Bloomberg Bloomberg
Comprehensive Tax Research. Practitioner to Practitioner. ®

Internal Revenue Code, § 4003. Special Rules [Repealed]

Editor's Note: Pub. L. 113-295, Div. A, Sec. 221(a)(103)(A), struck Sec. 4003, effective December 19, 2014.
I.R.C. § 4003(a) Separate Purchase Of Vehicle And Parts And Accessories Therefor
Under regulations prescribed by the Secretary—
I.R.C. § 4003(a)(1) In General
Except as provided in paragraph (2), if—
I.R.C. § 4003(a)(1)(A)
the owner, lessee, or operator of any passenger vehicle installs (or causes to be installed) any part or accessory (other than property described in section 4001(a)(2)(B)) on such vehicle, and
I.R.C. § 4003(a)(1)(B)
such installation is not later than the date 6 months after the date the vehicle was 1st placed in service,
then there is hereby imposed on such installation a tax equal to 10 percent of the price of such part or accessory and its installation.
I.R.C. § 4003(a)(2) Limitation
The tax imposed by paragraph (1) on the installation of any part or accessory shall not exceed 10 percent of the excess (if any) of—
I.R.C. § 4003(a)(2)(A)
the sum of—
I.R.C. § 4003(a)(2)(A)(i)
the price of such part or accessory and its installation,
I.R.C. § 4003(a)(2)(A)(ii)
the aggregate price of the parts and accessories (and their installation) installed before such part or accessory, plus
I.R.C. § 4003(a)(2)(A)(iii)
the price for which the passenger vehicle was sold, over
I.R.C. § 4003(a)(2)(B)
the appropriate applicable amount as determined under section 4001(a)(2).
I.R.C. § 4003(a)(3) Exceptions
Paragraph (1) shall not apply if—
I.R.C. § 4003(a)(3)(A)
the part or accessory installed is a replacement part or accessory,
I.R.C. § 4003(a)(3)(B)
the part or accessory is installed to enable or assist an individual with a disability to operate the vehicle, or to enter or exit the vehicle, by compensating for the effect of such disability, or
I.R.C. § 4003(a)(3)(C)
the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to the vehicle does not exceed $1,000 (or such other amount or amounts as the Secretary may by regulation prescribe).
The price of any part or accessory (and its installation) to which paragraph (1) does not apply by reason of this paragraph shall not be taken into account under paragraph (2)(A).
I.R.C. § 4003(a)(4) Installers Secondarily Liable For Tax
The owners of the trade or business installing the parts or accessories shall be secondarily liable for the tax imposed by this subsection.
I.R.C. § 4003(b) Imposition Of Tax On Sales, Etc., Within 2 Years Of Vehicles Purchased Tax-Free
I.R.C. § 4003(b)(1) In General
If—
I.R.C. § 4003(b)(1)(A)
no tax was imposed under this subchapter on the 1st retail sale of any passenger vehicle by reason of its exempt use, and
I.R.C. § 4003(b)(1)(B)
within 2 years after the date of such 1st retail sale, such vehicle is resold by the purchaser or such purchaser makes a substantial nonexempt use of such vehicle,
then such sale or use of such vehicle by such purchaser shall be treated as the 1st retail sale of such vehicle for a price equal to its fair market value at the time of such sale or use.
I.R.C. § 4003(b)(2) Exempt Use
For purposes of this subsection, the term ‘exempt use’ means any use of a vehicle if the 1st retail sale of such vehicle is not taxable under this subchapter by reason of such use.
I.R.C. § 4003(c) Parts And Accessories Sold With Taxable Passenger Vehicle
Parts and accessories sold on, in connection with, or with the sale of any passenger vehicle shall be treated as part of the vehicle.
I.R.C. § 4003(d) Partial Payments, Etc.
In the case of a contract, sale, or arrangement described in paragraph (2), (3), or (4) of section 4216(c), rules similar to the rules of section 4217(e)(2) shall apply for purposes of this subchapter.
(Added by Pub. L. 101-508, title XI, Sec. 11221(a), Nov. 5, 1990, 104 Stat. 1388-439; amended by Pub. L. 103-66, title XIII, Sec. 13161(a), Aug. 10, 1993, 107 Stat. 312; Pub. L. 105-34, title IX, XIV, Sec. 906, 1401(a), Aug. 5, 1997, 111 Stat 788; repealed by Pub. L. 113-295, Div. A, title II, Sec. 221(a)(103)(A), Dec. 19, 2014, 128 Stat. 4010.)
BACKGROUND NOTES
AMENDMENTS
2014 - Pub. L. 113-295, Div. A, Sec. 221(a)(103)(A), struck Sec. 4003. Before it was struck, it read as follows:
“Sec. 4003. Special Rules.
“(a) Separate Purchase Of Vehicle And Parts And Accessories Therefor.—Under regulations prescribed by the Secretary— “(1) In General.—Except as provided in paragraph (2), if—
“(A) the owner, lessee, or operator of any passenger vehicle installs (or causes to be installed) any part or accessory (other than property described in section 4001(a)(2)(B)) on such vehicle, and
“(B) such installation is not later than the date 6 months after the date the vehicle was 1st placed in service,
“then there is hereby imposed on such installation a tax equal to 10 percent of the price of such part or accessory and its installation.
“(2) Limitation.—The tax imposed by paragraph (1) on the installation of any part or accessory shall not exceed 10 percent of the excess (if any) of—
“(A) the sum of—
“(i) the price of such part or accessory and its installation,
“(ii) the aggregate price of the parts and accessories (and their installation) installed before such part or accessory, plus
“(iii) the price for which the passenger vehicle was sold, over
“(B) the appropriate applicable amount as determined under section 4001(a)(2).
“(3) Exceptions.—Paragraph (1) shall not apply if—
“(A) the part or accessory installed is a replacement part or accessory,
“(B) the part or accessory is installed to enable or assist an individual with a disability to operate the vehicle, or to enter or exit the vehicle, by compensating for the effect of such disability, or
“(C) the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to the vehicle does not exceed $1,000 (or such other amount or amounts as the Secretary may by regulation prescribe).
“The price of any part or accessory (and its installation) to which paragraph (1) does not apply by reason of this paragraph shall not be taken into account under paragraph (2)(A).
“(4) Installers Secondarily Liable For Tax.—The owners of the trade or business installing the parts or accessories shall be secondarily liable for the tax imposed by this subsection.
“(b) Imposition Of Tax On Sales, Etc., Within 2 Years Of Vehicles Purchased Tax-Free.
“(1) In general. If—
“(A) no tax was imposed under this subchapter on the 1st retail sale of any passenger vehicle by reason of its exempt use, and
“(B) within 2 years after the date of such 1st retail sale, such vehicle is resold by the purchaser or such purchaser makes a substantial nonexempt use of such vehicle, then such sale or use of such vehicle by such purchaser shall be treated as the 1st retail sale of such vehicle for a price equal to its fair market value at the time of such sale or use. “(2) Exempt use. For purposes of this subsection, the term ‘exempt use’ means any use of a vehicle if the 1st retail sale of such vehicle is not taxable under this subchapter by reason of such use.
“(c) Parts And Accessories Sold With Taxable Passenger Vehicle.—Parts and accessories sold on, in connection with, or with the sale of any passenger vehicle shall be treated as part of the vehicle.
“(d) Partial Payments, Etc.—In the case of a contract, sale, or arrangement described in paragraph (2), (3), or (4) of section 4216(c), rules similar to the rules of section 4217(e)(2) shall apply for purposes of this subchapter.”
1997 - Subsec. (a)(1)(A). Pub. L. 105-34, Sec. 906(b)(3) amended subpar. (A) by inserting “(other than property described in section 4001(a)(2)(B)” after “part or accessory”.
Subsec. (a)(2)(B). Pub. L. 105-34, Sec. 906(b)(4) amended subpar. (B). Prior to amendment it read as follows:
“(B) $30,000.”
Subsec. (a)(3)(C). Pub. L. 105-34, Sec. 1401(a), amended subpar. (C) by substituting “$1,000” for “$200”.
1993 - Sec. 4003. Pub. L. 103-66, Sec. 13161(a), amended Sec. 4003. Before amendment, it read as follows:
“Sec. 4003. AIRCRAFT
“(a) Imposition Of Tax.—There is hereby imposed on the 1st retail sale of any aircraft a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $250,000.
“(b) Aircraft.—For purposes of this section, the term ‘aircraft’ means any aircraft—
“(1) which is propelled by a motor, and
“(2) which is capable of carrying 1 or more individuals.
“(c) 80 Percent General Business Use.
“(1) In General.—The tax imposed by this section shall not apply to the sale of any aircraft if 80 percent of the use by the purchaser is in any trade or business.
“(2) Proof Of Business Use.—On the income tax return for each of the 1st 2 taxable years ending after the date an aircraft on which no tax was imposed by this section by reason of paragraph (1) was placed in service, the taxpayer filing such return shall demonstrate to the satisfaction of the Secretary that the use of such aircraft during each such year met the requirement of paragraph (1).
“(3) Imposition Of Luxury Tax Where Failure Of Proof.—If the requirement of paragraph (2) is not met for either of the taxable years referred to therein, the taxpayer filing such returns shall pay the tax which would (but for paragraph (1)) have been imposed on such aircraft plus interest determined under subchapter C of chapter 67 during the period beginning on the date such tax would otherwise have been imposed. If such taxpayer fails to pay the tax imposed pursuant to the preceding sentence, no deduction shall be allowed under section 168 for any taxable year with respect to the aircraft involved.
“(d) Other Exceptions.—The tax imposed by this section shall not apply to the sale of any aircraft for use by the purchaser exclusively—
“(1) in the aerial application of fertilizers or other substances,
“(2) in the case of a helicopter, in a use described in paragraph (1) or (2) of section 4261(e),
“(3) in a trade or business of providing flight training, or
“(4) in a trade or business of transporting persons or property for compensation or hire.”
EFFECTIVE DATE OF REPEAL
Repeal by Pub. L. 113-295, Div. A, Sec. 221(a)(103)(A), effective on the date of the enactment of this Act [Enacted: Dec. 19, 2014].
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2) SAVINGS PROVISION.—If—
“(A) any provision amended or repealed by the amendments made by this section applied to—
“(i) any transaction occurring before the date of the enactment of this Act [Enacted: Dec. 19, 2014],
“(ii) any property acquired before such date of enactment, or
“(iii) any item of income, loss, deduction, or credit taken into account before such date of enactment, and
“(B) the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by this section) affect the liability for tax for periods ending after date of enactment, nothing in the amendments or repeals made by this section shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment.”
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 906(b) of Pub. L. 105-34 applicable to sales and installations occurring after the date of the enactment of this Act [Enacted: Aug. 5, 1997].
Amendments by Sec. 1401(a) of Pub. L. 105-34 applicable to installations on vehicles sold after the date of the enactment of this Act [Enacted: Aug. 5, 1997].
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Sec. 13161(a) of Pub. L. 103-66, effective January 1, 1993.