Tires of the Type Used on Highway Vehicles

INTERNAL REVENUE SERVICE
NATIONAL OFFICE TECHNICAL ADVICE MEMORANDUM
FEB 17, 2000
Number: 200023011
Release Date: 6/9/2000
Third Party Contact: None
Index Number: 4072.02.00
Control Number: TAM-117948-99/CC:DOM:P&SI:B8
District Director
Taxpayer’s Name:
Taxpayer’s Address:
Taxpayer’s Identification No.:
Periods Involved:
Conference Held:
LEGEND: X =

# ISSUE

Is the taxpayer liable for the tax imposed by § 4071 of the Internal Revenue
Code on its sale of X?

# CONCLUSION

The taxpayer is liable for the tax imposed by § 4071 on its sale of X.

# FACTS

The taxpayer manufactures and sells a series of severe-service drive axle radial tires. This series of tires is recommended for the drive axle of truck tractors, dump trucks, logging trucks, or delivery trucks operating on/off road service. X is included in this series of tires.
X has a maximum operating speed of 50 miles per hour, while other tires in the series can be operated at 55 miles per hour. The taxpayer’s materials describe X as designed for the most rugged off-road conditions and intended for off-road use only.
-2-
X is original equipment on heavy duty dump trucks that are highway vehicles subject to the federal excise tax on heavy trucks and trailers sold at retail under § 4051.

# LAW AND ANALYSIS

Section 4071 imposes a tax on tires of the type used on highway vehicles, if wholly or in part made of rubber, sold by the manufacturer, producer, or importer. The rate of tax for a tire weighing more than 90 pounds is $10.50 plus 50 cents per pound in excess of 90 pounds.
Section 4072 defines tires of the type used on highway vehicles as tires of the type used on: (1) motor vehicles which are highway vehicles, or (2) vehicles of the type used in connection with motor vehicles that are highway vehicles.
Section 48.4072-1(c) of the Manufacturers and Retailers Excise Tax Regulations references § 48.4061(a)-1(d) for the meaning of highway vehicle.
Section 48.4061(a)-1(d)(1) defines a highway vehicle as any self-propelled vehicle, or any trailer or semi-trailer, designed to perform a function of transporting a load over public highways, whether or not also designed to perform other functions, but does not include a vehicle described in § 48.4061(a)-1(d)(2). It is immaterial that the vehicle is designed to perform a highway transportation function for only a particular load. The term public highways includes any domestic road that is not a private roadway. Examples of vehicles that are designed to perform a function of transporting a load over the public highway are highway-type trucks, truck tractors, trailers, and semi-trailers.
Section 48.4061(a)-1(d)(2) provides exceptions to the definition of highway vehicle contained in § 48.4061(a)-1(d)(1). Section 48.4061(a)-1(d)(2)(ii) provides an exception for certain vehicles specially designed for off-highway transportation. This exception provides that a vehicle is not a highway vehicle if it is specially designed for the primary function of transporting a particular type of load other than over the public highway in connection with construction, manufacturing, processing, farming, mining, drilling, timbering, or an operation similar to any of the foregoing enumerated operations and, by reason of the special design, the use of the vehicle to transport the load over the public highways is substantially limited or substantially impaired. In determining whether the use is limited or impaired, account may be taken of whether the vehicle may be driven at regular highway speeds, requires a special permit for highway use, is overweight, overheight, or overwidth for regular highway use, and any other relevant considerations.
Rev. Rul. 79-296, 1979-2 C.B. 370, holds that truck-tractors and low-bed semitrailers that are used in combination to transport military equipment on and off the highway and that are oversize and require special permits and/or escort vehicles on most state highways are highway vehicles subject to tax. The revenue ruling holds that -3while the vehicles have characteristics that impair their use on the highway, those characteristics are necessary in order to enable the vehicles to carry their intended load and accomplish their highway transportation function.
Excise tax is imposed on the sale by the manufacturer of X if X is a tire of the type used on highway vehicles. X is original equipment on vehicles that, according to the taxpayer, are highway vehicles for purposes of the § 4051 tax on trucks and tractors sold at retail. If a vehicle is a highway vehicle for purposes of § 4051, it is a highway vehicle for purposes of the tire tax under § 4071. The regulations under §§ 4051 and 4071 reference the definition of highway vehicle contained in § 48.4061(a)-1(d). As such, since vehicles are highway vehicles within the meaning of § 48.4061(a)-1(d), tax is imposed unless the vehicles meet one of the exceptions contained in § 48.4061(a)-1(d)(2).
The question is whether, for purposes of the exception from tax provided in
§ 48.4061(a)-1(d)(2)(ii), (1) these vehicles are specially designed for the primary function of transporting a particular load other than over the highway in connection with mining or timbering operations, and (2) their use to transport over the highway is substantially limited or impaired by reason of such special design. The regulations provide that the size of the vehicle, the speed at which the vehicle may be driven, the permits required for the vehicle, and other relevant considerations may be indicative of whether highway use is limited or impaired.
The taxpayer argues that the vehicles on which X is used are not highway vehicles. The taxpayer asserts that these trucks are not permitted to operate on the highway when fully loaded because of weight restrictions and, as such, their use is substantially limited or impaired.
X is a tire of the type used on dump trucks that are typically up to 9 feet wide and travel at highway speeds. The Service has held that vehicles of similar width that are capable of traveling at similar speeds are highway vehicles. See Rev. Rul. 79-296.

# CAVEAT

A copy of this technical advice memorandum is to be given to the taxpayer.
Section 6110(k)(3) provides that it may not be used or cited as precedent. Under
§ 6110(c), names, addresses, and identifying numbers have been deleted.