Is a heavy truck chassis a tax-exempt 'commercial truck' in Connecticut when a bucket lift is mounted on it — and when it's still bare?

Plain-English summary

Connecticut exempts sales of commercial trucks and similar vehicles with a gross vehicle weight rating (GVWR) over 26,000 pounds (Conn. Gen. Stat. § 12-412(70)). A company that builds aerial lifts — the boom-and-bucket rigs used to hoist a worker up to power lines or trees — mounts them on heavy truck chassis and asked whether the exemption applies. It sells two ways: buying the chassis itself and selling the completed lift truck, or mounting a lift onto a chassis the customer already bought.

DRS answered by focusing on what a "commercial truck" is. Following Ruling 93-14, it holds the exemption reaches only vehicles "designed, used or maintained primarily to transport property of a type commonly considered to be 'freight.'" That's the same freight-hauling-vs.-mobile-machine line the IRS draws for the federal retailers' excise tax on trucks (26 U.S.C. § 4051(a); 26 C.F.R. § 48.4061(a)-1(d)(2)(i); Rev. Rul. 95-40).

Chassis with a lift on it — not exempt. A lift is "essentially machinery… only made mobile by virtue of being mounted on truck chassis." It isn't designed primarily to haul freight, so it is not a commercial truck — even with a GVWR over 26,000 lbs, and even if it occasionally and incidentally carries tools or wood chips. Result:

• Sold as a complete unit (chassis + lift), the entire receipts are taxable.
• If the company mounts a lift onto the customer's own chassis, the lift charge (property plus the accompanying labor/service under § 12-407(8)(b), (9)(b)) is taxable.

Bare chassis — exempt. A chassis with nothing on it but the cab and engine is not mobile machinery. If, at purchase, it is suitable to be adapted to various uses including freight hauling, it counts as "designed" to transport freight, and its disqualifying use "has not yet been realized." So a bare heavy chassis is an exempt commercial truck under § 12-412(70) — whether or not a freight body is ever mounted later.

A note on buying the chassis to build lift trucks. When the company buys a chassis to mount a lift and sell the finished unit, the chassis purchase can be exempt either as a commercial truck (§ 12-412(70)) or as an ingredient/component part of a finished product to be sold (§ 12-412(18); United Aircraft Corp. v. Connelly). But the company may not buy the chassis on a resale basis (§ 12-410(1)) and then resell it tax-free, because building it into another product is an "intervening use" that defeats resale treatment (§ 12-410(4)(a)). Resale purchasing is only proper when the company intends to resell the chassis unchanged. (DRS notes the same "Sales & Use Tax Resale Certificate" form is used for both resale and component-part purchases, which causes confusion.) Either way, once the lift is mounted, the finished unit is fully taxable when sold.

DRS said this ruling amplifies and clarifies Ruling 93-14, and it was later cited in Ruling 97-4 (heavy storage trailers keeping the commercial-truck/trailer exemption if road-suitable).

What this means for you

Upfitters and specialty-truck builders

Mounting work machinery — lifts, cranes, excavators — onto a heavy chassis takes the finished vehicle out of the commercial-truck exemption. Bill and remit sales tax on the whole unit (or on the lift-plus-labor if the customer supplied the chassis). GVWR over 26,000 lbs does not save a mobile-machine vehicle.

Dealers selling bare heavy chassis

A bare chassis suitable for a freight body is exempt under § 12-412(70) at the time of sale, even if the buyer later turns it into a non-freight machine. The character is fixed at purchase, before the disqualifying use exists.

Get your exemption theory right when you buy the chassis

If you buy a chassis to build and sell a lift truck, claim exemption as a commercial truck or as a component part (§ 12-412(18)) — not as a purchase for resale. Building the lift onto the chassis is an intervening use that blocks resale treatment (§ 12-410(4)(a)). The same resale certificate form covers both, so label your purpose correctly.

"Incidental" cargo doesn't rescue a machine

Occasionally hauling tools or debris doesn't make a lift truck a freight vehicle. The test is the vehicle's primary design and use, mirroring the federal excise-tax distinction.

Common questions

Q: Is a bucket/lift truck exempt as a commercial truck in Connecticut?
A: No. A chassis with a lift mounted is mobile machinery, not a vehicle designed primarily to haul freight, so it isn't an exempt "commercial truck" under § 12-412(70) — regardless of a GVWR over 26,000 lbs.

Q: Is a bare heavy truck chassis exempt?
A: Yes, if it's suitable for having freight-hauling bodies mounted on it. At purchase it's still "designed" to transport freight, so it qualifies under § 12-412(70) whether or not a freight body is ever added.

Q: If a customer brings me their own chassis to add a lift, what's taxable?
A: The charge for the lift — the tangible property plus the accompanying labor/service (§ 12-407(8)(b), (9)(b)) — is taxable. You're selling the lift, not a commercial truck.

Q: Can I buy the chassis on a resale certificate?
A: Only if you'll resell it unchanged. If you'll mount a lift and sell a finished unit, that's an intervening use (§ 12-410(4)(a)); buy it exempt as a commercial truck or as a component part (§ 12-412(18)) instead. The finished unit is taxable on sale.

Citations and references

Statutes:

• Conn. Gen. Stat. § 12-412(70) (exemption for commercial trucks/truck tractors/tractors/semitrailers with GVWR over 26,000 lbs, or in ICC interstate freight service)
• Conn. Gen. Stat. § 12-412(18) (ingredient or component part of a finished product to be sold)
• Conn. Gen. Stat. § 12-410(1), (4)(a) (purchase for resale; intervening use defeats resale)
• Conn. Gen. Stat. § 12-407(8)(b), (9)(b) (gross receipts / sales price include accompanying labor and service charges)

Federal authorities cited (as analogy):

• 26 U.S.C. § 4051(a); 26 C.F.R. § 48.4061(a)-1(d)(2)(i); Rev. Rul. 95-40, 1995-20 I.R.B. 5-7 (freight-hauling vs. non-transportation equipment for federal retailers' excise tax)

Case cited:

• United Aircraft Corporation v. Connelly, 145 Conn. 176, 140 A.2d 486 (1958) (component-part exemption)

Related rulings (described in prose, not linked):

• Ruling No. 93-14 (commercial trucks don't include chassis with cranes/hydraulic excavators; amplified and clarified by this ruling)
• Ruling No. 97-4 (heavy storage trailers retain the commercial-truck/trailer exemption if road-suitable; cites this ruling)

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 95-8

Original ruling text

Ruling 95-8, Sales and Use Taxes / Commercial Trucks

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