United States District Court, Southern District of Illinois, S.D
July 30, 1971
MILTON M. MORRIS D/B/A MILMOR MANUFACTURING COMPANY, PLAINTIFF,
THE UNITED STATES OF AMERICA, DEFENDANT.
The opinion of the court was delivered by: Poos, Chief Judge.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This cause having come on for trial without a jury and the
Court being fully advised in the premises, after careful
consideration of the evidence and testimony submitted at the time
of trial, in addition to the records, files and memoranda
submitted, now makes its Findings of Fact and Conclusions of Law
FINDINGS OF FACT
(1) This is a Civil Action for the refund of Federal excise
taxes, penalties and interest paid for the fourth quarter of 1963
and all four quarters of 1964 files on August 12, 1968.
(2) Plaintiff is an individual doing business under the name of
Milmor Manufacturing Company, having its principal place of
business at 1300 McKinley Avenue in the City of Venice, State of
Illinois, within the Southern District of Illinois. Defendant is
the United States of America.
(3) Plaintiff, beginning in 1962 and during all intervening
years, is in the steel fabricating business, manufacturing
rectangular steel boxes approximately 17 feet long, 8 feet wide
and 4 feet 9 inches high, some open at the top and others closed,
(7 feet high), and modifying trucks purchased elsewhere by adding
hydraulic lift equipment to the truck frame assembly so that the
truck can lift the steel box (also known as "container") on to
the truck for movement to another location.
(4) Plaintiff filed timely excise tax returns, Form 720, for
the five taxable periods in the suit, and reported manufacturer's
excise tax on the modifications he added to the truck, but
reported no tax with respect to the rectangular steel boxes.
(5) As a result of an audit by an agent of the Commissioner of
Internal Revenue, certain deficiencies were recommended, based on
the includibility of these rectangular steel boxes as taxable
"automobile truck bodies" within Section 4061(a)(1) of the
Internal Revenue Code of 1954.
(6) After a full and comprehensive administrative review,
including an Appellate Conference in Springfield, Illinois, and
a National Office Conference in Washington, D.C., the agent's
findings were sustained.
(7) On January 19, 1968 plaintiff was assessed, as is here
applicable, for the five quarters, as follows:
Tax Penalty Interest
4th Q. 1963 790.92 197.73 189.24
1st Q. 1964 446.60 111.65 100.23
2nd Q. 1964 395.45 98.86 82.76
3rd Q. 1964 644.33 161.08 125.17
4th Q. 1964 736.39 184.10 132.01
-------- ------ --------
Sub Total 3,013.69 753.42 629.41
(8) On February 13, 1968, plaintiff paid the above assessment
of $4,396.52 for the deficiencies under Section 4061(a)(1) of
the Internal Revenue Code of 1954.
(9) On February 16, 1968 plaintiff timely filed a claim for
refund in the amount of $4,396.52, plus statutory interest in
which claim was disallowed by the Commissioner on June 19, 1968.
(10) During the five quarters in suit plaintiff manufactured 31
rectangular steel boxes, (also known as "containers"), selling 16
of them to the Millstone Construction Company, and the other 15
to the Alberici Construction Company. Plaintiff also modified
three trucks, selling one to the Millstone Construction Company
and two to the Alberici Construction Company.
(11) The rectangular steel boxes (containers) are not primarily
designed for use in the transportation of property on the
highway; however these "containers" are primarily adapted for use
in connection with and add utility to a truck.
(12) The issues before this Court for decision are as follows:
(1) Whether the taxpayer's rectangular steel boxes
are "automobile truck bodies" within the purview of
Section 4061(a)(1) of the Internal Revenue Code of
(2) Whether the taxpayer's rectangular steel boxes
are "parts or accessories" within the purview of
Section 4061(b) of the Internal Revenue Code of 1954;
(3) Whether the taxpayer's failure to report the
excise tax on the rectangular steel boxes subjects
him to a delinquency penalty pursuant to Section
6651(a) of the Internal Revenue Code of 1954.
CONCLUSIONS OF LAW
(1) This Court has jurisdiction over this cause pursuant to 28
U.S.Code, Section 1346(a)(1) as amended.
(2) Internal Revenue Code of 1954 (26 U.S.C.):
"Section 4061 (as amended by Section 203, Highway
Revenue Act of 1956, c. 462, 70 Stat. 374, and by
Section 204 of the Federal-Aid Highway Act of 1961,
P.L. 87-61, 75 Stat. 122, and by Section 3(a)(1) of
the Tax Rate Extension Act of 1962, P.L. 87-508, 76
Stat. 114). Imposition of Tax
(a) Automobiles. — There is hereby imposed upon the
following articles (including in each case parts or
accessories therefor sold on or in connection
therewith or with the sale thereof) sold by the
manufacturer, producer, or importer a tax equivalent
to the specified percent of the price for which so
(1) Articles taxable at 10 percent, except that
on and after October 1, 1972, the rate shall be 5
Automobile truck chassis.
Automobile truck bodies.
Automobile bus chassis.
Automobile bus bodies.
Truck and bus trailer and semitrailer chassis.
Truck and bus trailer and semitrailer bodies.
Tractors of the kind chiefly used for highway
transportation in combination with a trailer or
A sale of an automobile truck, bus, truck or bus
trailer or semi-trailer shall, for the purposes of
this paragraph, be considered to be a sale of the
chassis and of the body.
(b) Parts and Accessories. — There is hereby
imposed upon parts or accessories (other than tires
and inner tubes and other than automobile radio and
television receiving sets) for any of the articles
enumerated in subsection (a) sold by the
manufacturer, producer, or importer a tax equivalent
to 8 percent of the price for which so sold, except
that on and after July 1, 1963, the rate shall be 5
(3) Treasury Regulations on Excise Tax (1954 Code) (26 C.F.R.);
Section 48.4061(b)-2 Definition of parts and
accessories states in pertinent part as follows:
(a) In general. The term "parts and accessories"
(1) Any article the primary use of which is to
improve, repair, replace, or serve as a component
part of an automobile, truck or bus chassis or
body, or other automobile chassis or body, or
(2) Any article designed to be attached to or used
in connection with such chassis, body or tractor to
add to its utility or ornamentation, and
(3) Any article the primary use of which is in
connection with such
chassis, body, or tractor, whether or not essential
to its operation or use.
The term "parts or accessories" includes all
articles which have reached such a stage of
manufacture as to be commonly known as parts or
accessories whether or not fitting operations are
required in connection with their installation. An
article shall not be deemed to be a taxable part or
accessory even though it is designed to be attached
to the vehicle or to be primarily used in
connection therewith if the article is in effect
the load being transported and the primary function
of the article is to serve a purpose unrelated to
the vehicle as such. For example, a construction
derrick attached to a truck is not a taxable part
or accessory inasmuch as the derrick is the load of
the truck and its use is in connection with
construction work at a construction site rather
than in connection with the transportation or
loading or unloading function of the truck. On the
other hand, an article such as a towing cradle or
loading or unloading equipment designed to be
attached to or to be primarily used in connection
with a truck is a taxable part or accessory
inasmuch as the article contributes to the
load-carrying function of the truck.
(4) King Trailer Company v. United States, D.C., 228 F. Supp. 1013
(1964), does not apply in this instance inasmuch as the
"containers" are not primarily designed for highway use. These
"containers" are designed or adapted by the manufacturer for
purposes predominately other than the transportation of property
on the highway even though incidental highway use may occur. It
therefore follows that these "containers" are not truck bodies,
and not within the purview of Section 4061(a)(1) of the Internal
Revenue Code of 1954.
(5) The applicable standard for determining whether an item is
a part or accessory was set down by the Supreme Court in
Universal Battery Co. v. United States, 281 U.S. 580
, 50 S.Ct.
422, 74 L.Ed. 1051 (1930), as follows:
"* * * Any article designed to be used in connection
with such vehicle to add to its utility or
ornamentation and which is primarily adapted for such
use, whether or not essential to the operation of the
Inasmuch as the "containers" in question were designed to be used
in connection with the truck to add to its utility or
ornamentation and are primarily adapted for such use, there is no
question but that the taxpayer's "containers" are a part or
accessory of the trucks.
(6) The fact that these "containers" may be used independently
of a truck does not preclude a finding that they are parts or
accessories. In Universal Battery at p. 584, 50 S.Ct. at p. 423,
the Supreme Court has stated:
"We think the view taken in the administrative
regulations is reasonable and should be upheld. It is
that articles primarily adapted for use in motor
vehicles are to be regarded as parts or accessories
of such vehicles, even though there had been some
other use of the articles for which they are not so
(7) Treasury Regulations on Excise Tax (1954) Code (20 C.F.R.)
Section 48, 4061(b)-2 permits some relief for taxpayers by
providing that an article primarily designed for use with a motor
vehicle will not be subject to taxation if the primary function
of the article is to serve a purpose unrelated to the vehicle as
such. However, where the article contributes to the load-carrying
function of the truck, it is taxable as are the "containers" in
the instant case. The Court can come to no other conclusion but
to hold that the "containers" are the load-carrying function of
(8) Plaintiff's rectangular steel boxes ("containers"), are
"parts or accessories"
within the purview of Section 4061(b) of the Internal Revenue
Code of 1954 thus rendering plaintiff liable for the eight per
cent excise tax for the five taxable periods in question.
(9) A refund is due to the plaintiff inasmuch as plaintiff has
paid the ten per cent excise tax under Section 4061(a)(1) and
for the penalties and interest thereon, whereas plaintiff should
only be liable for the eight per cent excise tax under Section
4061(b) of the Internal Revenue Code, and for the penalties and
To the extent that any of the Findings of Fact set forth above
may be deemed to be Conclusions of Law, or to the extent that any
of the foregoing Conclusions of Law are deemed to be Findings of
Fact, the same shall be deemed Conclusions of Law or Findings of
Fact as the case may be.
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