transport 

tires and inner tubes between the location and the retail outlet by 

means of dollies, fork lift trucks, pushcarts, and similar vehicles of 

the type normally used around the premises of factories and similar 

establishments, as opposed to highway motor vehicles. For the purpose of 

the preceding sentence, it is immaterial that a public thoroughfare must 

be used in order to transport tires or inner tubes to a retail outlet 

from another location. Tires and inner tubes delivered to a location in 

the immediate vicinity of a retail outlet are considered to be delivered 

to the location ``primarily for future delivery'' to the retail outlet 

if it is determined that a majority (by number) of the tires and tubes 

removed from the location are delivered to the retail outlet. The 

determination described in the preceding sentence is made on the basis 

of the experience of a representative period of at least 12 consecutive 

calendar months during the 2-year period immediately preceding the first 

day included in the return period for which tax under section 4071(b) is 

reported. If a facility has not been in existence during such a 12-month 

period, the determination is made on the basis of the available 

experience of the manufacturer. If it is determined that the majority of 

all tires and inner tubes removed from a given location are delivered to 

a retail outlet of the manufacturer in the immediate vicinity of the 

location, tax is imposed upon all tires and tubes delivered by the 

manufacturer to the location, even though all or part of the tires or 

tubes comprising a particular



[[Page 104]]



shipment to the location may be intended for further transportation to a 

location other than the retail outlet. If it is determined that a 

majority of all tires and inner tubes removed from a given location are 

not delivered to a retail outlet of the manufacturer in the immediate 

vicinity of the location, tax is imposed upon the removal of a tire or 

inner tube from the location to the premises of the retail outlet. See 

also paragraph (d)(2) of this section, relating to sales by the 

manufacturer at facilities other than retail outlets.

    (ii) The provisions of this paragraph (c)(2) may be illustrated by 

the following examples.



    Example. A manufacturer of tires and tubes whose plant is located in 

City X operates two facilities in City Y; Warehouse A and Store Q. Store 

Q is a retail outlet within the meaning of paragraph (b) of this 

section, and Warehouse A is in the immediate vicinity of Store Q. During 

the 12-month period ending September 30, 1966, 60 percent of the tires 

and inner tubes removed from Warehouse A were delivered to Store Q. All 

tires or inner tubes delivered by the manufacturer to Warehouse A are 

subject to a tax under section 4071(b) and this section (unless, before 

such delivery, tax was imposed on the same tires and tubes).



    (3) Retail outlet maintained as adjunct of production or 

distribution facility. If a retail outlet is maintained as an adjunct to 

and in the immediate vicinity of a facility which is not a retail outlet 

(as, for example, a production plant or a regional distribution center), 

delivery to the retail outlet is deemed to occur at the earlier of:

    (i) The date when a tire or inner tube is removed from the general 

storage facilities in the facility which is not a retail outlet for 

transfer to the premises of the retail outlet, or

    (ii) The date when a tire or inner tube is designated to be sold by 

or at the retail outlet.

    (d) Special rules--(1) Retail outlets which also sell at wholesale. 

Tax applies to all shipments of tires and inner tubes delivered to a 

retail outlet as defined in paragraph (b)(2) of this section. Thus, for 

the purposes of section 4071(b) and this section, it is immaterial that 

all or part of the tires or inner tubes of a particular delivery to a 

retail outlet are intended for sale at wholesale. See also paragraph 

(d)(3) of this section.

    (2) Sales by manufacturer at facilities other than retail outlets. 

Sales by the manufacturer of tires and inner tubes at facilities other 

than retail outlets are subject to tax under section 4071(a).

    (3) Deliveries of tires or tubes on which tax has been previously 

imposed. (i) Tax is not imposed under section 4071(b) and this section 

on any tire or inner tube in respect of which there was previously 

imposed a tax under section 4071(a). Similarly, a tire or inner tube is 

taxed only once under section 4071(b) and this section.

    (ii) The provisions of this paragraph (d)(3) may be illustrated by 

the following example:



    Example. A manufacturer has two selling facilities, Store No. 1 and 

Store No. 2. Only retail sales are made at Store No. 2, which obtains 

its merchandise from Store No. 1. Assume that, although wholesaling and 

distribution activities are conducted at Store No. 1, the sale of tires 

and tubes at retail is conducted at Store No. 1 to the extent that Store 

No. 1 is a retail outlet within the meaning of paragraph (b) of this 

section, with the result that tax is imposed on deliveries by the 

manufacturer of tires and tubes to Store No. 1. Tax is not imposed on a 

delivery of tires or inner tubes from Store No. 1 to Store No. 2.



(Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 

1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 

4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 

7805))



[T.D. 7809, 47 FR 6005, Feb. 10, 1982]