Farm "forage box" bodies escape the heavy-truck excise tax, but a semitrailer's chassis components stay taxable

Plain-English summary

Section 4051 imposes a 12 percent federal excise tax on the first retail sale of truck and trailer bodies and chassis, but § 4053(2) exempts a body "primarily designed" to haul, process, spread, or load feed, seed, or fertilizer on farms. The taxpayer manufactures specialty "forage box" bodies that ride alongside a harvester to catch cut forage, built with heavy floors, corrosion-resistant materials, and an integral fast-unloading system that makes them impractical for hauling anything but farm forage. The IRS ruled that two of the products (Forage Box Body 1 and Forage Box Body 2), plus their installed accessories, are primarily designed for on-farm feed use and so are exempt from the § 4051 tax. The third product, a semitrailer version, got a split answer: its body components qualify for the same exemption, but § 4053(2) exempts only bodies, not chassis. Because the semitrailer has "chassis components" (landing gear, running gear, suspension, and related parts) that perform the transportation function of a chassis and let it carry loads over public highways, the portion of the sale price attributable to those chassis components remains taxable under § 4051. The takeaway for equipment makers: the farm-body exemption is generous but stops at anything that functions as a highway chassis.

Ruling snapshot

• Question: Are the taxpayer's forage box bodies exempt from the § 4051 heavy-truck excise tax under the § 4053(2) farm-body exemption?
• Outcome: mixed (both stand-alone forage box bodies exempt; the semitrailer's body is exempt but its chassis components remain taxable)
• Key authorities: IRC §§ 4051(a)(1), 4053(2), 7701(a)(48)(A); Rev. Ruls. 69-579, 78-8, 78-308, 2004-80; Notice 2017-5

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202050001
 Release Date: 12/11/2020
 Index Number: 4053.00-00, 4051.00-00

 ------------------------                                       Person To Contact:
 ------------------------------------                           --------------------------- , ID No.
 ------------------------------------------------
 ------------------                                             Telephone Number:
 --------------------------------                               --------------------
                                                                Refer Reply To:
                                                                CC:PSI:B07 – PLR-100177-20
                                                                Date:
                                                                September 04, 2020




LEGEND

Taxpayer = --------------------------------------------------------------

Forage Box Body 1 = ---------------------------------------------------------------------------------------
-------------------------------------------------

Forage Box Body 2 = ---------------------------------------------------------------------------------------
---------------------------------------------------------------

Semitrailer Forage Box = ----------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Construction Features = ------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
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-------------------------------------------------------------------------------

Component 1 = -----------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
----------------
PLR-100177-20                                            2

Component 2 = -----------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------

Accessories = ------------------------------------------------------------------------------------------------
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X = --------

Y = ----------

Z = ---

Material = -------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------

Dear --------------

      This letter responds to a letter ruling request dated December 10, 2019,
submitted on your behalf by your authorized representative, requesting rulings under
§ 4053(2) of the Internal Revenue Code (the Code).

FACTS

        According to the facts submitted, Taxpayer designs, manufactures, and sells
specialty forage box bodies and semitrailers. Taxpayer requests rulings that its Forage
Box Body 1, Forage Box Body 2, and Semitrailer Forage Box, (collectively, Forage Box
Bodies) are not taxable under § 4051 because all three are primarily designed and built
by Taxpayer to haul feed, seed, and fertilizer to and on farms, and as such, meet the
exemption under § 4053(2). Forage Box Body 1 and Forage Box Body 2 can be
installed on a semitrailer, trailer, or truck chassis. The buyer provides its own chassis to
Taxpayer, who installs Forage Box Body 1 or Forage Box Body 2 on to the chassis.
Semitrailer Forage Box is a semitrailer with a ----------------------------that has Construction
Features but -----------------------------------------------------However, it does contain
components which contribute to the transportation function and serve as a chassis.
These components are the landing gear, running gear (axles, wheels, tires, hubs, and
brakes), Component 1, Component 2, leaf spring suspension, other suspension
components, and additional equipment and accessories that contribute to the
transportation function or safety of these components (including, but not limited to,
bumpers, lights, license plate holders, etc.) attached to either Component 1 or
Component 2, (collectively, Chassis Components). Taxpayer has not included these
components in its ruling request. Each of the Forage Box Bodies has special design
PLR-100177-20                                            3

features that demonstrate that the Forage Box Bodies are primarily designed to haul
feed, seed, and fertilizer to and on farms. Moreover, the designs lack elements that
would allow a person to practically use the Forage Box Bodies to transport anything
other than feed, seed, and fertilizer to and on a farm.

       All of Taxpayer’s Forage Box Bodies are ----------, heavy-duty farm bodies that
are designed to travel alongside a forage harvester and receive feed as it is harvested.
The -----------construction causes the Forage Box Bodies to be ------------------------------
heavier than similarly sized bodies that are designed to haul products on the highway.

         All of Taxpayer’s Forage Box Bodies have an --------------- ------------------------------
unloading system. The --------------- ------- is designed to unload forage faster than other
live-bottom floor designs. Fresh cut forage begins to lose nutrients and moisture
quickly, so a fast-moving --------------- ------- that moves the forage quickly into the silos
helps reduce this loss----------------------------------------------------------------------------------------
------------------------------------------------that would be necessary to haul anything other than
forage. Taxpayer uses a Material for the floor of the Forage Box Bodies that withstands
--------------------------------------------- and the corrosion caused by the forage. The floor is
supported by X wide cross members spaced at Y intervals, giving the floor direct
support under less than Z percent of its surface. The unloading system and floor design
prevent the body from being able to carry dirt, gravel, sand or other general products as
they would damage the --------------------------. The unloading system and floor design
also prevent the body from being able to carry pallets or any other load which would
need a forklift to load or unload.

         The Forage Box Bodies also uniformly lack --------------------------------------------------
----------------------------operation on public highways, as these bodies are only used
seasonally for harvest.

         Specifically, Forage Box Body 1 and Forage Box Body 2 feature a -------------------
--------------------------------------that runs the length of the box underneath to add integrity
to the frame and provide a mounting system for the chassis.

         Semitrailer Forage Box differs from the other two body types because it is a -------
-----------------------------------------------------------------------------chassis though it does
possess components which contribute to the transportation function. The rear axle, -----
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------- This design feature
also reduces hauling capacity. Semitrailer Forage Box is also designed with
Construction Features. Its ----------------------------design means that ---------------------------
---------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------The
Semitrailer Forage Box does not have the ---------------------------present in Forage Box
Body 1 and Forage Box Body 2.
PLR-100177-20                                4


RULINGS REQUESTED

Taxpayer requests the following rulings:

    1. Taxpayer’s sale of Forage Box Body 1 models are not subject to the § 4051 tax
      because the bodies are primarily designed to haul feed, seed, or fertilizer to and
      on farms pursuant to § 4053(2) of the Code.

    2. Taxpayer’s sale of Forage Box Body 2 models are not subject to the § 4051 tax
      because the bodies are primarily designed to haul feed, seed, or fertilizer to and
      on farms pursuant to § 4053(2) of the Code.

    3. The components of Semitrailer Forage Box models attributable to the semitrailer
      body are not subject to the § 4051 tax upon Taxpayer’s sale of Semitrailer
      Forage Box models because the bodies are primarily designed to haul feed,
      seed, or fertilizer to and on farms pursuant to § 4053(2) of the Code.

LAW

       Section 4051(a)(1) of the Code imposes a 12 percent tax on the first retail sale of
certain articles (including in each case parts or accessories sold on or in connection
therewith or with the sale thereof), including automobile truck bodies, truck trailer and
semitrailer chassis and bodies.

         Section 4053(2) provides that the tax imposed by § 4051 shall not be imposed on
any body primarily designed – (A) to process or prepare seed, feed, or fertilizer for use
on farms, (B) to haul feed, seed, or fertilizer to and on farms, (C) to spread feed, seed,
or fertilizer on farms, (D) to load or unload feed, seed, or fertilizer on farms, or (E) for
any combination of the foregoing.

        Section 145.4051-1(a)(2) of the Temporary Excise Tax Regulations Under the
Highway Revenue Act of 1982 (Pub. L. 97-424) provides that a chassis or body is
taxable under § 4051(a)(1) only if such chassis is sold for use as a component of a
highway vehicle (as defined in § 48.4061(a)-1(d)) which is an automobile truck, truck
trailer or semitrailer, or a highway type tractor used in combination with a trailer or
semitrailer.

       Section 48.4061(a)-1(d)(1) of the Manufacturers and Retailers Excise Tax
Regulations provides that the term “highway vehicle” means any self-propelled vehicle,
or any trailer or semitrailer, designed to perform a function of transporting a load over
public highways, whether or not also designed to perform other functions.
PLR-100177-20                                5

        Section 7701(a)(48)(A), which supersedes the exception to the definition of
highway vehicle in § 48.4061(a)-1(d)(2)(ii), provides that a vehicle shall not be treated
as a highway vehicle if such vehicle is specially designed for the primary function of
transporting a particular type of load other than over the public highway and because of
this special design such vehicle’s capability to transport a load over the public highway
is substantially limited or impaired. A vehicle’s design is determined solely on the basis
of its physical characteristics. Section 7701(a)(48)(A)(iii) further provides that in
determining whether a substantial limitation or impairment exists, account may be taken
of factors such as the size of the vehicle, whether such vehicle is subject to the
licensing, safety, and other requirements applicable to highway vehicles, and whether
such vehicle can transport a load at a sustained speed of at least 25 miles per hour. It
is immaterial that a vehicle can transport a greater load off the public highway than such
vehicle can transport over the public highway.

        Rev. Rul. 69-579, 1969-2 C.B. 200, holds that certain automotive truck bodies
equipped with heavy-duty unloading equipment and used primarily for hauling feed,
seed, and fertilizer to and on farms, are exempt from the manufacturers tax under
§ 4063(a)(2)(B) (this is the predecessor to the § 4053(2) exemption provided for
retailers tax purposes).

         The revenue ruling describes truck, trailer, and semitrailer bodies that contain
heavy-duty mechanical or pneumatic type unloading equipment specially designed to
facilitate unloading on the farm. The unloading equipment is built into, and forms an
integral part of the bodies, adding substantially to their cost and weight, and limiting
their load-carrying capacity. The mechanical system uses conveyors and augers, and
unloads from the top of the body; the pneumatic system uses a blower and hose, and
usually unloads from the bottom and rear of the body. Each system is activated by a
power take-off from the truck engine. The bodies are usually divided into separate
compartments and are either open at the top or completely enclosed.

        The revenue ruling states that the elaborate and expensive unloading systems
built into these bodies, and the modifications of the bodies required to accommodate the
unloading systems, make it impracticable to purchase the bodies for use other than in
hauling feed, seed, or fertilizer on farms, and are exempt from the manufacturers tax by
virtue of the § 4063(a)(2)(B) exemption.

        Rev. Rul. 70-547, 1970-2 C.B. 264, holds that two-wheel mountings or
undercarriages that do not have identifiable chassis frames, and which are primarily
designed for use in combination with a taxable truck, are recognizable, and taxable, as
a trailer or semitrailer chassis. The revenue ruling describes these undercarriages as
consisting of a spring and axle assembly with wheels, and a separate tongue and hitch
assembly, all constructed so that it may be welded or bolted directly to the base of the
equipment for which it serves as an undercarriage. Other parts that may be included
PLR-100177-20                                6

with the undercarriages are braces, fenders, jack, taillights, wiring, and a license plate
bracket.

        Rev. Rul. 78-8, 1978-1 C.B. 341, analyzes whether a semitrailer of unitized
construction with a body primarily designed to haul feed, seed, and fertilizer to and on
farms is considered to have a taxable chassis. The revenue ruling holds that although
the semitrailer has no identifiable chassis frame, it has an undercarriage that performs
the transportation function of a chassis. Accordingly, those elements that make up the
undercarriage and contribute to the transportation function are a semitrailer chassis
suitable for use as a component of a highway vehicle. The revenue ruling specifically
identifies the keel assembly, the kingpin plate, landing and running gear, and any
additional equipment and accessories installed by the manufacturer that are related to
the basic function or safety of the chassis as taxable.

       Rev. Rul. 78-308, 1978-2 C.B. 259, addresses whether the attachment of a
wrecker body and crane and the attachment of a light, mirrors, or a bumper to a chassis
constitute further manufacture. It holds that they do not, however notes that the light,
the mirrors, and the bumper are taxable parts or accessories.

      Rev. Rul. 2004-80, 2004-2 C.B. 164, addresses the definition of the term
“primarily designed” as that term is used in distinguishing a truck from a tractor for
purposes of § 4051(a)(1). The revenue ruling states that the term “primarily designed”
means principally designed. It does not mean exclusively designed.

       Notice 2017-5, 2017-16 I.R.B. 779, (originally published as Notice 2016-81),
provides interim definitions of the terms “chassis” and “body” for purposes of
§ 4051(a)(1). Specifically, section 3.01 of the notice provides that a “chassis” is the
vehicle’s frame and supporting structure and all those components attached to it.
Further, section 3.02 of the notice defines a “body” as the cargo or load carrying
structure of a truck, trailer, or semitrailer. Examples of a body include, but are not
limited to, a flatbed body, a tanker body, and a box body.

ANALYSIS & CONCLUSIONS

       The exemption from tax provided by § 4053(2) does not extend to bodies
primarily designed for general use, even though the bodies may be capable of hauling
feed, seed, and fertilizer to and on farms or performing other functions described in
§ 4053(2). To be exempt, a body must be primarily designed for one of, or a
combination of, the functions described in § 4053(2).

      In requesting tax-exempt treatment for Forage Box Body 1, Forage Box Body 2,
and Semitrailer Forage Box, Taxpayer submitted a letter ruling request that was detailed
and comprehensive. To complement the extensive factual discussion, the letter ruling
request included engineering schematics and numerous full-color photos.
PLR-100177-20                                      7


        The Forage Box Bodies contain an unloading system that is built into, and forms
an integral part of, the bodies. The special unloading system is elaborate, limited in the
products it is compatible with, and adds substantially to the cost of each body. Thus,
like the specially designed bodies described in Rev. Rul. 69-579, purchase of the
subject bodies for use other than in hauling feed, seed, or fertilizer to and on farms,
would be impractical.

         Further, the detailed information provided by Taxpayer highlights a number of
other specific features, including the heavy -----------body design, the -------------------------
---------------------(on the Semitrailer Forage Box), and the -----------------------------------------
------------------that indicate they are primarily designed, within the meaning of Rev. Rul.
2004-80, for hauling feed, seed, or fertilizer to and on farms.

        Accordingly, Forage Box Body 1, Forage Box Body 2, and any combination of
installed Accessories, fall within the exemption provided by § 4053(2). Therefore,
Taxpayer’s first retail sales of Forage Box Body 1 and Forage Box Body 2 and any
combination of installed Accessories are exempt from the tax imposed by § 4051(a)(1).

        Semitrailer Forage Box is a semitrailer with a ----------------------------design. The
components that comprise the body of Semitrailer Forage Box, and any combination of
installed Accessories, fall within the exemption provided by § 4053(2). However, the
§ 4053(2) exemption only applies to bodies; it is inapplicable to chassis. Although
Semitrailer Forage Box has no -------------------------, it has Chassis Components that
perform the transportation function of a chassis. See Not. 2017-5, Rev. Rul. 70-547,
Rev. Rul. 78-308, and Rev. Rul. 78-8. Further, because the chassis of the Semitrailer
Forage Box is designed to perform the function of transporting a load over public
highways in combination with a taxable tractor and the vehicle does not meet the
definition of “off-highway vehicle” in § 7701(a)(48)(A), tax is imposed by § 4051(a)(1) on
the first retail sale of Semitrailer Forage Box on that portion of the sale price that is
attributable to the Chassis Components.

       Except as expressly provided herein, no opinion is expressed or implied
concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter.

      This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.

      The rulings contained in this letter are based upon information and
representations submitted by the taxpayer and accompanied by a penalty of perjury
statement executed by an appropriate party. While this office has not verified any of the
material submitted in support of the request for rulings, it is subject to verification on
examination.
PLR-100177-20                                 8


         In accordance with the Power of Attorney on file with this office, a copy of this
letter is being sent to your authorized representative.


                                    Sincerely,




                                    Charles J. Langley, Jr.
                                    Senior Technician Reviewer, Branch 7
                                    (Passthroughs & Special Industries)



Enclosures (2)
      Copy of this letter
      Copy for § 6110 purposes