Universal Battery Co. v. United States and Four Other Cases

Background

These are lawsuits by manufacturers seeking refunds of taxes paid under §900 of the Revenue Acts of 1918 and 1921 on sales of items the tax collectors called “parts or accessories” for motor vehicles. The statute taxes sales of certain trucks, automobiles, and also taxes sales of tires, parts, and accessories sold to buyers who are not vehicle manufacturers. The sellers in these cases did not make the taxed vehicles but did make the items that were taxed when sold to ordinary buyers.

Reasoning

The central question was whether each item sold was a “part or accessory” within the statute’s meaning. The Treasury’s long-standing regulations define “part” as an article designed or manufactured mainly to be used as a component of a vehicle, and “accessory” as an article mainly adapted to add utility or ornamentation to a vehicle. The Court found that this administrative interpretation is reasonable and admissible, and it should not be disturbed unless plainly wrong. The Court applied that test to the items in these cases and reviewed the lower courts’ factual findings.

Real world impact

Using that approach, the Court affirmed taxes where the record showed items were primarily adapted for vehicles (for example, certain storage batteries, speedometer parts, and bumper fittings). The Court reversed and sent back other cases where the trial court failed to make definite findings about whether the items were primarily adapted for vehicle use (for example, other battery sales and gascolaters). The decision upholds the agency’s decade-old definitions and requires clearer factual findings where product use was uncertain.