[Code of Federal Regulations]
[Title 26, Volume 16]
[Revised as of April 1, 2004]
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 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.

[[Page 103]]

    (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 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 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).


[[Page 104]]


    (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]