Home/Fourth Circuit/Burruss Land and Lumber Company, Incorporated v. United States

Burruss Land and Lumber Company, Incorporated v. United States

456 F.2d 38, 29 A.F.T.R.2d (RIA) 1616, 1972 U.S. App. LEXIS 11175
CourtCourt of Appeals for the Fourth Circuit
DecidedFebruary 22, 1972
Docket71-1194
StatusPublished
Cited by3 cases

This text of 456 F.2d 38 (Burruss Land and Lumber Company, Incorporated v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Burruss Land and Lumber Company, Incorporated v. United States, 456 F.2d 38, 29 A.F.T.R.2d (RIA) 1616, 1972 U.S. App. LEXIS 11175 (4th Cir. 1972).

Opinion

BOREMAN, Senior Circuit Judge:

This appeal presents the question whether sales of laminated boards, developed, advertised and marketed as flooring for motor vehicle trucks and trailers by Burruss Land and Lumber Company (hereafter Burruss or taxpayer) were subject to the manufacturer’s *39 excise tax imposed by Title 26 U.S.C. (I.R.C.1954 1 ) § 4061(b). 2

I.

Burruss has its principal place of business in Lynchburg, Virginia, and has other plants in Brookneal and Dillwyn, Virginia. Prior to 1955 Burruss used lumber from its 80,000 acres of Virginia timber land principally for pine framing, industrial lumber and house flooring. In 1955, after consulting with representatives of Fruehauf Trailer Corporation of Detroit, Michigan, and other trucking concerns, Burruss began the development of a new product, “laminated boards” for motor vehicle trailer and semi-trailer truck flooring. In the next few years Burruss established four production lines for these laminated boards in certain of its plants at a cost in excess of $1,000,-000.

Burruss produces its laminated boards in the following manner. Narrow strips of wood are ripped to a desired thickness, the sawn strips are then end dressed, 3 spread with glue, and placed on a conveyor belt. The dressed strips are then electronically glued together by machine and laminated “vertical grain” planks of varying lengths, widths, and thicknesses result.

Burruss marketed its product during the period 1956-1963 as “Burruss Brand Laminated Truck Flooring,” 4 representing that it was “tailored to fit your dimensions” and was “ready to use” with “no waste”; plainly, the taxpayer stressed the ease of installation of its product. 5

In orders placed with Burruss by telephone, order form or letter, customers usually specified the dimensions or number of square feet of the truck floor area to be covered and the thickness of the flooring ordered; 6 some orders included drawings indicating the shape and dimensions of the truck’s interior in which the flooring was to be installed. There is evidence in the record that over 95 percent of Burruss’ sales of laminated flooring were made to trucking firms such as Fruehauf Trailer Corporation and other companies that specialized in the manufacture or repair of truck bodies.

Burruss filed no excise tax returns with respect to its assertedly taxable sales of laminated boards between 1956 and 1963. Subsequently, the Internal Revenue Service determined that Bur-russ’ sales of this product in all four quarters of 1956 were subject to the excise tax prescribed by section 4061(b) *40 and, additionally, that taxpayer was liable for the penalties imposed by section 6651(a) for its failure to file an excise tax return for 1956 and by section 6656 (a) for its failure to make the required deposit of excise taxes in that year.

Burruss paid the excise taxes and penalties assessed with respect to the year 1956 and instituted suit on February 17, 1967, for the recovery thereof in the district court. The United States sought by counterclaim to collect the excise tax, penalties and interest with respect to Burruss’ sales of laminated truck flooring for the 28 quarters from January 1, 1957, through December 31, 1963. On a stipulation of facts, the deposition of James M. Gilley 7 and the briefs filed by the parties, the district court, 318 F. Supp. 360, held that sales of the taxpayer’s product were not subject to the- excise tax imposed by section 4061(b). Implicit in this decision was the determination that since Burruss was not liable for the excise tax it was not liable for the prescribed penalties and interest. The United States has appealed. We reverse, having concluded that Burruss’ product was subject to the excise tax prescribed by section 4061(b), and we remand to the district court to determine whether Burruss is subject to the penalties provided in sections 6651(a) and 6656(a).

II

Clearly, taxpayer’s sales of laminated boards were subject to the excise tax if that product was a truck “part or accessory” within the purview of section 4061(b) at the time of such sales and if taxpayer was the manufacturer. The parties disagree as to whether the classification of “parts or accessories” is properly determined by applying the “primarily adapted” test or the “primarily used” test. Neither section 4061(b) nor its predecessors 8 define “parts or accessories”; accordingly, an analysis of the applicable regulation, its basic predecessor and relevant decisional law is appropriate in order to reach a conclusion as to the proper test to be used in determining the scope of the statutory phrase “part or accessory,” i. e., its applicability or lack thereof, to “Burruss Brand Laminated Truck Flooring.” 9

*41 Treasury Regulation 47, Arts. 15 and 16, the basic predecessor of the regulation here applicable, 1954 Treasury Regulation on Manufacturers and Retailers Excise Tax § 40.4061(b)-2(a), was adopted pursuant to the Revenue Act of 1918, was effective without significant change until the Revenue Act of 1932 (excepting the period when the Revenue Acts of 1926 and 1928 were in effect as explained in footnote 8) and provided in relevant part:

Art. 15. Definition of parts. — A “part” for an automobile, truck is any article designed or manufactured for the special purpose of being used as or to replace a component part of any such vehicle and which by reason of some peculiar characteristic is not such a commercial commodity as would ordinarily be sold for general use and which is primarily adapted only for use as a component part of such vehicle. [Emphasis added.] Art. 16. Definition of accessories.— An “accessory” for an automobile, truck ... is any article designed to be attached to or used in connection with such vehicle to add to its utility or ornamentation and which is primarily adapted for use in connection with such vehicle, whether or not essential to its operation. [Emphasis added.]

The validity of the definitions in Treasury Regulation 47 was upheld by the Supreme Court in Universal Battery v. United States, 281 U.S. 580, 50 S.Ct. 422, 74 L.Ed. 1051 (1930). At pages 583-584, 50 S.Ct. page 423 the Court stated:

[A]rticles primarily adapted for use in motor vehicles are to be regarded as parts or accessories of such vehicles, even though there has been some other use of the articles for which they are not so well adapted.

As we interpret Universal Battery v. United States, supra,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

First National Bank in Palm Beach, of the Will of Frederick S. Holmes v. United States of America, J. W. Perry, Third-Party
591 F.2d 1143 (First Circuit, 1979)
Fisher Engineering v. United States
376 F. Supp. 541 (D. Maine, 1974)
BURRUSS LAND AND LUMBER CO. INC. v. United States
349 F. Supp. 188 (W.D. Virginia, 1972)

Cite This Page — Counsel Stack

Bluebook (online)
456 F.2d 38, 29 A.F.T.R.2d (RIA) 1616, 1972 U.S. App. LEXIS 11175, Counsel Stack Legal Research, https://law.counselstack.com/opinion/burruss-land-and-lumber-company-incorporated-v-united-states-ca4-1972.