Internal Revenue Code:Sec. 4002. 1st retail sale; uses, etc. treated as sales; determination of price

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle D - Miscellaneous Excise Taxes
       CHAPTER 31 - RETAIL EXCISE TAXES
        Subchapter A - Luxury Passenger Automobiles
      

Statute

    Sec. 4002. 1st retail sale; uses, etc. treated as sales;
        determination of price
 
    (a) 1st retail sale
      For purposes of this subchapter, the term ''1st retail sale''
    means the 1st sale, for a purpose other than resale, after
    manufacture, production, or importation.
    (b) Use treated as sale
      (1) In general
        If any person uses a passenger vehicle (including any use after
      importation) before the 1st retail sale of such vehicle, then
      such person shall be liable for tax under this subchapter in the
      same manner as if such vehicle were sold at retail by him.
      (2) Exemption for further manufacture
        Paragraph (1) shall not apply to use of a vehicle as material
      in the manufacture or production of, or as a component part of,
      another vehicle taxable under this subchapter to be manufactured
      or produced by him.
      (3) Exemption for demonstration use
        Paragraph (1) shall not apply to any use of a passenger vehicle
      as a demonstrator.
      (4) Exception for use after importation of certain vehicles
        Paragraph (1) shall not apply to the use of a vehicle after
      importation if the user or importer establishes to the
      satisfaction of the Secretary that the 1st use of the vehicle
      occurred before January 1, 1991, outside the United States.
      (5) Computation of tax
        In the case of any person made liable for tax by paragraph (1),
      the tax shall be computed on the price at which similar vehicles
      are sold at retail in the ordinary course of trade, as determined
      by the Secretary.
    (c) Leases considered as sales
      For purposes of this subchapter -
      (1) In general
        Except as otherwise provided in this subsection, the lease of a
      vehicle (including any renewal or any extension of a lease or any
      subsequent lease of such vehicle) by any person shall be
      considered a sale of such vehicle at retail.
      (2) Special rules for long-term leases
        (A) Tax not imposed on sale for leasing in a qualified lease
          The sale of a passenger vehicle to a person engaged in a
        passenger vehicle leasing or rental trade or business for
        leasing by such person in a long-term lease shall not be
        treated as the 1st retail sale of such vehicle.
        (B) Long-term lease
          For purposes of subparagraph (A), the term ''long-term
        lease'' means any long-term lease (as defined in section 4052).
        (C) Special rules
          In the case of a long-term lease of a vehicle which is
        treated as the 1st retail sale of such vehicle -
          (i) Determination of price
            The tax under this subchapter shall be computed on the
          lowest price for which the vehicle is sold by retailers in
          the ordinary course of trade.
          (ii) Payment of tax
            Rules similar to the rules of section 4217(e)(2) shall
          apply.
          (iii) No tax where exempt use by lessee
            No tax shall be imposed on any lease payment under a
          long-term lease if the lessee's use of the vehicle under such
          lease is an exempt use (as defined in section 4003(b)) of
          such vehicle.
    (d) Determination of price
      (1) In general
        In determining price for purposes of this subchapter -
          (A) there shall be included any charge incident to placing
        the passenger vehicle in condition ready for use,
          (B) there shall be excluded -
            (i) the amount of the tax imposed by this subchapter,
            (ii) if stated as a separate charge, the amount of any
          retail sales tax imposed by any State or political
          subdivision thereof or the District of Columbia, whether the
          liability for such tax is imposed on the vendor or vendee,
          and
            (iii) the value of any component of such passenger vehicle
          if -
              (I) such component is furnished by the 1st user of such
            passenger vehicle, and
              (II) such component has been used before such furnishing,
            and
          (C) the price shall be determined without regard to any
        trade-in.
      (2) Other rules
        Rules similar to the rules of paragraphs (2) and (4) of section
      4052(b) shall apply for purposes of this subchapter.
 

Sources

    (Added Pub. L. 101-508, title XI, Sec. 11221(a), Nov. 5, 1990, 104
    Stat. 1388-439; amended Pub. L. 103-66, title XIII, Sec. 13161(a),
    Aug. 10, 1993, 107 Stat. 450.)
 

Miscellaneous

                                 AMENDMENTS
      1993 - Pub. L. 103-66 amended section generally, substituting
    provisions relating to imposition of luxury tax upon first retail
    sale or use of luxury automobile for provisions relating to
    imposition of similar tax upon boats.
                      EFFECTIVE DATE OF 1993 AMENDMENT
      Amendment by Pub. L. 103-66 effective Jan. 1, 1993, see section
    13161(c) of Pub. L. 103-66, set out as a note under section 4001 of
    this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in section 4001 of this title.