-
26 U.S.C.
Sec. 4181. Imposition of tax
There is hereby imposed upon the sale by the manufacturer, producer,
or importer of the following articles a tax equivalent to the specified
percent of the price for which so sold:
Articles taxable at 10 percent--
Pistols.
Revolvers.
Articles taxable at 11 percent--
Firearms (other than pistols and revolvers).
Shells, and cartridges.
(Aug. 16, 1954, ch. 736, 68A Stat. 490.)
Sec. 4221. Certain tax-free sales
(a) General rule
Under regulations prescribed by the Secretary, no tax shall be
imposed under this chapter (other than under section 4121 or 4081) on
the sale by the manufacturer (or under subchapter A or C of chapter 31
on the first retail sale) of an article--
(1) for use by the purchaser for further manufacture, or for
resale by the purchaser to a second purchaser for use by such second
purchaser in further manufacture,
(2) for export, or for resale by the purchaser to a second purchaser for
export,
(3) for use by the purchaser as supplies for vessels or aircraft,
(4) to a State or local government for the exclusive use of a State or local
government, or
(5) to a nonprofit educational organization for its exclusive use, but only if such exportation or use is to occur before any other use. Paragraphs (4) and (5) shall not apply to the tax imposed by section 4064. In the case of taxes imposed by section 4051,\1\ or 4071, paragraphs (4) and (5) shall not apply on and after October 1, 2005. In the case of the tax imposed by section 4131, paragraphs (3), (4), and (5) shall not apply and paragraph (2) shall apply only if the use of the
exported vaccine meets such requirements as the Secretary may by
regulations prescribe. In the case of taxes imposed by subchapter A of
chapter 31, paragraphs (1), (3), (4), and (5) shall not apply.
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\1\ So in original. The comma probably should not appear.
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(Added Pub. L. 85-859, title I, Sec. 119(a), Sept. 2, 1958, 72 Stat. 1282; amended Pub. L. 86-70, Sec. 22(a), June 25, 1959, 73 Stat. 146; Pub. L. 86-344, Sec. 2(b), Sept. 21, 1959, 73 Stat. 617; Pub. L. 86-418, Sec. 1, Apr. 8, 1960, 74 Stat. 38; Pub. L. 86-624, Sec. 18(e), July 12, 1960, 74 Stat. 416; Pub. L. 87-61, title II, Sec. 205(a), June 29, 1961, 75 Stat. 126; Pub. L. 89-44, title II, Sec. 208(d), title VIII, Sec. 801(c), (d)(1), June 21, 1965, 79 Stat. 141, 158; Pub. L. 91-172, title I, Sec. 101(j)(26), Dec. 30, 1969, 83 Stat. 529; Pub. L. 92-178, title IV, Sec. 401(a)(3)(A), Dec. 10, 1971, 85 Stat. 531; Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95-227, Sec. 2(b)(2), Feb. 10, 1978, 92 Stat. 12; Pub. L. 95-600, title VII, Sec. 701(ff)(2)(A), Nov. 6, 1978, 92 Stat. 2924; Pub. L. 95-618, title II, Secs. 201(c)(1), 232(a), 233(c)(1), (2), Nov. 9, 1978, 92 Stat. 3183, 3189, 3191, 3192; Pub. L. 96-222, title I, Sec. 108(c)(5),
Apr. 1, 1980, 94 Stat. 227; Pub. L. 97-424, title V, Secs. 515(b)(1), 516(b)(2), Jan. 6, 1983, 96 Stat. 2181, 2183; Pub. L. 98-369, div. A, title VII, Sec. 735(c)(8), July 18, 1984, 98 Stat. 983; Pub. L. 99-499, title V, Sec. 521(d)(4), Oct. 17, 1986, 100 Stat. 1779; Pub. L. 99-514, title XVII, Sec. 1703(c)(2)(C), Oct. 22, 1986, 100 Stat. 2776; Pub. L. 100-17, title V, Sec. 502(b)(4), Apr. 2, 1987, 101 Stat. 257; Pub. L. 100-203, title IX, Sec. 9201(b)(1), title X, Sec. 10502(d)(4), Dec. 22,
1987, 101 Stat. 1330-330, 1330-444; Pub. L. 101-239, title VII, Sec. 7841(d)(17), Dec. 19, 1989, 103 Stat. 2429; Pub. L. 101-508, title XI, Secs. 11211(d)(3), 11221(b), (d)(1), (2), Nov. 5, 1990, 104 Stat. 1388-427, 1388-444; Pub. L. 102-240, title VIII, Sec. 8002(b)(3), Dec. 18, 1991, 105 Stat. 2203; Pub. L. 103-66, title XIII, Sec. 13161(b)(1), Aug. 10, 1993, 107 Stat. 452; Pub. L. 105-178, title IX, Sec. 9002(b)(1), June 9, 1998, 112 Stat. 500; Pub. L. 105-206, title VI, Sec. 6023(17), July 22, 1998, 112 Stat. 825; Pub. L. 108-357, title VIII, Sec. 853(d)(2)(F), Oct. 22, 2004, 118 Stat. 1613.)
Sec. 6416. Certain taxes on sales and services
(b) Special cases in which tax payments considered overpayments
Under regulations prescribed by the Secretary, credit or refund
(without interest) shall be allowed or made in respect of the
overpayments determined under the following paragraphs:
(2) Specified uses and resales
The tax paid under chapter 32 (or under subsection (a) or (d) of
section 4041 in respect of sales or under section 4051) in respect
of any article shall be deemed to be an overpayment if such article
was, by any person--
(A) exported;
(B) used or sold for use as supplies for vessels or aircraft;
(C) sold to a State or local government for the exclusive use of a State or
local government;
(D) sold to a nonprofit educational organization for its exclusive use;
(E) in the case of any tire taxable under section 4071(a),
sold to any person for use as described in section 4221(e)(3); or
(F) in the case of gasoline, used or sold for use in the production of
special fuels referred to in section 4041.
Subparagraphs (C) and (D) shall not apply in the case of any tax paid under section 4064. In the case of the tax imposed by section 4131, subparagraphs (B), (C), and (D) shall not apply and subparagraph (A) shall apply only if the use of the exported vaccine meets such requirements as the Secretary may by regulations prescribe. This paragraph shall not apply in the case of any tax
imposed under section 4041(a)(1) or 4081 on diesel fuel or kerosene and any tax paid under section 4121.
(3) Tax-paid articles used for further manufacture, etc.
If the tax imposed by chapter 32 has been paid with respect to
the sale of any article (other than coal taxable under section 4121)
by the manufacturer, producer, or importer thereof and such article
is sold to a subsequent manufacturer or producer before being used,
such tax shall be deemed to be an overpayment by such subsequent
manufacturer or producer if--
(A) in the case of any article other than any fuel taxable
under section 4081, such article is used by the subsequent
manufacturer or producer as material in the manufacture or
production of, or as a component part of--
(i) another article taxable under chapter 32, or
(ii) an automobile bus chassis or an automobile bus
body, manufactured or produced by him; or
(B) in the case of any fuel taxable under section 4081, such
fuel is used by the subsequent manufacturer or producer, for
nonfuel purposes, as a material in the manufacture or production
of any other article manufactured or produced by him.
27 CFR
Sec. 53.131 Tax-free sales; general rule.
(a) In general. Section 4221(a) of the Code sets forth the following
exempt purposes for which an article subject to tax under chapter 32 of
the Code may be sold tax-free by the manufacturer, producer, or
importer:
(1) For use by the purchaser for further manufacture, or for resale
by the purchaser to a second purchaser for use by such second purchaser
in further manufacture,
(2) For export, or for resale by the purchaser to a second purchaser
for export,
(3) For use by the purchaser as supplies for vessels or aircraft,
(4) To a State or local government for the exclusive use of a State
or local government, and
(5) To a nonprofit educational organization for its exclusive use.
Section 4221(a) of the Code applies only in those cases where the
exportation or use referred to is to occur before any other use, and
where the seller, first purchaser, and second purchaser, as may be
appropriate, have registered as required under section 4222 of the Code
and paragraph (a) of Sec. 53.140. See paragraph (c) of this section for
provisions relating to evidence required in support of tax-free sales.
See Sec. 53.141 for exceptions to the requirement for
registration.Where tax is paid on the sale of an article, but the
article is used or resold for use for an exempt purpose, a claim for
credit or refund may be filed in accordance with and to the extent
provided in sections 6402(a) and 6416 of the Code, and the regulations
thereunder (Sec. Sec. 53.161 and 53.171-53.186).
(b) Manufacturer relieved of liability in certain cases--(1) General
rule. Under the provisions of section 4221(c) of the Code, if an article
subject to tax under Chapter 32 of the Code is sold free of tax by the
manufacturer of the article for an exempt purpose referred to in section
4221(c) of the Code and paragraph (b)(2) of this section, the
manufacturer shall be relieved of any tax liability under chapter 32 of
the Code with respect to such sale if the manufacturer in good faith
accepts a proper certification by the purchaser that the
article or articles will be used by the purchaser in the stated exempt
manner. See paragraph (b)(2) of this section for a list of the exempt
purposes referred to in section 4221(c) of the Code.
(2) Situations wherein section 4221(c) of the Code is applicable.
The following are situations wherein section 4221(c) of the Code is
applicable with respect to sales made tax free on the assumption that
one of the following sections of the Code provides exemption for such
sales:
(i) Section 4221(a)(1) of the Code, to the extent that it relates to
sales for further manufacture by a first purchaser (see Sec. 53.132),
(ii) Section 4221(a)(3) of the Code, relating to supplies for
vessels and aircraft (see Sec. 53.134),
(iii) Section 4221(a)(4) of the Code, relating to sales to State or
local governments (see Sec. 53.135),
(iv) Section 4221(a)(5) of the Code, relating to sales to nonprofit
educational organizations (see Sec. 53.136).
(3) Situations wherein section 4221(c) of the Code is not
applicable. The relief from liability for the payment of tax provided by
section 4221(c) of the Code is not applicable with respect to sales made
tax free on the assumption that one of the following sections of the
Code provides exemption for such sales:
(i) Section 4221(a)(1) of the Code, to the extent that it relates to
sales for resale to a second purchaser for use by the second purchaser
in further manufacture (see Sec. 53.132),
(ii) Section 4221(a)(2) of the Code, relating to sales for export
(see Sec. 53.133).
(4) Duty of seller to ascertain validity of tax-free sale. If the
manufacturer at the time of its sale has reason to believe that the
article sold by it is not intended for the exempt purpose indicated by
the purchaser, or that the purchaser has failed to register as required,
the manufacturer is not considered to have accepted certification from
the purchaser in good faith, and is not relieved from liability under
the provisions of section 4221(c) of the Code.
(5) Information to be furnished to purchaser. A manufacturer selling
articles free of tax under this section shall indicate to the purchaser
that:
(i) Certain articles normally subject to tax are being sold tax
free, and
(ii) The purchaser is obtaining those articles tax free for an
exempt purpose under an exemption certificate or its equivalent.
(6) The manufacturer may transmit this information by any convenient
means, such as coding of sales invoices, provided that the information
is presented with sufficient particularity so that the purchaser is
informed that he has obtained the articles tax free and:
(i) The purchaser can compute and remit the tax due if an article
sold tax free for further manufacture is diverted to a taxable use,
(ii) The manufacturer can remit the tax due with respect to an
article purchased tax free for resale for use in further manufacture or
for export if, within the 6-month period described in Sec. 53.132(c) or
Sec. 53.133(c), the manufacturer does not receive proof that the
article has been exported or resold for use in further manufacturer, or
(iii) The purchaser can notify the manufacturer if an article
otherwise purchased tax free is diverted to a taxable use.
(c) Evidence required in support of tax-free sales--(1) Purchasers
required to be registered. Every purchaser who is required to be
registered (see Sec. 53.140) shall furnish to the seller, as evidence
in support of each tax-free sale made by the seller to such purchaser,
the exempt purpose for which the article or articles are being purchased
and the registration number of the purchaser. Such information must be
in writing and may be noted on the purchase order or other document
furnished by the purchaser to the seller in connection with each sale.
(2) Purchasers not required to be registered. For the evidence which
purchasers not required to register must furnish to the seller in
support of each tax-free sale made by the seller to such purchasers, see
paragraph (b) of Sec. 53.133 for sales or resales to a foreign
purchaser for export, paragraph (d) of Sec. 53.134 for sales of
supplies to vessels or aircraft, paragraph (c) of Sec. 53.135 for sales
to State and local governments, and paragraph (c) of Sec. 53.141 for
sales and purchases by the United States.
[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61
FR 37005, July 16, 1996]
Sec. 53.132 Tax-free sale of articles to be used for, or resold for, further
manufacture.
(a) Further manufacture--(1) In general. Under prescribed
conditions, an article subject to tax under Chapter 32 of the Code may
be sold tax free by the manufacturer, pursuant to section 4221(a)(1) of
the Code, for use by the purchaser in further manufacture, or for resale
by the purchaser to a second purchaser for use by the second purchaser
in further manufacture. See section 4221(d) (6) of the Code and
paragraph (b) of this section for the circumstances under which an
article is considered to have been sold for use in further manufacture.
See section 6416(b)(3) of the Code and Sec. 53.180 for the
circumstances under which credit or refund is available when tax-paid
articles are used in further manufacture.
(2) Proof of resale for use in further manufacture. See section
4221(b)(1) of the Code and paragraph (c) of this section for provisions
under which the exemption provided in section 4221(a)(1) of the Code
shall cease to apply in the case of an article sold by the manufacturer
to a purchaser for resale to a second purchaser for use in further
manufacture unless the manufacturer receives timely proof of resale for
further manufacture.
(b) Circumstances under which an article is considered to have been
sold for use in further manufacture. (1) For purposes of the exemption
from the manufacturers excise tax provided by section 4221(a)(1) of the
Code, an article shall be treated as sold for use in further manufacture
if the article is sold for use by the purchaser as material in the
manufacture or production of, or as a component part of, another article
taxable under chapter 32 of the Code;
(2) An article is used as material in the manufacture or production
of, or as a component of, another article if it is incorporated in, or
is a part or accessory of, the other article when the other article is
sold by the manufacturer. In addition, an article is considered to be
used as material in the manufacture of another article if it is consumed
in whole or in part in testing such other article; for example, shells
or cartridges that are used by the manufacturer of firearms to test new
firearms. However, an article that is consumed in the manufacturing
process other than in testing, so that it is not a physical part of the
manufactured article, is not considered to have been used as material in
the manufacture of, or as a component part of, another article.
(c) Proof of resale for further manufacture--(1) Cessation of
exemption. The exemption provided in section 4221(a)(1) of the Code and
described in paragraph (a) of this section in respect of an article sold
by the manufacturer to a purchaser for resale to a second purchaser for
use by the second purchaser in further manufacture shall cease to apply
on the first day following the close of the 6-month period which begins
on the date of the sale of such article by the manufacturer, or the date
of shipment of the article by the manufacturer, whichever is earlier,
unless, within such 6-month period, the manufacturer receives proof, in
the form prescribed by paragraph (c)(2) of this section, that the
article was actually resold by the purchaser to a second purchaser for
such use. If, on the first day following the close of the 6-month
period, such proof has not been received, the manufacturer shall become
liable for tax at that time at the rate in effect when the sale was made
but otherwise in the same manner as if the article had been sold by it
on such first day at a taxable price equivalent to that at which the
article was actually sold. If the manufacturer later obtains such proof,
it may file a claim for refund or credit of this tax. The payment of
this tax by the manufacturer is not considered an overpayment by the
subsequent manufacturer or producer for which the subsequent
manufacturer or producer is entitled to a credit or refund under section
6416(b)(3) of the Code. See section 4221(d)(6) of the Code and paragraph
(b) of this section for the circumstances under which an article is
considered to have been sold for use in further manufacture.
(2) Proof of resale--(i) Certificate of purchaser. The proof of
resale to be received by the manufacturer, as required under section
4221(b)(1) of the Code, may consist of either a copy of the invoice of
the manufacturer's vendee directed to his purchaser which discloses the
certificate of registry number held by each party or a statement
described in this paragraph. In the case of an invoice of manufacturer's
vendee, it must appear from such invoice (or by statement attached
thereto) that the article was in fact resold for use in further
manufacture. In lieu of such an invoice, proof of resale may consist of
a statement, executed and signed by the manufacturer's vendee which
includes the following:
(A) Date statement was executed.
(B) Name and address of manufacturer's vendee (if other than the
person executing statement).
(C) Certificate of registry number held by vendee.
(D) Specify article(s) purchased tax-free, by whom purchased,
certificate of registry number of second purchaser, date of purchase(s),
whether articles were purchased as material in the manufacture or
production of, or as a component part or parts of, an article or
articles taxable under Chapter 32 of the Code.
(E) Statement that person executing statement or manufacturer's
vendee possesses proof of tax-free resale of the article(s) in the form
of purchase orders and sales invoices and identifying the person who
will maintain custody of such proof for 3 years from the date of the
statement and will make such proof available for inspection by TTB
during such 3 year period.
(F) Statement that a previous statement has not been executed in
respect of such certificate of resale and that the person signing the
statement is aware that fraudulent use of the statement may subject the
person signing the statement and all parties making fraudulent use of
the statement to all applicable criminal penalties under the Code.
(G) Name, signature, and title of individual executing statement.
(ii) Period covered. Any statement executed and signed by the
manufacturer's vendee, as provided in paragraph (c)(2)(i) of this
section, may be executed with respect to any one or more articles
purchased tax free from a manufacturer and resold for use in further
manufacture within the 6-month period prescribed in section 4221(a)(1)
of the Code and paragraph (c)(1) of this section. Such statement (or
other prescribed proof of resale) must be retained for inspection by the
appropriate TTB officer as provided in section 6001 of the Code.
(iii) TTB I 5600.37. A preprinted statement, TTB I 5600.37,
Statement of Manufacturer's Vendee, which is available as provided in
Sec. 53.21(b), when completed, contains all necessary information for a
properly executed statement. Extra copies of TTB I 5600.37 may be
reproduced as needed.
[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61
FR 37005, July 16, 1996]
Sec. 53.133 Tax-free sale of articles for export, or for resale by the purchaser to a second purchaser for export.
(a) In general. (1) An article subject to tax under chapter 32 of
the Code may be sold tax free by the manufacturer, pursuant to section
4221(a)(2) of the Code and this section, for export, or for resale by
the purchaser to a second purchaser for export. See Sec. 53.11 for the
meaning of the term ``exportation''. An article may be sold tax free by
the manufacturer under the provisions of this section only if the person
to whom the manufacturer sells the article intends either to export the
article or to resell it to a person who intends to export it. An article
may not be sold tax free under the provisions of this section by a
manufacturer to a purchaser for resale to a second purchaser which does
not intend to export the article itself but plans to resell it to a
third purchaser for export. See section 6416(b)(2)(A) of the Code and
Sec. 53.177 for the circumstances under which credit or refund of tax
is available where tax-paid articles are exported from the United
States.
(2) If an article, otherwise taxable under chapter 32 of the Code:
(i) Is sold tax free by the manufacturer pursuant to section
4221(a)(2) of the Code and this section, and
(ii) Is returned subsequently to the United States in an unused and
undamaged condition,
then the importer is liable for the tax imposed by chapter 32 of the
Code on the subsequent sale or use of the article in the United States.
The provisions of this paragraph (a)(2) of this section may be
illustrated by the following examples:
Example (1). Q, a U.S. manufacturer of shells and cartridges,
previously sold shells and cartridges to R, a company in Canada. The
sale was tax free under section 4221(a)(2). Prior to use, R sold the
shells and cartridges to S, who imports the articles into the United
States and sells them. The sale of the shells and cartridges subjects S
to an excise tax liability under section 4181.
Example (2). X, a U.S. firearms manufacturer, sold a rifle to Y
company in France. The sale was tax free under section 4221(a)(2). The
rifle was sold by Y to W, an individual in the City of Nice, France.
After initial use, W resold the rifle to X. X returned the rifle to the
United States where it was resold. The resale of the rifle by X does not
subject X to an excise tax liability under section 4181.
(b) Sales or resales to a foreign purchaser for export. In the case
of sales or resales to a foreign purchaser for export, if the first or
the second purchaser is located in a foreign country or possession of
the United States, such purchaser is not required to register as
provided in section 4222(a) of the Code and Sec. 53.140. To establish
the right to sell articles tax free for export to a purchaser who is not
registered and who is located in a foreign country or a possession of
the United States, the manufacturer must obtain from such purchaser at
the time title to the article passes or at the time of shipment,
whichever is earlier, either:
(1) A written order or contract of sale showing that the
manufacturer is to ship the article to a foreign destination; or
(2) Where delivery by the manufacturer is to be made within the
United States, a statement from the purchaser showing:
(i) That the article is purchased either to fill existing or future
orders for delivery to a foreign destination or for resale to another
person engaged in the business of exporting who will export the article,
and
(ii) That such article will be transported to its foreign
destination in due course prior to use or further manufacture and prior
to any resale except for export. See section 4221(b) of the Code and
paragraphs (c) and (d) of this section for requirements as to timely
proof of exportation and cessation of the exemption for export unless
the evidence to show actual exportation has been received by the
manufacturer.
(c) Cessation of exemption. The exemption provided in section
4221(a)(2) of the Code and paragraph (a) of this section for an article
sold by the manufacturer for export or for resale by the purchaser to a
second purchaser for export shall cease to apply on the first day
following the close of the 6-month period which begins on the date of
the sale of the article by the manufacturer, or the date of shipment of
the article by the manufacturer, whichever is earlier, unless within the
6-month period the manufacturer receives proof, in the form prescribed
by paragraph (d) of this section, that the article was actually
exported. If, on the first day following the close of the 6-month
period, the proof has not been received, the manufacturer shall become
liable for tax at that time at the rate in effect when the sale was made
but otherwise in the same manner as if the article had been sold by it
on such first day at a taxable price equivalent to that at which the
article was actually sold.
(d) Proof of exportation. (1) Exportation may be evidenced by:
(i) A copy of the export bill of lading issued by the delivering
carrier,
(ii) A certificate by the agent or representative of the export
carrier showing actual exportation of the article,
(iii) A certificate of landing signed by a customs officer of the
foreign country to which the article is exported,
(iv) Where the foreign country has no customs administration, a
statement of the foreign consignee showing receipt of the article, or
(v) Where a department or agency of the United States Government is
unable to furnish any one of the foregoing four types of proof of
exportation, a statement or certification on the department or agency
stationery, executed by an authorized officer, that the
listed or identified articles have, in fact, been exported.
(2) In any case where the manufacturer is not the exporter, the
manufacturer must have in its possession a statement from the vendee to
whom the manufacturer sold the article stating the following:
(i) Date statement was executed.
(ii) Name and address of manufacturer's vendee (if other than the
person executing statement).
(iii) Certificate of registry number held by vendee.
(iv) Specify article(s) purchased tax-free, by whom purchased, and
date of purchase.
(v) Statement that article(s) was either exported in due course by
the vendee or was sold to another person who in due course exported the
article(s).
(vi) Name and address of vendee who will maintain possession of the
proof of exportation documents, description of the documents, and
statement that vendee will maintain documents for 3 years and make them
available to TTB for inspection.
(vii) Statement that a previous statement has not been executed in
respect of the articles covered by this statement and that fraudulent
use of this statement may subject person executing statement and all
parties making fraudulent use of statement to all applicable criminal
penalties under the Code.
(viii) Name, signature, title, and address of individual executing
certificate.
(3) The statement executed and signed by the manufacturer's vendee,
as provided in paragraph (d)(2) of this section, may be executed with
respect to any one or more articles purchased tax free from a
manufacturer and exported within the 6-month period prescribed in
section 4221(b)(2) of the Code and paragraph (c) of this section. Such
statement shall be kept for inspection by the appropriate TTB officer as
provided in section 6001 of the Code.
(4) TTB I 5600.36. A preprinted statement, TTB I 5600.36, Statement
of Manufacturer's Vendee, which is available as provided in Sec.
53.21(b), when completed, contains all necessary information for a
properly executed statement. Extra copies of TTB I 5600.36 may be
reproduced as needed.
[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-344, 58
FR 40354, July 28, 1993; T.D. 372, 61 FR 20724, May 8, 1996; T.D. ATF-
380, 61 FR 37006, July 16, 1996]
Sec. 53.134 Tax-free sale of articles for use by the purchaser as supplies
for vessels or aircraft.
(a) Supplies for vessels or aircraft--(1) In general. An article
subject to tax under chapter 32 of the Code may be sold tax free by the
manufacturer, pursuant to section 4221(a)(3) of the Code and this
section, for use by the purchaser as supplies for vessels or aircraft.
See paragraph (b) of this section for the meaning of the term ``supplies
for vessels or aircraft.'' An article may be sold tax free under the
provisions of this section only in those cases where the sale of an
article by the manufacturer is made directly to the owner, officer,
charterer, or authorized agent of a vessel or aircraft for use as
supplies for the vessel or aircraft. No sale may be made tax free to a
dealer for resale for use as supplies for vessels or aircraft, even
though it is known at the time of sale by the manufacturer that the
article will be so resold. See section 6416(b)(2)(B) of the Code and
paragraph (c) of Sec. 53.178 for circumstances under which credit or
refund of tax is available where tax-paid articles are used, or sold for
use, as supplies for vessels or aircraft. An article may not be sold tax
free under the provisions of this section by the manufacturer to
passengers or members of the crew of a vessel or aircraft.
(2) Civil aircraft of foreign registry. In the case of any article
sold by the manufacturer for use by the purchaser as supplies for civil
aircraft of foreign registry employed in foreign trade or in trade
between the United States and any of its possessions, the provisions of
this paragraph apply only if the reciprocity requirements of section
4221(e)(1) of the Code are met. See paragraph (c) of this section.
(b) Meaning of terms--(1) Supplies for vessels or aircraft. The term
``supplies for vessels or aircraft'' means fuel supplies, ships' stores,
sea stores, or legitimate equipment on vessels of war of
the United States or of any foreign nation, vessels employed in the
fisheries or in the whaling business, or vessels actually engaged in
foreign trade or trade between the Atlantic and Pacific ports of the
United States or between the United States and any of its possessions.
(2) Fuel supplies, ships' stores, and legitimate equipment. The
terms ``fuel supplies'', ``ships' stores'', and ``legitimate equipment''
include all articles, materials, supplies, and equipment necessary for
the navigation, propulsion, and upkeep of vessels of war of the United
States or of any foreign nation, vessels employed in the fisheries or in
the whaling business, or vessels actually engaged in foreign trade or in
trade between the Atlantic and Pacific ports of the United States or
between the United States and any of its possessions, even though such
vessels may make intermediate stops in the United States. The term does
not include supplies for vessels engaged in trade:
(i) Between domestic ports in the Atlantic Ocean and the Gulf of
Mexico,
(ii) Between domestic ports on the Pacific Ocean,
(iii) Between domestic ports on the Great Lakes, or
(iv) On the inland waterways of the United States.
(3) Sea stores. The term sea stores includes any article purchased
for use or consumption by the passengers or crew, or both, of a vessel
during its voyage.
(4) Vessel. The term vessel includes:
(i) Every description of watercraft or other contrivance used, or
capable of being used, as a means of transportation on water,
(ii) Civil aircraft registered in the United States and employed in
foreign trade or in trade between the United States and any of its
possessions, and
(iii) Civil aircraft registered in a foreign country and employed in
foreign trade or trade between the U.S. and its possessions.
(5) Vessels of war of the United States or of any foreign nation.
The term vessels of war of the United States or of any foreign nation
includes:
(i) Every description of watercraft or other contrivance used, or
capable of being used, as a means of transportation on water and
constituting equipment of the armed forces (including the U.S. Coast
Guard and U.S. National Guard) of the United States or of a foreign
nation, and
(ii) Aircraft owned by the United States or by any foreign nation
and constituting equipment of the armed forces thereof.
(iii) For purposes of this section, vessels or aircraft owned by
armed forces are not considered to be equipment of such armed forces
while on lease or loan to an organization that is not part of the armed
forces.
(6) Vessels used in fisheries or whaling business. The exemption
provided by section 4221(a)(3) of the Code and paragraph (a) of this
section in the case of articles sold for the prescribed use on vessels
employed in the fisheries or whaling business is limited to articles
sold by the manufacturer for such use on vessels while employed, and to
the extent employed, exclusively in the fisheries or in the whaling
business. For purposes of this section, vessels engaged in sport fishing
are not considered to be employed in the fisheries business.
(7) Civil aircraft. The exemption provided by section 4221(a)(3) of
the Code and paragraph (a) of this section relating to supplies for
vessels or aircraft, with respect to civil aircraft, extends only to
civil aircraft when employed in foreign trade, or in trade between the
United States and any of its possessions. Sales of supplies to civil
aircraft when engaged in trade between the Atlantic and the Pacific
ports of the United States are not exempt from the tax imposed under
chapter 32 of the Code. See section 4221(e)(1) of the Code and paragraph
(c) of this section for requirement of reciprocal exemption in the case
of a civil aircraft registered in a foreign country.
(8) Trade. The term ``trade'' includes the transportation of persons
or property for hire and the making of the necessary preparations for
such transportation. The term ``trade'' also includes the transportation
of property on a vessel or aircraft owned or chartered by the owner of
the property in connection with the purchase, sale, or
exchange of the property in a commercial business operation. However, a
vessel owned or chartered by a company and used in the transportation of
personnel or property of such company to or from its business properties
located in a foreign country, or in a possession of the United States,
is not engaged in ``trade''.
(c) Reciprocity required in the case of civil aircraft. The
exemption provided by section 4221(a)(3) of the Code and paragraph (a)
of this section with respect to the sales of supplies for civil aircraft
registered in a foreign country is further limited in that the privilege
of exemption may be granted only if the Secretary of Commerce advises
the Secretary of the Treasury that the foreign country allows, or will
allow, substantially the same reciprocal privileges. If a foreign
country discontinues the allowance of such substantially reciprocal
exemption, the exemption allowed by the United States will not apply
after the Secretary of the Treasury is notified by the Secretary of
Commerce of the discontinuance of the exemption allowed by the foreign
country.
(d) Evidence required to establish--(1) In general. The exemption
provided in section 4221(a)(3) of the Code and paragraph (a) of this
section for articles sold for use by the purchaser as supplies for
vessels or aircraft applies only:
(i) If both the manufacturer and purchaser are registered under the
provisions of section 4222 of the Code, or
(ii) The purchaser or both the manufacturer and the purchaser are
not registered but have satisfied the provisions of paragraph (d)(2) of
this section.
See paragraph (c) of Sec. 53.131 for the evidence required to establish
exemption where the purchaser is registered pursuant to section 4222 of
the Code and Sec. 53.140.
(2) Exemption certificates for use in support of tax-free sales of
supplies for vessels and aircraft. (i) In order to establish exemption
from tax under section 4221(a)(3) of the Code in those instances where
the purchaser or both the manufacturer and purchaser are not registered
under section 4222 of the Code, the manufacturer must obtain (prior to
or at the time of the sale) from the owner, charterer, or authorized
agent of the vessel or aircraft and retain in the manufacturer's
possession a properly executed exemption certificate in the form
prescribed by paragraph (d)(2)(iii) of this section. If articles are
sold tax-free for use as supplies for civil aircraft employed in foreign
trade or in trade between the United States and any of its possessions,
the exemption certificate must show the name of the country in which the
aircraft is registered.
(ii) Where only occasional sales of articles are made to a purchaser
for use as supplies for vessels or aircraft, a separate exemption
certificate shall be furnished for each order. However, where sales are
regularly or frequently made to a purchaser for such exempt use, a
certificate covering all orders for a specified period not to exceed 12
calendar quarters will be acceptable. Such certificates and proper
records of invoices, orders, etc., relative to tax-free sales must be
kept for inspection by the appropriate TTB officer as provided in
section 6001 of the Code.
(iii) Acceptable form of exemption certificate. A certificate of
exemption to support tax-free sales under this section must include the
following:
(A) Name of owner, charterer, or authorized agent.
(B) Name of company and vessel.
(C) List article(s) covered by the certificate or beginning and
ending dates during which orders will be placed (not to exceed 12
calendar quarters).
(D) Statement that articles will be used only for fuel supplies,
ships' stores, sea stores, or legitimate equipment on a vessel belonging
to one of the class of vessels to which section 4221 of the Code
applies. Identify class of vessel certificate covers (see paragraphs (a)
and (b) of this section).
(E) If articles are purchased for use on civil aircraft engaged in
foreign trade or trade between the United States and any of its
possessions, state the country in which the aircraft is registered.
(F) Statement that it is understood that if any articles are used
for any purpose other than as stated in the certificate, or are resold
or otherwise disposed of, the person executing the certificate must
notify the manufacturer.
(G) Statement that the certificate shall not be used to purchase
tax-free articles for use as supplies, etc. on pleasure vessels or any
type of aircraft except:
(1) Civil aircraft employed in foreign trade or trade between the
United States and any of its possessions;
(2) Aircraft owned by the United States or any foreign country and
constituting a part of the armed forces thereof.
(H) Statement that it is understood that any fraudulent use of the
certificate may subject person executing certificate and all parties
making fraudulent use of the certificate to all applicable criminal
penalties under the Code.
(I) Statement that person executing certificate is prepared to
establish by satisfactory evidence the purpose for which the article(s)
was used.
(J) Date, name, signature, and address of person executing the
certificate.
(iv) TTB I 5600.34. A preprinted certificate, TTB I 5600.34,
Exemption Certificate, which is available as provided in Sec. 53.21(b),
when completed, contains all necessary information for a properly
executed certificate. Extra copies of TTB I 5600.34 may be reproduced as
needed.
[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61
FR 37006, July 16, 1996; T.D. TTB-44, 71 FR 16957, Apr. 4, 2006]
Sec. 53.135 Tax-free sale of articles to State and local governments for
their exclusive use.
(a) In general. An article subject to tax under Chapter 32 of the
Code may be sold tax free by the manufacturer, pursuant to section
4221(a)(4) of the code and this section, to a State or local government
for the exclusive use of such State or local government. See paragraph
(b) of this section for the meaning of the term ``State or local
government''. An article may be sold tax free by the manufacturer under
this paragraph only in those cases where the sale is made directly to a
State or local government for its exclusive use. Accordingly, no sale
may be made tax free to a dealer for resale to a State or local
government for its exclusive use, even though it is known at the time of
sale by the manufacturer that the article will be so resold. A sale of
an article to a State or local government for resale is not considered
to be a sale for the ``exclusive use'' of the State or local government,
within the meaning of section 4221(a)(4) of the Code, and, therefore,
such sales may not be made tax free. Such sales are not exempt
regardless of whether the resales are made to government employees, or
the fact that the article is an item of equipment the employee is
required to possess in carrying out his duties. For example, pistols or
revolvers may not be sold tax free to a State or local government for
resale to its police officers. See section 6416(b)(2)(C) of the Code,
and paragraph (d) of Sec. 53.178, for the circumstances under which
credit or refund of tax is available where tax-paid articles are sold
for the exclusive use of a State or local government.
(b) State or local government. The term State or local government
includes any State, the District of Columbia, and any political
subdivision of any of the foregoing. See, section 7871(a)(2)(B) of the
Code and 26 CFR 305.7701-1 et seq., which provide that an Indian tribal
government shall be treated as a State for purposes of exemption from an
excise tax imposed by chapter 32. Section 7871(b) of the Code provides
that the exemption from tax applies only if the transaction involves the
exercise of an essential governmental function of the Indian tribal
government.
(c) Evidence required in support of tax-free sales to State or local
governments. (1) In the case of a State or local government which is
registered (see Sec. 53.141 for provisions under which a State or local
government may register if it so desires), the provisions of paragraph
(c) of Sec. 53.131 have application as to the evidence required in
support of tax-free sales. If a State or local government is not
registered, the evidence required in support of a tax-free sale to the
State or local government shall, except as provided in paragraph (c)(2)
of this section, consist of a certificate, executed and signed by an
officer or employee
authorized by the State or local government to execute and sign the
certificate. If it is impracticable to furnish a separate certificate
for each order or contract because of frequency of purchases, a
certificate covering all orders between given dates (such period not to
exceed 12 calendar quarters) will be acceptable. The certificates and
proper records of invoices, orders, etc., relative to tax-free sales
must be retained by the manufacturer as provided in Sec. 53.24(d). A
certificate of exemption to support tax-free sales under this section
must contain the following:
(i) Title of official executing certificate, branch of government,
date executed, and statement that official is authorized to execute
certificate.
(ii) List articles covered by the certificate or beginning and
ending dates during which orders will be placed by the purchaser (period
not to exceed 12 calendar quarters).
(iii) Name of manufacturer from which articles purchased.
(iv) Governmental unit purchasing articles.
(v) Statement that is understood that articles purchased under this
certificate of exemption are limited to use exclusively by the
purchasing governmental entity.
(vi) Statement that is understood that any fraudulent use of this
certificate may subject the person executing the certificate and all
parties making fraudulent use of the certificate to all applicable
criminal penalties under the Code.
(vii) Name, address, and signature of person executing the
certificate.
(2) A purchase order, provided that all of the information required
by paragraph (c)(1) of this section is included therein, is acceptable
in lieu of a separate exemption certificate.
(3) TTB I 5600.35. A preprinted certificate, TTB I 5600.35,
Exemption Certificate, which is available as provided in Sec. 53.21(b),
when completed, contains all necessary information for a properly
executed certificate. Extra copies of TTB I 5600.35 may be reproduced as
needed.
(d) Resale of articles purchased tax free by a State or local
government. If articles purchased tax free for the exclusive use of a
State or local government (whether on the basis of a registration number
or an exemption certificate) are, prior to use by the State or local
government, resold under circumstances that do not amount to an
exclusive use by the State or local government (such as pistols or
revolvers that are resold by a police department to its police
officers), the parties responsible in the State or local government are
required to inform the manufacturer, producer, or importer from whom the
articles were purchased that they were disposed of in a manner that did
not amount to an exclusive use by the State or local government. A
willful failure to supply the manufacturer, producer, or importer with
the information required by this subparagraph will subject responsible
parties to the penalties provided by section 7203 of the Code.
[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61
FR 37006, July 16, 1996]
Sec. 53.179 Supporting evidence required in case of manufacturers tax
involving exportations, uses, sales, or resales.
(a) Evidence to be submitted by claimant. No claim for credit or
refund of an overpayment, within the meaning of section 6416(b)(2) of
the Code and Sec. 53.178, of tax under chapter 32 of the Code shall be
allowed unless the person who paid the tax submits with the claim the
evidence required by Sec. 53.172(b)(2) and a statement, supported by
sufficient available evidence:
(1) Showing the amount claimed in respect of each category of
exportations, uses, sales, or resales on which the claim is based and
which give rise to a right of credit or refund under section 6416(b)(2)
of the Code and Sec. 53.177,
(2) Identifying the article, both as to nature and quantity, in
respect of which credit or refund is claimed,
(3) Showing the amount of tax paid in respect of the article or
articles and the dates of payment, and
(4) Indicating that the person claiming a credit or refund possesses
evidence (as set forth in paragraph (b)(1) of this section) that the
article has been exported, or has been used, sold, or resold in a manner
or for a purpose which gives rise to an overpayment within the meaning
of section 6416(b)(2) of the Code and Sec. 53.178.
(b) Evidence required to be in possession of claimant--(1) Evidence
required under paragraph (a)(4)--(i) In general. The evidence required
to be retained by the person who paid the tax, as provided in paragraph
(a)(4) of this section, must, in the case of an article exported,
consist of proof of exportation in the form prescribed in Sec. 53.133
or must, in the case of other articles sold tax-paid by that person,
consist of a certificate, executed and signed by the ultimate purchaser
of the article, in the form prescribed in paragraph (b)(1)(ii) of this
section. However, if the article to which the claim relates has passed
through a chain of sales from the person who paid the tax to the
ultimate purchaser, the evidence required to be retained by the person
who paid the tax may consist of a certificate, executed and signed by
the ultimate vendor of the article, in the form provided in paragraph
(b)(1)(iii) of this section, rather than the proof of exportation itself
or the certificate of the ultimate purchaser.
(ii) Certificate of ultimate purchaser. (A) The certificate executed
and signed by the ultimate purchaser of the article to which the claim
relates must identify the article, both as to nature and quantity; show
the address of the ultimate purchaser of the article, and the name and
address of the ultimate vendor of the article; and describe the
use actually made of the article in sufficient detail to establish that
credit or refund is due, except that the use to be made of the article
must be described in lieu of actual use if the claim is made by reason
of the sale or resale of an article for a specified use which gives rise
to the overpayment.
(B) If the certificate sets forth the use to be made of any article,
rather than its actual use, it must show that the ultimate purchaser has
agreed to notify the claimant if the article is not in fact used as
specified in the certificate.
(C) The certificate must also contain a statement that the ultimate
purchaser understands that the ultimate purchaser and any other party
may, for fraudulent use of the certificate, be subject to all applicable
criminal penalties under the Internal Revenue Code.
(D) A purchase order will be acceptable in lieu of a separate
certificate of the ultimate purchaser if it contains all the information
required by this paragraph.
(iii) Certificate of ultimate vendor. Any certificate executed and
signed by an ultimate vendor as evidence to be retained by the person
who paid the tax as provided in paragraph (a)(4) of this section may be
executed with respect to any one or more overpayments by the person
which arose under section 6416(b)(2) and Sec. 53.178 by reason of
exportations, uses, sales or resales, occurring within any period of not
more than 12 consecutive calendar quarters, the beginning and ending
dates of which are specified in the certificate. A certificate
supporting a claim for credit or refund under this section shall contain
the following:
(A) Name of ultimate vendor if other than person executing the
certificate.
(B) Statement that article(s) was purchased by the ultimate vendor
tax-paid and was thereafter exported, used, sold, or resold.
(C) Description of proof which supports exportation or certificate
as to use executed by ultimate purchaser.
(D) Statement that ultimate vendor retains such proof for 3 years
from the date of the statement and will, upon request, supply such proof
at any time within such 3 year period to the taxpayer to establish that
credit or refund is due in respect of the article.
(E) Statement that to the best knowledge and belief of the person
executing the certificate, no statement in respect of the proof of
exportation or certificate has previously been executed and that the
person executing the certificate understands that any fraudulent use of
the certificate may subject the person executing the certificate or any
other party to all applicable criminal penalties under the Code.
(F) Name, title, address and signature of person executing
certificate and date signed.
(G) Description of all articles covered by the certificate, with the
corresponding vendor's invoice number, date of resale of article,
quantity, whether articles were exported or used and the use made of
article or to be made of article.
(iv) TTB I 5600.33. TTB I 5600.33, Statement of Ultimate Vendor,
which is available as provided in Sec. 53.21(b), when completed,
contains all necessary information for a properly executed certificate.
Additional copies may be reproduced as needed.
(2) Repayment or consent of ultimate vendor. If the person claiming
credit or refund or an overpayment to which this section applies has
repaid, or agreed to repay, the amount of the overpayment to the
ultimate vendor or if the ultimate vendor consents to the allowance of
the credit or refund, a statement to that effect, signed by the ultimate
vendor, must be shown on, or made a part of, the supporting evidence
required under this section to be retained by the person claiming the
credit or refund. In this regard, see Sec. 53.172(b)(2).
[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61
FR 37007, July 16, 1996; T.D. TTB-44, 71 FR 16958, Apr. 4, 2006]
| File Type | application/msword |
| File Title | 26 U |
| Author | TTB |
| Last Modified By | TTB |
| File Modified | 2011-03-08 |
| File Created | 2011-02-15 |