Ruling 95-8
Sales and Use Taxes Commercial Trucks
This ruling is cited in Ruling 97-4
FACTS:
A company (the "Company") sells lifts that are mounted onto truck chassis (truck frames with cabs and engines). The lifts are designed to lift a worker and the worker's equipment into the air to work on power lines, trees, etc. while the truck remains stationary. The lifts consist of upper and lower boom arms connected by a pivoting linkage assembly. The booms are connected to a turret base which is bolted to the truck frame. At the end of the upper boom is a bucket in which the worker stands. Hydraulic outriggers are installed on either side of the truck chassis for leveling and stability when the lift is in operation.
Sometimes the Company purchases truck chassis from manufacturers or dealers, then builds the lifts onto the chassis and sells the entire units to its customers. Other times the Company's customers purchase the chassis themselves and bring them in or have them shipped to the Company to have the lifts mounted onto them. When purchased alone, either by the Company's customers or by the Company itself, the truck chassis are suitable for having flatbeds, truck bodies or other freight-hauling apparatuses mounted on them, as well as for having lifts mounted on them.
ISSUES:
Whether a truck chassis onto which a lift has been mounted, with a gross vehicle weight rating in excess of 26,000 pounds, is a "commercial truck" exempt from sales and use taxes under Conn. Gen. Stat. §12-412(70).
Whether a truck chassis alone, onto which nothing has been mounted (other than the cab and engine), with a gross vehicle weight rating in excess of 26,000 pounds, is a "commercial truck" exempt from sales and use taxes under Conn. Gen. Stat. §12-412(70).
DISCUSSION:
Conn. Gen. Stat. §12-412(70) exempts from sales and use taxes [sales, rentals and leasing of commercial trucks, truck tractors, tractors and semitrailers, and vehicles used in combination therewith, which (A) have a gross vehicle weight rating in excess of twenty-six thousand pounds or (B) are operated actively and exclusively for the carriage of interstate freight pursuant to a certificate or permit issued by the Interstate Commerce Commission. As used in this subsection, "gross vehicle weight rating" means the value specified by the manufacturer as the loaded weight of the single or combination vehicle ....
In Ruling No. 93-14 the Department ruled that "commercial trucks" do not include truck chassis on which cranes and hydraulic excavators have been mounted, and are therefore not exempt from sales and use taxes under Conn. Gen. Stat. §12-412(70). The ruling concluded that "commercial trucks" include only vehicles "designed, used or maintained primarily to transport property of a type commonly considered to be 'freight.'" Ruling No. 93-14, p. 3. This distinction between freight-hauling vehicles and vehicles that are designed to function as mobile machines that do not perform a freight-hauling function is one which the Internal Revenue Service draws, as well, for purposes of determining whether the sale of a truck is subject to federal retailer's excise tax under 26 U.S.C. §4051(a). For federal purposes trucking equipment that does not perform a "transportation function," that is, equipment that is not designed to transport cargo, may be exempt from the excise tax. See 26 C.F.R. §48.4061(a)-1(d)(2)(i) and Rev. Rul. 95-40, 1995-20 I.R.B. 5-7.
The Company's lifts are essentially machinery designed to be used for other than freight-hauling purposes, that are only made mobile by virtue of being mounted on truck chassis. Since they are not "designed, used or maintained primarily to transport ... freight" they do not constitute "commercial trucks" and are not exempt from sales and use taxes, even when their gross vehicle weight rating exceeds 26,000 pounds, and even if they are occasionally and incidentally (as opposed to primarily) used to carry property such as tools or wood chips.
When a truck chassis with a gross vehicle weight rating in excess of 26,000 pounds is purchased separately by a customer of the Company, whether such chassis is exempt depends on whether it qualifies, at the time of its purchase, as a "commercial truck." With nothing mounted on it, it cannot be said to constitute a piece of mobile machinery, such as a crane or a lift, and cannot thereby be excluded from the definition. If, when purchased, it is suitable to be adapted to a variety of uses, including freight hauling, such a chassis must be considered to be "designed" to transport freight. Since its ultimate, disqualifying use has not yet been realized, it is still an exempt "commercial truck" under Conn. Gen. Stat. §12-412(70).
When a truck chassis with a gross vehicle weight rating in excess of 26,000 pounds is purchased by the Company for the purpose of using the chassis to mount a lift thereon and then to sell the completed unit to a customer, the purchase of the truck chassis could be considered exempt under either of two statutory provisions: the chassis could be purchased by the Company exempt from sales and use taxes as an ingredient or component part of a finished product to be sold, under Conn. Gen. Stat. §12-412(18); see, e.g., United Aircraft Corporation v. Connelly, 145 Conn. 176, 140 A.2d 486 (1958); or as a commercial truck under Conn. Gen. Stat. §12-412(70) (for the reasons set forth in the previous paragraph). Once the lift has been mounted onto the chassis, the entire unit is subject to sales and use taxes as a finished product, when sold by the Company. A truck chassis that is thus incorporated into a finished product may not be purchased on a resale basis under Conn. Gen. Stat. §12-410(1), and then resold on a tax-exempt basis under Conn. Gen. Stat. §12-412(70), since an intervening use--that of incorporating it into another product--has been made of the chassis by the Company; see Conn. Gen. Stat. §12-410(4)(a). Only when the Company intends, at the time of the purchase, to resell the truck chassis, without change, in the regular course of its business, may it purchase a chassis on a resale basis. The distinction between a purchase for resale and an exempt purchase of an ingredient or component part of a finished product to be sold under Conn. Gen. Stat. §12-412(18) is sometimes confused because the same form, the "Sales & Use Tax Resale Certificate," is utilized for both types of purchases.
When the Company sells a lift which it has mounted onto a truck chassis previously purchased by a customer and driven or delivered to the Company's facility, the Company is selling the lift alone to its customer. The gross receipts from the sale of the lift are for the sale of an item of tangible personal property together with the accompanying labor or service charges of the Company in connection with such sale, and are subject to sales and use taxes; see Conn. Gen. Stat. §12-407(8)(b) and (9)(b).
RULING:
A truck chassis onto which a lift has been mounted, with a gross vehicle weight rating in excess of 26,000 pounds, is not a "commercial truck" exempt from sales and use taxes under Conn. Gen. Stat. §12-412(70). When sold at retail as a complete unit, the entire gross receipts from the chassis and lift are subject to sales and use taxes. When only the lift is mounted onto a truck chassis previously purchased by a retail customer, the gross receipts from the lift are subject to sales and use taxes.
A truck chassis purchased alone, onto which nothing has been mounted (other than the cab and engine), with a gross vehicle weight rating in excess of 26,000 pounds, is a "commercial truck" exempt from sales and use taxes under Conn. Gen. Stat.§12-412(70), provided the truck chassis is suitable for having freight-hauling apparatuses mounted on it, whether or not such apparatuses are later mounted on it.
This Ruling amplifies and clarifies Ruling No. 93-14.
LEGAL DIVISION
June 13, 1995