[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR48.4061(b)-3]

[Page 101]
 
                       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. 48.4061(b)-3  Rebuilt, reconditioned, or repaired parts or accessories.

    (a) Rebuilt parts or accessories. Rebuilding of automobile parts or 
accessories, as distinguished from reconditioning or repairing, 
constitutes manufacturing, and the rebuilder of such parts or 
accessories is liable for the tax imposed by section 4061(b) with 
respect to his sales of such rebuilt parts or accessories. Reboring or 
other machining, rewinding, and comparable major operations constitute 
rebuilding. The person owning the part or accessory being rebuilt is the 
manufacturer of the article and is liable for the tax on his sale of the 
rebuilt part or accessory. The tax attaches whether the machining or 
other operation is performed by the rebuilder himself or by some other 
person in his behalf. For example, the tax attaches with respect to 
sales of (1) rebuilt batteries, (2) rebabbited or machined connecting 
rods, (3) reassembled clutches after operations such as the resurfacing 
of clutch plates, (4) rewound armatures, (5) reassembled generators with 
armatures rewound by or for the person reassembling the generator, (6) 
reground or remetalized crankshafts, and (7) engines in which blocks are 
machined (such as cylinders rebored or new sleeves inserted with or 
without cylinders being rebored) or new blocks installed. For provisions 
relating to the sale price of rebuilt parts or accessories, see 
Sec. 48.4062(b)-1.
    (b) Reconditioned parts or accessories. The mere disassembling, 
cleaning, and reassembling (with any necessary replacements of worn 
parts) of automobile parts or accessories, such as fuel pumps, water 
pumps, carburetors, distributors, shock absorbers, windshield-wiper 
motors, brake shoes, clutch disks, voltage regulators, and other parts 
or accessories, are regarded as reconditioning operations rather than 
the manufacturing or production of rebuilt parts or accessories. The 
sale of a reconditioned part or accessory is not subject to tax if 
previous to the reconditioning there had been a prior sale of such part 
or accessory in the United States. Any new taxable parts or accessories 
produced, or purchased tax free for use in further manufacture, and used 
as replacements in reconditioning such units are subject to tax when 
used by the reconditioner.
    (c) Repaired parts or accessories. The tax does not apply to the 
amount paid for the repair of automobile parts or accessories for the 
owner thereof. Repairing consists of the restoration, whether by 
rebuilding or reconditioning, of an owner's part or accessory to usable 
condition for his own use rather than for sale. The person who performs 
the repairing must retain in his possession evidence or documents from 
which the nontaxable nature of the operation can be ascertained. Any 
person engaged in rebuilding parts or accessories for purposes of sale 
incurs liability for tax with respect to his own use of any part or 
accessory rebuilt by him for sale.