26 USC § 4001 - Imposition of tax

(a) Imposition of tax

(1) In general

There is hereby imposed on the 1st retail sale of any passenger vehicle a tax equal to 10 percent of the price for which so sold to the extent such price exceeds the applicable amount.

(2) Applicable amount

(A) In general

Except as provided in subparagraphs (B) and (C), the applicable amount is $30,000.

(B) Qualified clean-fuel vehicle property

In the case of a passenger vehicle which is propelled by a fuel which is not a clean-burning fuel and to which is installed qualified clean-fuel vehicle property (as defined in section 179A (c)(1)(A)) for purposes of permitting such vehicle to be propelled by a clean-burning fuel, the applicable amount is equal to the sum of—

(i) the dollar amount in effect under subparagraph (A), plus

(ii) the increase in the price for which the passenger vehicle was sold (within the meaning of section 4002) due to the installation of such property.

(C) Purpose built passenger vehicle

(i) In general In the case of a purpose built passenger vehicle, the applicable amount is equal to 150 percent of the dollar amount in effect under subparagraph (A).

(ii) Purpose built passenger vehicle For purposes of clause (i), the term “purpose built passenger vehicle” means a passenger vehicle produced by an original equipment manufacturer and designed so that the vehicle may be propelled primarily by electricity.

(b) Passenger vehicle

(1) In general

For purposes of this subchapter, the term “passenger vehicle” means any 4-wheeled vehicle—

(A) which is manufactured primarily for use on public streets, roads, and highways, and

(B) which is rated at 6,000 pounds unloaded gross vehicle weight or less.

(2) Special rules

(A) Trucks and vans

In the case of a truck or van, paragraph (1)(B) shall be applied by substituting “gross vehicle weight” for “unloaded gross vehicle weight”.

(B) Limousines

In the case of a limousine, paragraph (1) shall be applied without regard to subparagraph (B) thereof.

(c) Exceptions for taxicabs, etc.

The tax imposed by this section shall not apply to the sale of any passenger vehicle for use by the purchaser exclusively in the active conduct of a trade or business of transporting persons or property for compensation or hire.

(d) Exemption for law enforcement uses, etc.

No tax shall be imposed by this section on the sale of any passenger vehicle—

(1) to the Federal Government, or a State or local government, for use exclusively in police, firefighting, search and rescue, or other law enforcement or public safety activities, or in public works activities, or

(2) to any person for use exclusively in providing emergency medical services.

(e) Inflation adjustment

(1) In general

The $30,000 amount in subsection (a) shall be increased by an amount equal to—

(A) $30,000, multiplied by

(B) the cost-of-living adjustment under section 1 (f)(3) for the calendar year in which the vehicle is sold, determined by substituting “calendar year 1990” for “calendar year 1992” in subparagraph (B) thereof.

(2) Rounding

If any amount as adjusted under paragraph (1) is not a multiple of $2,000, such amount shall be rounded to the next lowest multiple of $2,000.

(f) Phasedown

For sales occurring in calendar years after 1995 and before 2003, subsection (a)(1) andsection 4003 (a) shall be applied by substituting for “10 percent”, each place it appears, the percentage determined in accordance with the following table:

If the calendar year is: The percentage is:  1996 9 percent      1997 8 percent      1998 7 percent      1999 6 percent      2000 5 percent      2001 4 percent      2002 3 percent  .

(g) Termination

The taxes imposed by this section and section 4003 shall not apply to any sale, use, or installation after December 31, 2002.

Source

(Added Pub. L. 101–508, title XI, § 11221(a),Nov. 5, 1990, 104 Stat. 1388–439; amended Pub. L. 103–66, title XIII, § 13161(a),Aug. 10, 1993, 107 Stat. 449; Pub. L. 104–188, title I, §§ 1607(a), (b), 1703(c)(1),Aug. 20, 1996, 110 Stat. 1839, 1875; Pub. L. 105–34, title IX, § 906(a)–(b)(2), title XVI, § 1601(f)(3)(A), (B),Aug. 5, 1997, 111 Stat. 874, 875, 1090.)

Amendments

1997—Subsec. (a). Pub. L. 105–34, § 906(a), amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “There is hereby imposed on the 1st retail sale of any passenger vehicle a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $30,000.”

Subsec. (e)(1). Pub. L. 105–34, § 906(b)(1), struck out “and section 4003 (a)” after “in subsection (a)” in introductory provisions.

Subsec. (f). Pub. L. 105–34, § 1601(f)(3)(A)(i), inserted “and section 4003 (a)” after “subsection (a)”.

Pub. L. 105–34, § 1601(f)(3)(A)(ii), inserted “, each place it appears,” before “the percentage”.

Pub. L. 105–34, § 906(b)(2), substituted “subsection (a)(1)” for “subsection (a)”.

Subsec. (g). Pub. L. 105–34, § 1601(f)(3)(B), substituted “taxes imposed by this section and section 4003” for “tax imposed by this section” and “, use, or installation” for “or use”.

1996—Subsec. (e). Pub. L. 104–188, § 1703(c)(1), reenacted heading without change and amended text generally. Prior to amendment, text read as follows:

“(1) In general.—If, for any calendar year, the excess (if any) of—

“(A) $30,000, increased by the cost-of-living adjustment for the calendar year, over

“(B) the dollar amount in effect under subsection (a) for the calendar year,

is equal to or greater than $2,000, then the $30,000 amount in subsection (a) andsection 4003 (a) (as previously adjusted under this subsection) for any subsequent calendar year shall be increased by the amount of such excess rounded to the next lowest multiple of $2,000.

“(2) Cost-of-living adjustment.—For purposes of paragraph (1), the cost-of-living adjustment for any calendar year shall be the cost-of-living adjustment under section 1 (f)(3) for such calendar year, determined by substituting ‘calendar year 1990’ for ‘calendar year 1992’ in subparagraph (B) thereof.”

Subsec. (f). Pub. L. 104–188, § 1607(b), added subsec. (f). Former subsec. (f) redesignated (g).

Pub. L. 104–188, § 1607(a), substituted “December 31, 2002” for “December 31, 1999”.

Subsec. (g). Pub. L. 104–188, § 1607(b), redesignatedsubsec. (f) as (g).

1993—Pub. L. 103–66amended section generally, substituting “Imposition of tax” for “Passenger vehicles” in section catchline and “this subchapter” for “subsection (a)” in subsec. (b)(1) and adding subsecs. (d) to (f).

Effective Date of 1997 Amendment

Section 906(c) ofPub. L. 105–34provided that: “The amendments made by this section [amending this section and section 4003 of this title] shall apply to sales and installations occurring after the date of the enactment of this Act [Aug. 5, 1997].”

Section 1601(f)(3)(C) ofPub. L. 105–34provided that: “The amendments made by this paragraph [amending this section] shall apply to sales after the date of the enactment of this Act [Aug. 5, 1997].”

Amendment by section 1601(f)(3)(A), (B) ofPub. L. 105–34effective as if included in the provisions of the Small Business Job Protection Act of 1996, Pub. L. 104–188, to which it relates, see section 1601(j) ofPub. L. 105–34, set out as a note under section 36C of this title.

Effective Date of 1996 Amendment

Section 1607(c) ofPub. L. 104–188provided that: “The amendments made by this section [amending this section] shall apply with respect to sales occurring after the date which is 7 days after the date of the enactment of this Act [Aug. 20, 1996].”

Section 1703(c)(2) ofPub. L. 104–188provided that: “The amendment made by paragraph (1) [amending this section] shall take effect on the date of the enactment of this Act [Aug. 20, 1996].”

Effective Date of 1993 Amendment

Section 13161(c) ofPub. L. 103–66provided that: “The amendments made by this section [amending this section and sections 4002, 4003, 4221, and 4222 of this title and omitting sections 4004, 4006, 4007, 4011, and 4012 of this title] shall take effect on January 1, 1993, except that the provisions of section 4001(e) of the Internal Revenue Code of 1986 (as amended by subsection (a)) shall take effect on the date of the enactment of this Act [Aug. 10, 1993].”

Effective Date

Section 11221(f) ofPub. L. 101–508provided that:

“(1) In general.—The amendments made by this section [enacting this subchapter, redesignating former subchapters A and B of this chapter as subchapters B and C, respectively, and amending sections 4221, 4222, and 4293 of this title] shall take effect on January 1, 1991.

“(2) Exception for binding contracts.—In determining whether any tax imposed by subchapter A of chapter 31 of the Internal Revenue Code of 1986, as added by this section, applies to any sale after December 31, 1990, there shall not be taken into account the amount paid for any article (or any part or accessory therefor) if the purchaser held on September 30, 1990, a contract (which was binding on such date and at all times thereafter before the purchase) for the purchase of such article (or such part or accessory).”