26 U.S. Code § 4002 - 1st retail sale; uses, etc. treated as sales; determination of price
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(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.
(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.
(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—
(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
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. 450.)
1993—Pub. L. 103–66amended 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
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