
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC4002]

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

(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.)


                               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.

                  Section Referred to in Other Sections

    This section is referred to in section 4001 of this title.
