26 U.S.C. § 4052 — Definitions and special rules

(a) First retail sale. (1) “First retail sale” means the first sale after production, manufacture, or importation for a purpose other than resale or a long-term lease. (2) Lease rules similar to section 4217 apply. (3) If a person uses a taxable article before its first retail sale, that person owes the section 4051 tax as if the person had made the retail sale. This does not apply when the article is used as material, a component, or in manufacturing or producing another article by that person. When the use creates the tax, the price is the ordinary retail price of similar articles, as determined by the Secretary^*.

(b) Price. (1) The price includes charges for putting the article into usable condition. It excludes the section 4051 tax; a separately stated State, local, or District of Columbia retail-sales tax, whether owed by seller or buyer; and the value of a component supplied by the article's first user if that component had already been used. Price is determined without considering a trade-in. (2) For a non-arm's-length sale below fair market price, tax is based on the ordinary retail price of similar articles, as determined by the Secretary. (3) For a long-term lease treated as the first retail sale, price equals the article's sale price to the lessor, determined under this subchapter without paragraph (4), plus the cost of parts and accessories installed by the lessor before the lessee's first use or leased with the article, plus the presumed markup percentage on that sum. The presumed markup percentage is the average markup of retailers of that type of article, as determined by the Secretary. Regulations may exclude specified leases when applying this rule is unnecessary. (4) If the manufacturer, producer, importer, or a related person owes the tax, price equals the otherwise determined price plus that price multiplied by the presumed markup percentage. A related person generally is a member of the same controlled group as the manufacturer, producer, or importer. Regulations may exclude a person when the article is sold through a permanent retail establishment in the ordinary retail business.

(c) Combinations not treated as manufacture. Except for subsection (a)(3)(B), merely combining an article with any listed item does not make a person a manufacturer of the article. The items are a coupling device, including a fifth wheel; wrecker crane; loading or unloading equipment, including a crane, hoist, winch, or power liftgate; aerial ladder or tower; snow and ice-control equipment; earthmoving, excavation, or construction equipment; spreader; sleeper cab; cab shield; or wood or metal floor.

(d) Other rules. Regulations may apply rules similar to section 4216(c) and (d), concerning partial payments.

(e) Long-term lease. A long-term lease is a lease lasting 1 year or more. Section 168(i)(3)(A)'s rules apply when determining the lease term; this section does not define those outside terms.

(f) Repairs and modifications. (1) An article described in section 4051(a)(1) is not treated as manufactured or produced solely because of repairs or modifications, including a change in its transportation function or restoration of a wrecked article, if the cost is no more than 75 percent of a comparable new article's retail price. (2) That rule does not apply if the repaired or modified article would be taxable under section 4051 if new, but was not taxable when new under that section or its predecessor.

(g) Resale certification. The Secretary must issue regulations allowing a person buying taxable articles for resale or a long-term lease to certify on the sales invoice, under penalty of perjury, that the sale is for resale. The Secretary may not require registration to use this procedure.