taxes—firearms and ammu- - gpo · 669 bureau of alcohol, tobacco and firearms, treasury pt. 53...

669

Bureau of Alcohol, Tobacco and Firearms, Treasury Pt. 53

§ 47.62 False statements or conceal-ment of facts.

Any person who willfully, in a reg-istration or permit application, makesany untrue statement of a materialfact or fails to state a material fact re-quired to be stated therein or nec-essary to make the statements thereinnot misleading, shall upon convictionbe fined not more than $1,000,000, or im-prisoned not more than 10 years, orboth.

[T.D. ATF–8, 39 FR 3251, Jan. 25, 1974, asamended by T.D. ATF–215, 50 FR 42162, Oct.18, 1985; T.D. ATF–287, 54 FR 13681, Apr. 5,1989]

§ 47.63 Seizure and forfeiture.

Whoever knowingly imports into theUnited States contrary to law any arti-cle on the U.S. Munitions Import List;or receives, conceals, buys, sells, or inany manner facilitates its transpor-tation, concealment, or sale after im-portation, knowing the same to havebeen imported contrary to law, shall befined not more than $10,000 or impris-oned not more than 5 years, or both;and the merchandise so imported, orthe value thereof shall be forfeited tothe United States.

(18 U.S.C. 545)

[T.D. ATF–8, 39 FR 3251, Jan. 25, 1974, asamended by T.D. ATF–215, 50 FR 42162, Oct.18, 1985]

PART 53—MANUFACTURERS EXCISETAXES—FIREARMS AND AMMU-NITION

Subpart A—Introduction

Sec.53.1 Introduction.53.2 Attachment of tax.53.3 Exemption certificates.

Subpart B—Definitions

53.11 Meaning of terms.

Subpart C—Administrative andMiscellaneous Provisions

53.21 Forms prescribed.53.22 Employer identification number.53.23 Alternate methods or procedures.53.24 Records.

Subparts D–F [Reserved]

Subpart G—Tax Rates

53.61 Imposition and rates of tax.53.62 Exemptions.53.63 Other tax-free sales.

Subparts H–I [Reserved]

Subpart J—Special Provisions Applicableto Manufacturers Taxes

53.91 Charges to be included in sale price.53.92 Exclusions from sale price.53.93 Other items relating to tax on sale

price.53.94 Constructive sale price; scope and ap-

plication.53.95 Constructive sale price; basic rules.53.96 Constructive sale price; special rule

for arm’s length sales.53.97 Constructive sale price; affiliated cor-

porations.53.98 Computation of tax on leases and in-

stallment sales.53.99 Sales of installment accounts.53.100 Exclusion of local advertising charges

from sale price.53.101 Limitation on aggregate of exclusions

and price readjustments.53.102 No exclusion or readjustment for

other advertising charges or reimburse-ments.

53.103 Lease considered as sale.53.104 Limitation on amount of tax applica-

ble to certain leases.

USE BY MANUFACTURER OR IMPORTERCONSIDERED SALE

53.111 Tax on use by manufacturer, pro-ducer, or importer.

53.112 Business or personal use of articles.53.113 Events subsequent to taxable use of

article.53.114 Use in further manufacture.53.115 Computation of tax.

APPLICATION OF TAX IN CASE OF SALES BYOTHER THAN MANUFACTURER OR IMPORTER

53.121 Sales of taxable articles by a personother than the manufacturer, producer,or importer.

Subpart K—Exemptions, Registration, Etc.

53.131 Tax-free sales; general rule.53.132 Tax-free sale of articles to be used

for, or resold for, further manufacture.53.133 Tax-free sale of articles for export, or

for resale by the purchaser to a secondpurchaser for export.

53.134 Tax-free sale of articles for use by thepurchaser as supplies for vessels or air-craft.

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27 CFR Ch. I (4–1–99 Edition)§ 53.1

53.135 Tax-free sale of articles to State andlocal governments for their exclusiveuse.

53.136 Tax-free sales of articles to nonprofiteducational organizations.

53.137–53.139 [Reserved]53.140 Registration.53.141 Exceptions to the requirement for

registration.53.142 Denial, revocation or suspension of

registration.53.143 Special rules relating to further man-

ufacture.

Subpart L—Refunds and Other Administra-tive Provisions of Special Applicationto Manufacturers Taxes

53.151 Returns.53.152 Final returns.53.153 Time for filing returns.53.154 Manner of filing returns.53.155 Extension of time for filing returns.53.156 Extension of time for paying tax

shown on return.53.157 Deposit requirement for deposits

made for calendar quarters prior to July1, 1995.

53.158 Payment of tax by electronic fundtransfer.

53.159 Deposit requirement for depositsmade for calendar quarters beginning onor after July 1, 1995.

53.161 Authority to make credits or refunds.53.162 Abatements.53.163–53.170 [Reserved]53.171 Claims for credit or refund of over-

payments of manufacturers taxes.53.172 Credit or refund of manufacturers tax

under chapter 32.53.173 Price readjustments causing overpay-

ments of manufacturers tax.53.174 Determination of price readjust-

ments.53.175 Readjustment for local advertising

charges.53.176 Supporting evidence required in case

of price readjustments.53.177 Certain exportations, uses, sales, or

resales causing overpayments of tax.53.178 Exportations, uses, sales, and resales

included.53.179 Supporting evidence required in case

of manufacturers tax involving expor-tations, uses, sales, or resales.

53.180 Tax-paid articles used for furthermanufacture and causing overpaymentsof tax.

53.181 Further manufacture included.53.182 Supporting evidence required in case

of tax-paid articles used for further man-ufacture.

53.183 Return of installment accounts caus-ing overpayments of tax.

53.184 Refund to exporter or shipper.53.185 Credit on returns.

53.186 Accounting procedures for like arti-cles.

53.187 OMB control numbers.

AUTHORITY: 26 U.S.C. 4181, 4182, 4216–4219,4221–4223, 4225, 6001, 6011, 6020, 6021, 6061, 6071,6081, 6091, 6101–6104, 6109, 6151, 6155, 6161, 6301–6303, 6311, 6402, 6404, 6416, 7502.

SOURCE: T.D. ATF–308, 56 FR 303, Jan. 3,1991, unless otherwise noted.


§ 53.1 Introduction.

The regulations in this part (part 53,subchapter C, chapter I, title 27, Codeof Federal Regulations) are designated‘‘Manufacturers Excise Taxes—Fire-arms and Ammunition.’’ The regula-tions relate to the tax on the sale offirearms and ammunition imposed bysection 4181 of the Internal RevenueCode of 1986, and to certain related ad-ministrative provisions of chapter 32,subchapter F, of the Code. Chapter 32,subchapter D of the Code imposes taxeson the sale or use by the manufacturer,producer, or importer of certain rec-reational equipment specified in thatchapter. References in the regulationsin this part to the ‘‘Internal RevenueCode’’ or the ‘‘Code’’ are references tothe Internal Revenue Code of 1986(United States Code of 1986), as amend-ed, unless otherwise indicated. Ref-erences to a section or other provisionof law are references to a section orother provision of the Internal RevenueCode of 1986, as amended, unless other-wise indicated.

§ 53.2 Attachment of tax.

(a) For purposes of this part, themanufacturers excise tax generally at-taches when the title to the articlesold passes from the manufacturer to apurchaser.

(b) When title passes is dependentupon the intention of the parties asgathered from the contract of sale andthe attendant circumstances. In theabsence of expressed intention, thelegal rules of presumption followed inthe jurisdiction where the sale is madegovern in determining when titlepasses.

(c) In the case of a sale on credit, thetax attaches whether or not the pur-chase price is actually collected.


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Bureau of Alcohol, Tobacco and Firearms, Treasury § 53.11

(d) Where a consignor (such as a man-ufacturer) consigns articles to a con-signee (such as a dealer), retainingownership in them until they are dis-posed of by the consignee, title doesnot pass, and the tax does not attachuntil sale by the consignee. Where therelationship between a manufacturerand a dealer is that of principal andagent, title does not pass, and the taxdoes not attach, until sale by the deal-er.

(e) In the case of a lease, an install-ment sale, a conditional sale, or a chat-tel mortgage arrangement or similararrangement creating a security inter-est, a proportionate part of the tax at-taches to each payment. See section4217 and §§ 53.103 and 53.104 for a limita-tion on the amount of tax payable onlease payments.

(f) In the case of use by the manufac-turer, the tax attaches at the time theuse begins.

§ 53.3 Exemption certificates.Several sections of the regulations in

this part, relating to sales exempt frommanufacturers excise tax, require themanufacturer to obtain an exemptioncertificate from the purchaser to sub-stantiate the exempt character of thesale. Any form of exemption certificatewill be acceptable if it includes all theinformation required to be contained insuch a certificate by the pertinent sec-tions of the regulations in this part.These certificates are available aspreprinted documents which may be or-dered from the Bureau’s DistributionCenter (see § 53.21 for the address of theDistribution Center). The preprintedcertificates may be reproduced as need-ed.

[T.D. ATF–380, 61 FR 37005, July 16, 1996]


§ 53.11 Meaning of terms.When used in this part and in forms

prescribed under this part, where nototherwise distinctly expressed or mani-festly incompatible with the intentthereof, terms shall have the meaningsascribed in this section. Words in theplural form shall include the singular,and vice versa, and words importingthe masculine gender shall include the

feminine. The terms ‘‘includes’’ and‘‘including’’ do not exclude otherthings not enumerated which are in thesame general class or are otherwisewithin the scope thereof.

ATF officer. An officer or employee ofthe Bureau of Alcohol, Tobacco andFirearms (ATF) authorized to performany function relating to the adminis-tration or enforcement of this part.

Calendar quarter. A period of 3 cal-endar months ending on March 31, June30, September 30, or December 31.

Calendar year. The period which be-gins January 1 and ends on the fol-lowing December 31.

Chapter 32. For purposes of this partchapter 32 means section 4181, chapter32, of the Internal Revenue Code of1986, as amended.

Code. Internal Revenue Code of 1986,as amended.

Director. The Director, Bureau of Al-cohol, Tobacco and Firearms, the De-partment of the Treasury, Washington,DC 20226.

Electronic fund transfer (EFT). Anytransfer of funds effected by a tax-payer’s financial institution, either di-rectly or through a correspondentbanking relationship, via the FederalReserve Communications System(FRCS) or Fedwire to the Treasury Ac-count at the Federal Reserve Bank.

Exportation. The severance of an arti-cle from the mass of things belongingwithin the United States with the in-tention of uniting it with the mass ofthings belonging within some foreigncountry or within a possession of theUnited States.

Exporter. The person named as ship-per or consignor in the export bill oflading.

Financial institution. A bank or otherfinancial institution, whether or not amember of the Federal Reserve Sys-tem, which has access to the FederalReserve Communications Systems(FRCS) or Fedwire. The ‘‘FRCS’’ or‘‘Fedwire’’ is a communications net-work that allows Federal Reserve Sys-tem member financial institutions toeffect a transfer of funds for their cus-tomers (or other financial institutions)to the Treasury Account at the FederalReserve Bank.


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27 CFR Ch. I (4–1–99 Edition)§ 53.11

Firearms. Any portable weapons, suchas rifles, carbines, machine guns, shot-guns, or fowling pieces, from which ashot, bullet, or other projectile may bedischarged by an explosive.

Importer. Any person who brings ataxable article into the United Statesfrom a source outside the UnitedStates, or who withdraws such an arti-cle from a customs bonded warehousefor sale or use in the United States. Ifthe nominal importer of a taxable arti-cle is not its beneficial owner (for ex-ample, the nominal importer is a cus-toms broker engaged by the beneficialowner), the beneficial owner is the‘‘importer’’ of the article for purposesof chapter 32 of the Code and is liablefor tax on his sale or use of the articlein the United States. See section 4219of the Code and 27 CFR 53.121 for thecircumstances under which sales bypersons other than the manufactureror importer are subject to the manu-facturers excise tax.

Knockdown condition. A taxable arti-cle that is unassembled but completeas to all component parts.

Manufacturer. Includes any personwho produces a taxable article fromscrap, salvage, or junk material, orfrom new or raw material, by proc-essing, manipulating, or changing theform of an article or by combining orassembling two or more articles. Theterm also includes a ‘‘producer’’ and an‘‘importer.’’ Under certain cir-cumstances, as where a person manu-factures or produces a taxable articlefor another person who furnishes mate-rials under an agreement whereby theperson who furnished the materials re-tains title thereto and to the finishedarticle, the person for whom the tax-able article is manufactured or pro-duced, and not the person who actuallymanufactures or produces it, will beconsidered the manufacturer.

A manufacturer who sells a taxablearticle in a knockdown condition is lia-ble for the tax as a manufacturer.Whether the person who buys suchcomponent parts or accessories and as-sembles a taxable article from themwill be liable for tax as a manufacturerof a taxable article will depend on therelative amount of labor, material, andoverhead required to assemble thecompleted article and on whether the

article is assembled for business or per-sonal use.

Person. An individual, trust, estate,partnership, association, company, orcorporation. When used in connectionwith penalties, seizures, and forfeit-ures, the term includes an officer oremployee of a partnership, who as anofficer, employee or member, is under aduty to perform the act in respect ofwhich the violation occurs.

Pistols. Small projectile firearmswhich have a short one-hand stock orbutt at an angle to the line of bore anda short barrel or barrels, and which aredesigned, made, and intended to beaimed and fired from one hand. Theterm does not include gadget devices,guns altered or converted to resemblepistols, or small portable guns erro-neously referred to as pistols, as, forexample, Nazi belt buckle pistols, glovepistols, or one-hand stock guns firingfixed shotgun or fixed rifle ammuni-tion.

Possession of the United States. In-cludes Guam, the Midway Islands, Pal-myra, the Panama Canal Zone, theCommonwealth of Puerto Rico, Amer-ican Samoa, the Virgin Islands, andWake Island.

Purchaser. Includes a lessee where thelessor is also the manufacturer of thearticle.

Region. A Bureau of Alcohol, Tobaccoand Firearms Region.

Regional director (compliance). Theprincipal ATF regional official respon-sible for administering regulations inthis part.

Revolvers. Small projectile firearmsof the pistol type, having a breech-loading chambered cylinder so ar-ranged that the cocking of the hammeror movement of the trigger rotates itand brings the next cartridge in linewith the barrel for firing.

Sale. An agreement whereby the sell-er transfers the property (that is, thetitle or the substantial incidents ofownership in goods) to the buyer for aconsideration called the price, whichmay consist of money, services, orother things.

Secretary. The Secretary of the Treas-ury or his delegate.

Shells and cartridges. Include any arti-cle consisting of a projectile, explosive,


673


and container that is designed, assem-bled, and ready for use without furthermanufacture in firearms, pistols or re-volvers. A person who reloads usedshell or cartridge casings is a manufac-turer of shells or cartridges within themeaning of section 4181 if such reloadedshells or cartridges are sold by the re-loader. However, the reloader is not amanufacturer of shells or cartridges if,in return for a fee and expenses, he re-loads casings of shells or cartridgessubmitted by a customer and returnsthe reloaded shells or cartridges withthe identical casings provided by thecustomer to that customer. Under suchcircumstances, the customer would bethe manufacturer of the shells or car-tridges and may be liable for tax on thesale of articles. See section 4218 of theCode and § 53.112.

Taxable article. Any article taxableunder section 4181 of the Code.

Treasury Account. The Department ofTreasury’s General Account at theFederal Reserve Bank of New York.

Vendor. Includes a lessor where thelessor is also the manufacturer of thearticle.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–312, 56 FR 31083, July9, 1991; T.D. ATF–330, 57 FR 40325, Sept. 3,1992; T.D. ATF–365, 60 FR 33670, June 28, 1995;T.D. ATF–404, 63 FR 52603, Oct. 1, 1998]


§ 53.21 Forms prescribed.

(a) The Director is authorized to pre-scribe all forms required by this part.All of the information called for ineach form shall be furnished as indi-cated by the headings on the form andthe instructions on or pertaining to theform. In addition, information calledfor in each form shall be furnished asrequired by this part.

(b) Requests for forms should bemailed to the ATF Distribution Center,7943 Angus Court, Springfield, Virginia22153.

(c) Signature authorization. An indi-vidual’s signature on a return, state-ment, or other document made by orfor a corporation or a partnership shallbe prima facie evidence that the indi-

vidual is authorized to sign the return,statement, or other document.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991. Redes-ignated in part by T.D. ATF–365, 60 FR 33670,June 28, 1995, as amended by T.D. 372, 61 FR20724, May 8, 1996]

§ 53.22 Employer identification num-ber.

(a) Requirement of application. (1) Ex-cept for one-time or occasional filers,every person who makes a sale or useof an article with respect to which atax is imposed by section 4181 of theCode, and who has not earlier been as-signed an employer identification num-ber or has not applied for one, shallmake an application on Form SS–4 foran employer identification number.The application and any supple-mentary statement accompanying itshall be prepared in accordance withthe applicable form, instructions, andregulations and shall set forth fullyand clearly the data therein called for.Form SS–4 may be obtained from anyinternal revenue district office, inter-nal revenue service center or ATF re-gional office. The application shall befiled with the internal revenue officerdesignated in the instructions applica-ble to Form SS–4. The application shallbe signed by:

(i) The individual if the person is anindividual;

(ii) The president, vice-president, orother principal officer, if the person isa corporation;

(iii) A responsible and duly author-ized member or officer having knowl-edge of its affairs, if the person is apartnership or other unincorporatedorganization; or

(iv) The fiduciary, if the person is atrust or estate.

An employer identification numberwill be assigned to the person in duecourse upon the basis of informationreported on the application requiredunder this section.

(2) Time for filing Form SS–4. The ap-plication for an employer identifica-tion number shall be filed no later thanthe seventh day after the date of thefirst sale or use of an article with re-spect to which a tax is imposed bychapter 32 of the Code. However, theapplication should be filed far enoughin advance of the first required use of


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27 CFR Ch. I (4–1–99 Edition)§ 53.23

such number to permit issuance of thenumber in time for compliance withsuch requirement.

(3) One-time or occasional filers. A per-son who files a return under the provi-sions of section 53.151(a)(5) is not re-quired to make application for an em-ployer identification number. Suchpersons may use their social securitynumber on any return, statement orother document submitted to ATF bythat person in lieu of an employer iden-tification number.

(b) Use of employer identification num-ber. The employer identification num-ber assigned to a person liable for a taximposed by chapter 32 of the Code shallbe shown on any return, statement, orother document submitted to ATF bythe person.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–365, 60 FR 33670, June28, 1995]

§ 53.23 Alternate methods or proce-dures.

(a) A taxpayer, on specific approvalby the Director as provided in this sec-tion, may use an alternate method orprocedure in lieu of a method or proce-dure specifically prescribed in thispart. The Director may approve an al-ternate method or procedure, subjectto stated conditions, when—

(1) Good cause has been shown for theuse of the alternate method or proce-dure;

(2) The alternate method or proce-dure is within the purpose of, and con-sistent with the effect intended by, thespecifically prescribed method or pro-cedure, and affords equivalent securityto the revenue; and

(3) The alternate method or proce-dure will not be contrary to any provi-sion of law and will not result in an in-crease in cost to the Government orhinder the effective administration ofthis part. No alternate method or pro-cedure relating to the assessment, pay-ment, or collection of tax shall be au-thorized under this paragraph.

(b) Where the taxpayer desires to em-ploy an alternate method or procedure,a written application to do so shall besubmitted to the regional director fortransmittal to the Director. The appli-cation shall specifically describe theproposed alternate method or proce-

dure and shall set forth the reasonstherefor. Alternate methods or proce-dures shall not be employed until theapplication has been approved by theDirector. The taxpayer shall, duringthe period of authorization of an alter-nate method or procedure, comply withthe terms of the approved application.Authorization for any alternate meth-od or procedure may be withdrawnwhenever, in the judgment of the Di-rector, the revenue is jeopardized orthe effective administration of thispart is hindered by the continuation ofsuch authorization.[T.D. ATF–365, 60 FR 33670, June 28,1995]

§ 53.24 Records.(a) In general—(1) Form of records. The

records required by the regulations inthis part shall be kept accurately, butno particular form is required for keep-ing the records. Such forms and sys-tems of accounting shall be used as willenable an ATF officer to ascertainwhether liability for tax is incurredand, if so, the amount thereof.

(2) [Reserved](b) Copies of returns, schedules, and

statements. Every person who is re-quired, by the regulations in this partor by instructions applicable to anyform prescribed thereunder, to keepany copy of any return, schedule,statement, or other document, shallkeep such copy as a part of the records.

(c) Records of claimants. Any personwho, pursuant to the regulations inthis part, claims a refund, credit, orabatement, shall keep a complete anddetailed record with respect to the tax,interest, addition to the tax, additionalamount, or assessable penalty to whichthe claim relates. Such record shall in-clude any records required of theclaimant by paragraph (b) of this sec-tion and subpart L of this part.

(d) Place and period for keepingrecords. (1) All records required by thispart shall be prepared and kept by theperson required to keep them, at one ormore convenient and safe locations ac-cessible to ATF officers, and shall atall times be immediately available forinspection by such officers.

(2) Except as otherwise provided inthis subparagraph, every person re-quired by the regulations in this part


675


to keep records in respect of a tax shallmaintain such records for at leastthree years after the due date of suchtax for the return period to which therecords relate, or the date such tax ispaid, whichever is later. The records ofclaimants required by paragraph (c) ofthis section shall be maintained for aperiod of at least three years after thedate the claim is filed.

(e) Reproduction of original records. (1)General books of account, such as cashbooks, journals, voucher registers,ledgers, etc., shall be maintained andpreserved in their original form. How-ever, reproductions of supportingrecords of details, such as invoices,vouchers, production reports, salesrecords, certificates, proofs of expor-tation, etc., may be kept in lieu of theoriginal records. Any process may beused which accurately and timely re-produces the original record, and whichforms a durable medium for reproduc-ing and preserving the original record.

(2) Copies of records treated as originalrecords. Whenever records are repro-duced under this section, the repro-duced records shall be preserved in con-veniently accessible files, and provi-sions shall be made for examining,viewing, and using the reproducedrecords the same as if they were theoriginal record. Such reproducedrecords shall be treated and consideredfor all purposes as though they werethe original record. All provisions oflaw and regulations applicable to theoriginal record are applicable to the re-produced record.

[T.D. ATF–365, 60 FR 33670, June 28, 1995]

Subparts D–F [Reserved]

Subpart G—Tax Rates

§ 53.61 Imposition and rates of tax.(a) Imposition of tax. Section 4181 of

the Code imposes a tax on the sale ofthe following articles by the manufac-turer, producer, or importer thereof:

(1) Pistols;(2) Revolvers;(3) Firearms (other than pistols and

revolvers); and(4) Shells and cartridges.(b) Parts or accessories—(1) In general.

No tax is imposed by section 4181 of the

Code on the sale of parts or accessoriesof firearms, pistols, revolvers, shells,and cartridges when sold separately orwhen sold with a complete firearm foruse as spare parts or accessories. Thetax does attach, however, to sales ofcompleted firearms, pistols, revolvers,shells, and cartridges, and to sale ofsuch articles that, although in knock-down condition, are complete as to allcomponent parts.

(2) Component parts. Component partsare items that would ordinarily be at-tached to a firearm during use and, inthe ordinary course of trade, are pack-aged with the firearm at the time ofsale by the manufacturer or importer.All component parts for firearms areincludible in the price for which the ar-ticle is sold.

(3) Nontaxable parts. Parts sold withfirearms that duplicate componentparts that are not includible in theprice for which the article is sold.

(4) Nontaxable accessories. Items thatare not designed to be attached to afirearm during use or that are not, inthe ordinary course of trade, providedwith the firearm at the time of the saleby the manufacturer or importer arenot includible in the price for whichthe article is sold.

(5) Examples—(i) In general. The fol-lowing examples are provided as guide-lines and are not meant to be all inclu-sive.

(ii) Component parts. Component partsinclude items such as a frame or re-ceiver, breech mechanism, triggermechanism, barrel, buttstock,forestock, handguard, grips, buttplate,fore end cap, trigger guard, sight or setof sights (iron or optical), sight mountor set of sight mounts, a choke, a flashhider, a muzzle brake, a magazine, aset of sling swivels, and/or an attach-able ramrod for muzzle loading fire-arms when provided by the manufac-turer or importer for use with the fire-arm in the ordinary course of commer-cial trade. Component parts also in-clude any part provided with the fire-arm that would affect the tax status ofthe firearm, such as an attachableshoulder stock.

(iii) Nontaxable parts. Nontaxableparts include items such as extra bar-rels, extra sights, optical sights andmounts (in addition to iron sights),


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27 CFR Ch. I (4–1–99 Edition)§ 53.62

spare magazines, spare cylinders, extrachoke tubes, and spare pins.

(iv) Nontaxable accessories. Non-taxable accessories include items suchas cleaning equipment, slings, slip onrecoil pads (in addition to standardbuttplate), tools, gun cases for storageor transportation, separate items suchas knives, belt buckles, or medallions.Nontaxable accessories also include op-tional items purchased by the cus-tomer at the time of retail sale that donot change the tax classification of thefirearm, such as telescopic sights andmounts, recoil pads, slings, sling swiv-els, chokes, and flash hiders/muzzlebrakes of a type not provided by themanufacturer or importer of the fire-arm in the ordinary course of commer-cial trade.

(c) Rates of tax. Tax is imposed on thesale of the articles specified in section4181 of the Code at the rates indicatedbelow.

Percent

(1) Pistols ............................................................... 10(2) Revolvers ......................................................... 10(3) Firearms (other than pistols and revolvers) ..... 11(4) Shells and cartridges ....................................... 11

(d) Computation of tax. The tax iscomputed by applying to the price forwhich the article is sold the applicablerate. For definition of the term ‘‘price’’see section 4216 of the Code and theregulations contained in subpart J ofthis part.

(e) Liability for tax. The tax imposedby section 4181 of the Code is payableby the manufacturer, producer, or im-porter making the sale.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–404, 63 FR 52603, Oct.1, 1998]

§ 53.62 Exemptions.(a) Firearms subject to the National

Firearms Act. Section 4182(a) providesthat the tax imposed by section 4181 ofthe Code shall not attach to the sale ofany firearms on which the tax imposedby section 5811 of the Code (relating totax on the transfer of machine guns,short-barreled firearms, and otherweapons) has been paid. Any manufac-turer, producer, or importer claimingsuch an exemption from the tax im-posed by section 4181 of the Code mustmaintain such records and be prepared

to produce such evidence as will estab-lish the right to the exemption.

(b) Sales to Defense Department or toU.S. Coast Guard—(1) Military depart-ment. Section 4182(b) of the Code pro-vides that the tax imposed by section4181 of the Code shall not attach to thesale of firearms, pistols, revolvers,shells, or cartridges that are purchasedwith funds appropriated for a militarydepartment of the United States. Forthis purpose, the term ‘‘military de-partment’’ means the Department ofthe Army, the Department of the Navy,and Department of the Air Force. In-cluded in the Department of the Navyare naval aviation and the MarineCorps.

(2) Coast Guard. Section 655, title 14,U.S.C., provides that no tax on the saleor transfer of firearms, pistols, revolv-ers, shells, or cartridges may be im-posed on such articles when boughtwith funds appropriated for the UnitedStates Coast Guard.

(3) Supporting evidence. Any manufac-turer, producer, or importer claimingan exemption from the tax imposed bysection 4181 of the Code by reason ofsection 4182(b) and section 655, title 14of the Code must maintain suchrecords and be prepared to producesuch evidence as will establish theright to the exemption. Generally,clearly identified orders or contracts ofa military department signed by an au-thorized officer of the military depart-ment will be sufficient to establish theright to the exemption. In the absenceof such orders or contracts, a state-ment, signed by an authorized officerof a military department or the CoastGuard, that the prescribed articleswere purchased with funds appro-priated for that military department orthe Coast Guard will constitute satis-factory evidence of the right to an ex-emption.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–344, 58 FR 40354, July28, 1993]

§ 53.63 Other tax-free sales.

For provisions relating to tax-freesales of firearms and ammunition see:

(a) Section 4221 and 27 CFR 53.131,‘‘Tax-free sales; general rule’’.


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(b) Section 4223 and 27 CFR 53.132,‘‘Tax-free sale of articles to be used for,or resold for, further manufacture’’.

(c) Section 4222 and 27 CFR 53.140,‘‘Registration’’.

Subparts H–I [Reserved]

Subpart J—Special Provisions Ap-plicable to ManufacturersTaxes

§ 53.91 Charges to be included in saleprice.

(a) In general. The ‘‘price’’ for whichan article is sold includes the totalconsideration paid for the article,whether that consideration is in theform of money, services, or otherthings. However, for purposes of thetaxes imposed under chapter 32 of theCode, certain collateral charges madein connection with the sale of a taxablearticle must be included in the taxablesale price, whereas others may be ex-cluded. Any charge which is requiredby a manufacturer, producer, or im-porter to be paid as a condition of itssale of a taxable article and which isnot attributable to an expense fallingwithin one of the exclusions providedin section 4216 of the Code or the regu-lations thereunder is includable in thetaxable sale price. It is immaterial forthis purpose that the charge may bepaid to a person other than the manu-facturer, producer, or importer, or thatit may be separately billed to the pur-chaser as a charge earmarked for ex-penses incurred or to be incurred in hisbehalf, such as charges for demonstra-tion or display of the article, for salespromotion programs, or otherwise.With respect to the rules relating toexclusion of charges for local adver-tising of a manufacturer’s products, seesection 4216(e) of the Code and § 53.100.In the case of sales on credit, a car-rying, finance, or service charge is ex-cludable from the sale price if it is rea-sonably related to the costs of carryingthe deferred portion of the sale price(such as interest on the deferred por-tion of the sale price, expenses of book-keeping necessary to keep the recordsof such sales, and expenses of cor-respondence and other communicationin connection with collection).

(b) Tools and dies. Separate chargesfor tools and dies used in the manufac-ture or production of a taxable articleare to be included, in whole or in part,in the sale price on which the tax isbased. It is immaterial whether thecharges for such items are billed in alump sum or are amortized or allocatedto each of the taxable articles. If, atthe termination of a contract to manu-facture taxable articles, the tools anddies used in production pass to the pur-chaser, only the amount of deprecia-tion of the tools and dies incurred inproduction, computed on a ‘‘productionoutput’’ basis, should be included inthe sale price. If the purchaser fur-nishes the tools and dies, the amountof the cost thereof, to the extent thatsuch cost has been depreciated in theproduction of the taxable articles(computed on a ‘‘production output’’basis), shall be included in determiningthe sale price of the articles for pur-poses of computing the tax.

(c) Charges for warranty. A charge fora warranty of an article which themanufacturer, producer, or importerrequires the purchaser to pay in orderto obtain the article shall be includedin the sale price of the article on whichthe tax is computed. On the otherhand, a charge for a warranty of a tax-able article paid at the purchaser’s op-tion shall not be included in the saleprice for purposes of computing taxthereon.

(d) Charges for coverings, containers,and packing. Any charge by the manu-facturer, producer, or importer for cov-erings and containers of whatever na-ture used to pack an article for ship-ment shall be included as part of thesale price for the purpose of computingthe tax, whether or not the charges areidentified as such on the invoice or arebilled separately. Even though there isan agreement that the manufacturer,producer, or importer will repay all ora portion of the charge for the cov-erings or containers upon the returnthereof, the full charge neverthelessshall be included in the sale price. It isimmaterial whether the charge madeat the time of sale is more or less thanthe actual value of the covering or con-tainer. See § 53.173(b)(4) for provisionsrelating to the claiming of a credit or


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refund in the case of a price readjust-ment due to the return or repossessionof a covering or container. Packingcharges are to be included in the saleprice whether the charges cover normalpacking or special packing services,such as for extra protection of the arti-cle or for odd-lot quantities. This ruleshall apply whether the packing serv-ices are initiated by the manufacturer,producer, or importer or are furnishedat the request of the purchaser andwhether the packing is performed bythe manufacturer, producer, or im-porter or by another person at his re-quest. If the purchaser supplies pack-ing materials, the fair market value ofsuch materials must be included in thetax base when computing tax liabilityon the sale of the article.

(e) Taxable and nontaxable articles soldas a unit. Where a taxable article and anontaxable article are sold by the man-ufacturer as a unit, the tax attaches tothat portion of the manufacturer’s saleprice of the unit which is properly allo-cable to the taxable article. Normally,the taxable portion of such a unit maybe determined by applying to the man-ufacturer’s sale price of the unit theratio which the manufacturer’s sepa-rate sale price of the taxable articlebears to the sum of the sale prices ofboth the taxable and nontaxable arti-cles, if such articles are sold separatelyby the manufacturer. Where the arti-cles (or either one of them) are not soldseparately by the manufacturer and donot have established sale prices, thetaxable portion is to be determinedfrom a comparison of the actual costsof the articles to the manufacturer.Thus, if the cost of the taxable articlerepresents four-fifths of the total costof the complete unit, the tax applies tofour-fifths of the price charged by themanufacturer for the unit.


§ 53.92 Exclusions from sale price.(a) Tax—(1) Tax not part of taxable sale

price. The tax imposed by chapter 32 ofthe Code on the sale of an article is notpart of the taxable sale price of the ar-ticle. Thus, if a manufacturer com-putes the tax on a sale price which isdetermined without regard to the tax,

and it charges the proper tax as a sepa-rate item, the amount of tax socharged does not become a part of thetaxable sale price and no tax is due onthe tax so charged. Where no separatecharge is made as tax, it will be pre-sumed that the price charged to thepurchaser for the article includes theproper tax, and the proper percentageof such price will be allocated to thetax.

(2) Computation of tax. If an articlesubject to tax at the rate of 10 percentis sold for $100 and an additional itemof $10 is billed as tax, $100 is the tax-able selling price and $10 is the amountof tax due thereon. However, if the ar-ticle is sold for $100 with no separatebilling or indication of the amount ofthe tax, it will be presumed that thetax is included in the $100, and a com-putation will be necessary to deter-mine what portion of the total amountrepresents the sale price of the articleand what portion represents the tax.The computation is as follows:

Taxablesale price =

sale price includ-ing tax

100 + rate of tax

Thus, if the tax rate is 10 percent andthe sale price including tax is $100, thetaxable sale price is $90.91 (that is, $100divided by (100+10)), and the tax is 10percent of $90.91, or $9.09.

(b) Transportation, delivery, insurance,or installation charges—(1) Charges in-curred pursuant to sale. Charges fortransportation, delivery, insurance, in-stallation, and other expenses actuallyincurred in connection with the deliv-ery of an article to a purchaser pursu-ant to a bona fide sale shall be ex-cluded from the sale price in com-puting the tax. Such charges includeall items of transportation, delivery,insurance, installation, and similar ex-pense incurred after shipment to a cus-tomer begins, in response to the cus-tomer’s order, pursuant to a bona fidesale. However, costs of such nature in-curred by a manufacturer, producer, orimporter in transporting, in the nor-mal course of business and for its ben-efit and convenience, articles from afactory or port of entry to a warehouse


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or other facility (regardless of the loca-tion of such warehouse or facility) arenot considered as being incurred inconnection with the delivery of an arti-cle to a purchaser pursuant to a bonafide sale, and charges therefor cannotbe excluded from the sale price in com-puting tax liability. Similarly, an al-lowance granted by a manufacturer asreimbursement for expenses incurredby the purchaser in shipping used arti-cles to the manufacturer for creditagainst the purchase price of taxablearticles shall not be excluded from thesale price when computing tax due onthe sale of the taxable articles. In anyevent, no charge may be excluded fromthe sale price unless the conditions setforth in paragraph (b)(2) of this sectionare complied with. Said conditions areprescribed under the authority grantedthe Secretary in section 4216(a) of theCode.

(2) Only actual expenses to be excluded.Where a separate charge is made fortransportation or other expenses in-curred in connection with the deliveryof an article to the purchaser pursuantto a bona fide sale, there shall be ex-cluded in arriving at the sale price sub-ject to tax only that portion of thecharge which represents the actual ex-penses incurred for the transportationor other excludable expenses. Where aseparate charge is less than the actualexpense, the difference is presumed tobe included in the billed price. Suchdifference, together with the separatecharge, shall be excluded in arriving atthe sale price on which the tax is com-puted. Similarly, where no separatecharge is made but the manufacturer,producer, or importer incurs an ex-pense of the type to which this para-graph has application, the amount ofsuch expense actually incurred shall beexcluded from the sale price on whichthe tax is computed. Where transpor-tation expense is incurred in conjunc-tion with a shipment composed of bothtaxable and nontaxable articles, onlythe portion of the expense allocable tothe taxable articles shall be exclud-able. In general, unless the taxpayerestablishes to the satisfaction of theregional director that another methodreasonably apportions such freight ex-pense between taxable and nontaxablearticles, such expense should be appor-

tioned on the basis of the relativeweights (or, if available, the relativepublished tariff rates) applicable to thetaxable and nontaxable articles. Whereit is not feasible to apportion such ex-pense on the basis of relative weightsor tariff rates, the expense shall be ap-portioned on another reasonable basis;for example, in the case of a shipmentincluding both taxable and nontaxablearticles which are subject to the sametariff rate, it may be appropriate to ap-portion the transportation expense onthe basis of the relative sale prices. Acharge for insurance in connectionwith the delivery of an article to a pur-chaser is considered to represent an ex-pense actually incurred only to the ex-tent that an amount equivalent to suchcharge is paid or payable by the manu-facturer to a person authorized to as-sume such insurance risk.

(3) Transportation, delivery, or installa-tion services performed by manufacturer.For purposes of computing the taxablesale price of articles, it is immaterialwhether the transportation, delivery,or other services of the type to whichthis paragraph has application are per-formed by a common carrier or inde-pendent agency for or on behalf of themanufacturer, producer, or importer,or are performed by the manufacturer,producer, or importer with the use ofits own vehicles or other facilities.Thus, where a manufacturer, producer,or importer performs the transpor-tation, delivery, or other services withits equipment, tools, employees, etc.,the cost of such services allocable tothe sale of the taxable article shall beexcluded. In determining whether anexpense is an excludable transportationor delivery expense, only those ex-penses incurred by reason of the factthat the purchaser accepts delivery atsome point other than the manufactur-er’s place of business shall be consid-ered excludable transportation or de-livery expenses. All expenses incurredin placing an article packed, ready forshipment on the loading dock at themanufacturer’s factory are not exclud-able transportation or delivery ex-penses. An allowance granted by themanufacturer, producer, or importer tothe purchaser for transportation, deliv-ery, or other expenses incurred or to be


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27 CFR Ch. I (4–1–99 Edition)§ 53.93

incurred by the purchaser in connec-tion with the sale shall be excluded incomputing the taxable sale price, ifcharges for similar expenses would beexcludable if incurred by the manufac-turer.

(4) Records in support of exclusion.Every manufacturer, producer, or im-porter making sales of taxable articlesshall keep records which will disclosethe amount of transportation, delivery,insurance, installation or other ex-pense actually incurred by it in con-nection with the delivery of a taxablearticle to a purchaser pursuant to abona fide sale.

(c) Other charges. A charge or expensenot within the scope of paragraph (a)or (b) of this section, whether or notseparately stated, may not be excludedin computing the taxable sale price un-less it can be shown by adequaterecords that the charge or expense isnot properly included as a manufac-turing or selling expense or is in noway incidental to placing the article incondition packed ready for shipment.Commissions to manufacturers’ agents,or allowances, payments, or adjust-ments made to, and for the benefit of,persons other than the purchaser maynot be excluded or deducted, under anycondition, in computing the sale priceupon which the tax is computed.

§ 53.93 Other items relating to tax onsale price.

(a) Exchanges. If, in connection withthe sale of an article subject to a taximposed under chapter 32 of the Codeon the price for which sold, a manufac-turer receives from its vendee anotherarticle in exchange, the tax on themanufacturer’s sale shall be computedon the basis of the amount allowed forthe article received from the vendee,plus any additional amount chargedthe vendee.

(b) Replacements under warranty. If anarticle, subject to a tax imposed underchapter 32 of the Code on the price forwhich sold, is returned to the manufac-turer by reason of the failure of the ar-ticle under a warranty as to its qualityor service, and a new article is given bythe manufacturer, free, or at a reducedprice, the tax on the new article shallbe computed on the actual amount, ifany, to be paid to the manufacturer for

the new article. See § 53.174(b) for thecircumstances under which the allow-ance made by the manufacturer, pro-ducer, or importer upon the return ofthe first article constitutes a price re-adjustment of the sale price of the firstarticle and the extent, if any, to whicha credit may be allowed, or refundmade, of the tax paid by the manufac-turer, producer, or importer on the saleof the first article.

(c) Readjustments in sale price. Read-justment in sale price (such as allow-able discounts, rebates, bonuses, etc.)cannot be anticipated. The tax must bebased upon the original price unlessthe readjustments have actually beenmade prior to the close of the periodfor which the tax upon the sale is re-turned. However, if the price uponwhich the tax was computed is subse-quently readjusted, credit may betaken against the tax due on a subse-quent return or a claim for refund filedas provided by section 6416(b)(1) of theCode and §§ 53.174–53.176.


§ 53.94 Constructive sale price; scopeand application.

(a) In general. Section 4216(b) of theCode pertains to those taxes imposedunder chapter 32 of the Code that arebased on the price for which an articleis sold, and contains the provisions forconstructing a tax base other than theactual sale price of the article, undercertain defined conditions.

(b) Specific applications. (1) Section4216(b)(1) of the Code applies to:

(i) Arm’s-length sales at retail or onconsignment, other than those sales atretail and to retailers to which section4216(b)(2) of the Code and § 53.96 apply;and

(ii) Sales otherwise than at arm’slength, and at less than fair marketprice.

(2) Section 4216(b)(2) of the Code ap-plies generally to arm’s-length sales ofan article at retail or to retailers, orboth, where the manufacturer also sellsthe same article to wholesale distribu-tors.

(3) Section 4216(b)(3) of the Code pro-vides a formula for determining a con-structive sale price for sales of taxable


681


articles between members of an affili-ated group of corporations (as ‘‘affili-ated group’’ is defined in section 1504(a)of the Code) in those instances wherethe purchasing corporation regularlyresells to retailers but does not regu-larly resell to wholesale distributors,and except for situations where section4216(b)(4) of the Code applies.

(4) Section 4216(b)(4) of the Code pro-vides a special method for computing aconstructive sale price for sales of tax-able articles between affiliated cor-porations where the purchasing cor-poration sells only to retailers, and thenormal method of selling within the in-dustry is for manufacturers to sell towholesale distributors.

(c) Definitions. For purposes of sec-tion 4216(b) of the Code and §§ 53.94–53.97and unless otherwise indicated:

(1) Sale at retail. A ‘‘sale at retail,’’ ora ‘‘retail sale’’, is a sale of an article toa purchaser who intends to use or leasethe article rather than resell it. Thefact that articles are sold in wholesalelots, or at wholesale prices, will notchange the character of such sales as‘‘sales at retail’’ if the purchaser is notengaged in the business of resellingsuch articles, and acquires them forthe purpose of using them rather thanreselling them.

(2) Retail dealers. A ‘‘retail dealer’’, or‘‘retailer’’, is a person engaged in thebusiness of selling articles at retail.

(3) Wholesale distributor. The term‘‘wholesale distributor’’ means a per-son engaged in the business of sellingarticles to persons engaged in the busi-ness of reselling such articles.

§ 53.95 Constructive sale price; basicrules.

(a) In general. Section 4216(b)(1) of theCode sets forth the conditions that re-quire the Secretary to construct a saleprice on which to compute a tax im-posed under chapter 32 of the Code onthe price for which an article is sold.The section requires a constructivesale price to be established where ataxable article is:

(1) Sold at retail;(2) Sold while on consignment; or,(3) Sold otherwise than through an

arm’s-length transaction at less thanfair market price.

(b) Sales at retail. Section 4216(b)(1)(A)of the Code relates to the determina-tion of a constructive sale price forsales of taxable articles sold at arm’s-length and at retail. In the case of suchsales, the constructive sale price is thehighest price for which such articlesare sold to wholesale distributors, inthe ordinary course of trade, by manu-facturers or producers thereof, as de-termined by the Secretary. If the con-structive sale price is less than the ac-tual sale price, the constructive saleprice shall be used as the tax base. Ifthe constructive sale price is not lessthan the actual sale price, the actualsale price shall be considered as notless than fair market, and shall be usedas the tax base. In determining thehighest price for which articles are soldby manufacturers to wholesale dis-tributors, there must be taken intoconsideration the normal industrypractices with respect to inclusionsand exclusions under section 4216(a) ofthe Code. However, once a constructivesale price has been determined by theSecretary, no further adjustment ofsuch price shall be made. The provi-sions of section 4216(b)(1)(A) of theCode and this paragraph shall notapply in those instances where the pro-visions of section 4216(b)(2) of the Codeand § 53.96 apply.

(c) Sales on consignment. As in thecase of sales at retail, the constructivesale price for sales on consignmentshall be the price for which such arti-cles are sold, in the ordinary course fortrade, by manufacturers or producersthereof, as determined by the Sec-retary. For purposes of section4216(b)(1)(B) of the Code and this para-graph, an article is considered to besold on consignment if it is sold whileit is on consignment to a person whichhas the right to sell, and does sell, sucharticle in its own name, but never re-ceives title to the article from themanufacturer. Ordinarily, the con-structive sale price of an article soldon consignment is the net price re-ceived by the manufacturer from theconsignee. The provisions of section4216(b)(1)(B) of the Code and this para-graph shall not apply if the provisionsof section 4216(b)(2) of the Code and§ 53.96 apply.


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27 CFR Ch. I (4–1–99 Edition)§ 53.96

(d) Sales not at arm’s-length. For pur-poses of section 4216(b)(1)(C) of theCode and this paragraph, a sale is con-sidered to be made under cir-cumstances otherwise than at ‘‘arm’s-length’’ if:

(1) One of the parties is controlled (inlaw or in fact) by the other, or there iscommon control, whether or not suchcontrol is actually exercised to influ-ence the sale price, or

(2) The sale is made pursuant to spe-cial arrangements between a manufac-turer and a purchaser.In case of an article sold otherwisethan at arm’s-length, and at less thanfair market price, the constructive saleprice shall be the price for which sucharticles are sold, in the ordinary courseof trade, by manufacturers or pro-ducers thereof, as determined by theSecretary. Once such a constructivesale price has been determined, no fur-ther adjustment of such price shall bemade. See sections 4216(b) (3) and (4) ofthe Code, and § 53.97, for specific meth-ods for determining constructive saleprices for intercompany sales undercertain defined conditions.

§ 53.96 Constructive sale price; specialrule for arm’s-length sales.

(a) In general. Section 4216(b)(2) of theCode provides a special rule underwhich a manufacturer shall determinea constructive sale price for this sale oftaxable articles at retail, and to retaildealers, under certain conditions. Therule is applicable where:

(1) The manufacturer regularly sellssuch articles at retail, or to retailers,or both, as the case may be,

(2) The manufacturer also regularlysells such articles to one or morewholesale distributors in arm’s-lengthtransactions, and the manufacturer es-tablishes that its prices in such casesare determined without regard to anybenefit to be derived under section4216(b)(2) of the Code, and

(3) The transactions are arm’s-lengthtransactions.

(4) A manufacturer meeting the fore-going requirements shall base its taxliability for sales at retail and sales toretailers on the lower of its actual saleprice or the highest price for which itsells the same articles under the sameconditions to wholesale distributors.

(b) Definitions. For purposes of sec-tion 4216(b)(2) of the Code and this sec-tion:

(1) Actual sale price. ‘‘Actual saleprice’’ means the actual selling pricefor an article determined in the samemanner as sale price is determined fora taxable sale. Accordingly, such pricemust reflect the inclusions and exclu-sions set forth in section 4216(a) of theCode, and any price adjustments de-scribed in section 6416(b)(1) of the Code.

(2) Highest price to wholesale distribu-tors. The ‘‘highest price’’ chargedwholesale distributors for an article bya manufacturer, producer, or importerthereof, is the highest price at whichthe manufacturer, producer, or im-porter sells the article to wholesaledistributors, determined without re-gard to quantity. Such price shall bedetermined in the same manner as saleprice is determined for a taxable salewith respect to the inclusions and ex-clusions under section 4216(a) of theCode; however, since the price is to bea ‘‘highest’’ price, no further adjust-ment may be made for price readjust-ments under section 6416(b)(1) of theCode.

(3) Regular sales. An article is consid-ered to be sold ‘‘regularly’’ at retail orto retailers if sales are made at retailor to retailers periodically andrecurringly as a regular part of theseller’s business. If a seller makes onlyisolated or casual sales of an article atretail or to retailers, it is not consid-ered to be selling ‘‘regularly’’ at retailor to retailers. Similarly, a manufac-turer is considered to be making reg-ular sales of an article to one or moredistributors if it sells the article to atleast one distributor periodically andrecurringly as a regular part of itsbusiness.

(4) Normal method of sales in industry.In the absence of a showing to the Di-rector of a more appropriate manner ofdetermining the normal method ofsales within an industry which is prac-tical in application, the normal meth-od of sales within an industry shall beregarded as not being at retail or to re-tailers, or both, if the industry dollarvolume of sales which are at retail orto retailers, or both, is less than halfthe total industry dollar volume ofsales at all levels of distribution by


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manufacturers, producers, or import-ers, including sales to other manufac-turers, producers, or importers.


§ 53.97 Constructive sale price; affili-ated corporations.

(a) In general. Sections 4216(b) (3) and(4) of the Code establish procedures fordetermining a constructive sale priceunder section 4216(b)(1)(C) of the Codefor sales between corporations that aremembers of the same ‘‘affiliatedgroup’’, as that term is defined in sec-tion 1504(a) of the Code.

(b) Sales to which section 4216(b)(3) ofthe Code applies. Section 4216(b)(3) ofthe Code provides a procedure for de-termining a constructive sale priceunder section 4216(b)(1)(C) of the Codein those instances where:

(1) A manufacturer, producer or im-porter regularly sells a taxable articleto a wholesale distributor which is amember of the same affiliated group asthe manufacturer, producers or im-porter, and

(2) The wholesale distributor regu-larly sells such article to one or moreindependent retailers, but does not reg-ularly sell to wholesale distributors.Under such circumstances the con-structive sale price for the article shallbe an amount equal to 90 percent of thelowest price for which the distributorregularly sells the article in arm’s-length transactions to such inde-pendent retailers. Once the construc-tive sale price has been determined, noadjustment shall be made for inclu-sions or exclusions under section4216(a) of the Code or price readjust-ments under section 6416(b)(1) of theCode. If both sections 4216(b)(3) and4216(b)(4) of the Code apply with re-spect to the sale of an article, the con-structive sale price for such articleshall be the lower of the prices com-puted under sections 4216(b)(3) and4216(b)(4).

(c) Sales to which section 4216(b)(4) ofthe Code applies. Section 4216(b)(4) ofthe Code provides a procedure for de-termining a constructive sale priceunder section 4216(b)(1)(C) of the Codein those instance where:

(1) A manufacturer, producer, or im-porter regularly sells (except for tax-free sales) a taxable article only to awholesale distributor which is a mem-ber of the same affiliated group as themanufacturer, producer, or importer,

(2) The distributor regularly sells (ex-cept for tax-free sales) such articleonly to retail dealers, and

(3) The normal method of sales forsuch articles within the industry is tosell such articles in arm’s-length trans-actions to wholesale distributors.

(4) Under section 4216(b)(4) of theCode, the constructive sale price ofsuch article shall be the median priceat which the distributor, at the time ofthe sale by the manufacturer, resellsthe article to retail dealers, reduced bya percentage of such price equal to thepercentage which:

(i) The difference between the medianprice for which comparable articles aresold to wholesale distributors, in theordinary course of trade, by manufac-turers of producers thereof, and themedian price at which such wholesaledistributors in arm’s-length trans-actions sell such comparable articlesto retailers, is of

(ii) The median price at which suchwholesale distributors in arm’s-lengthtransactions sell such comparable arti-cles to retailers.

(iii) For purposes of this paragraph,the ‘‘median price’’ for which an articleis sold at a particular level of distribu-tion is the price midway between thehighest and lowest prices charged vend-ees at the particular level of distribu-tion. Where only one price is chargedat a level of distribution, ‘‘medianprice’’ is equivalent to ‘‘actual price’’.All sale prices referred to in para-graphs (c) and (d) of this section areprices that must reflect the inclusionsand exclusions set forth in section4216(a) of the Code. However, once aconstructive sale price has been deter-mined under these paragraphs, no fur-ther adjustment of such price is al-lowed.

(d) Application of section 4216(b)(4) ofthe Code. The application of section4216(b)(4) of the Code and paragraph (c)of this section may be illustrated bythe following example:


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27 CFR Ch. I (4–1–99 Edition)§ 53.98

Example. M, a corporation engaged in themanufacture of article X, sold 100 of such ar-ticles at $10.00 per article to a wholesale dis-tributor N, a corporation engaged in thebusiness of selling X articles to independentretail dealers. N is a member of the same af-filiated group of corporations as M. M sells Xarticles only to N. The normal method ofmanufacturers’ sales of X articles in the in-dustry is to sell to independent wholesaledistributors. N corporation sells X articles toretailers for $15.00 each. The price for whichcomparable X articles are sold to wholesaledistributors in the ordinary course of tradeby manufacturers thereof is $12.00 per arti-cle. Wholesale distributors sell X articles toretailers in the ordinary course of trade for$16.00 per article. Under the foregoing factsthe constructive sale price determined undersection 4216(b)(4) of the Code and this para-graph is $11.25, computed as follows:

$15. $15.$16. $12.

$16.$11.00 00

00 00

0025− × −

=

(e) Determination of ‘‘lowest price’’. Inaddition to other considerations, in de-termining a ‘‘lowest price’’ for pur-poses of sections 4216(b) (1) and (3) ofthe Code and § 53.97, such price shall bedetermined:

(1) Without requiring that a givenpercentage of sales be made at thatprice (provided that the volume ofsales made at that price is greatenough to indicate that those saleshave not been engaged in primarily toestablish a lower tax base), and

(2) Without including any charge fora fixed amount that the purchaser hasan unconditional right to recover onthe basis of a contractual arrangementexisting at the time of sale.

(f) Definitions. For purposes of thissection and paragraphs (3) and (4) ofsection 4216(b) of the Code, the term‘‘regularly sells’’ has the same meaningas that accorded the term ‘‘regularsales’’ in § 53.96(b)(3), and the term‘‘normal method of sales in the indus-try’’ has the same meaning as accordedthat term in § 53.96(b)(4).


§ 53.98 Computation of tax on leasesand installment sales.

(a) Leases. When a taxable article isleased by a manufacturer, producer, orimporter, liability for tax is incurred,except as provided by section 4217(b) of

the Code and § 53.104, on each paymentmade with respect to such lease. Tax ispayable on each lease payment as longas the article is leased by the manufac-turer, producer, or importer. The taxpayable with respect to each lease pay-ment is a percentage of each paymentbased on the rate of tax, if any, in ef-fect on the date the lease payment isdue. If the article is subsequently soldby the manufacturer, producer, or im-porter, the tax applies also to suchsale, without regard to the tax paidwhen the article was leased. For defini-tion of the term ‘‘lease’’, see § 53.103.

(b) Installment sales. When a taxablearticle is sold under an installmentpayment contract with title reservedin the seller, or under a conditionalsale contract, chattel mortgage ar-rangement or other arrangement cre-ating a security interest with pay-ments to be made in installments, taxshall be computed and paid on eachpayment made by the purchaser. Thetax payable with each payment is apercentage of each payment based onthe rate of tax, if any, in effect on thedate the payment is due. The part ofeach payment that is subject to tax isthat portion of the payment equal tothe percentage of the total portion ofthe payment equal to the percentage ofthe total charge for the article that issubject to tax. For example, if thetotal charge for the article is $1,000,and of the total amount charged only90 percent thereof, or $900, is subject totax by reason of exclusions, then only90 percent of the installment paymentis subject to tax. If the tax base is aconstructive sale price computed undersection 4216(b) of the Code that is lessthan the actual sale price of the arti-cle, the portion of each payment sub-ject to tax is the percentage of suchpayment equal to the percentage thatthe constructive sale price bears to theactual sale price. For example, if an ar-ticle is sold at retail for $100, and theconstructive sale price for such an arti-cle computed under the provisions ofsection 4216(b)(1)(A) of the Code is $75,the percentage which the constructivesale price bears to the actual sale priceis 75 percent. Accordingly, only 75 per-cent of each installment payment issubject to tax.


685


(c) Sales on credit. Where articles aresold on credit under conditions otherthan those specified in paragraph (b) ofthis section, the entire tax shall be re-ported and paid with the return cov-ering the period in which the sale ismade, even though the price may notbe paid to the manufacturer, producer,or importer until a later date, or notpaid at all.

§ 53.99 Sales of installment accounts.

(a) In general. Except as provided inparagraph (d) of this section, in case ofa sale or other disposition by a manu-facturer, producer, or importer of aninstallment account of the type speci-fied in section 4216(c) of the Code, thetax shall not apply to subsequent in-stallment payments on such account.Instead, there shall be paid an amountequal to the difference between the taxpreviously paid on such installment ac-count and the total tax computed byapplying:

(1) To each installment due beforethe sale of the installment account, therate of tax applicable at the time pay-ment thereof was due, and

(2) To each installment, the time forpayment of which has not arrived, therate of tax which, under the provisionsof chapter 32 of the Code as in effect onthe date of the sale of the installmentaccount, is (or is to be) in effect on thedate such installment is due. However,see paragraph (b) of this section if thesale is made in a bankruptcy or insol-vency proceeding. The tax due underthis paragraph shall be included in thereturn for the period in which the ac-count is sold.

(b) Sale in bankruptcy or insolvencyproceeding. In the case of a sale of aninstallment account of a manufacturer,producer, or importer pursuant to theorder of, or subject to the approval of,a court of competent jurisdiction in abankruptcy or insolvency proceeding,the amount of tax due shall be com-puted and paid as provided in para-graph (a) of this section but shall notexceed the amount of tax computed bymultiplying:

(1) The proportionate share of theamount for which such accounts aresold which is allocable to each unpaidinstallment payment, by

(2) The rate of tax which, under theprovisions of chapter 32 of the Code asin effect on the date of the sale of theinstallment account, is (or is to be) ineffect on the date such payment is due.

(c) Collection of installment accounts onbehalf of the manufacturer. Where amanufacturer, producer, or importerretains title to an installment accountbut turns it over to another person forcollection on a fee basis, no sale ofsuch account (or other disposition ascontemplated in section 4216(d) of theCode) has been made. The tax shallcontinue to be paid as provided by sec-tion 4216(c) of the Code.

(d) Returned installment accounts.Where an installment account whichhas been sold or otherwise disposed ofis returned to the manufacturer, pro-ducer, or importer who sold it under anagreement under which the accountwas sold, and credit or refund has beenallowed under section 6416(b)(5) of theCode and § 53.183, the manufacturer,producer, or importer shall pay tax asprovided by section 4216(c) of the Codeand § 53.98 on any subsequent paymentsmade on such returned installment ac-count until such time as there shallhave been paid the total tax liabilitywith respect to the account as com-puted under paragraph (a) of this sec-tion.

(e) Limitation. The sum of theamounts payable under this sectionand § 53.98 or an installment accountshall not exceed the total amount oftax which would be payable if such in-stallment account had not been sold orotherwise disposed of (computed as pro-vided in subsection (c)).

§ 53.100 Exclusion of local advertisingcharges from sale price.

(a) In general. Section 4216(e) of theCode deals with the treatment to be ac-corded charges made by a manufac-turer for, and reimbursements by amanufacturer or expenditures in con-nection with the advertising of certainarticles subject to excise tax underchapter 32 of the Code. Section 4216(e)of the Code provides an exclusion(which is in addition to the exclusionsprovided by section 4216(a) of the Codeand § 53.92) in respect of charges forlocal advertising, as defined in para-graph (b) of this section, for purposes


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of determining the price for which anarticle is sold. See paragraph (c) of thissection. The exclusion provided by sec-tion 4216(e) of the Code and paragraph(c) of this section has application onlyif the advertising is broadcast over aradio or television station, appears in anewspaper or magazine, or is displayedby means of an outdoor advertisingsign or poster. Section 4216(e) of theCode also provides an overall limita-tion in respect of the sum of theamount of the exclusions from price ascharges for local advertising and theamount of the readjustments author-ized under section 6416(b)(1) of the Code(relating to credits or refunds for pricereadjustments) in respect of reimburse-ments by a manufacturer of expendi-tures for local advertising. See § 53.101.For provisions prohibiting exclusionfrom price or readjustment of price inrespect of charges for, and reimburse-ments of expenditures for, advertisingother than local advertising, see§ 53.102.

(b) Definition of local advertising—(1)In general. For purposes of the regula-tions under sections 4216(e) and6416(b)(1) of the Code (§§ 53.100–53.102and 53.173–53.176), the term ‘‘local ad-vertising’’ means advertising which re-lates to an article with respect towhich tax is imposed under chapter 32of the Code on the price for which soldand which:

(i) Is initiated or obtained by the pur-chaser or any subsequent vendee,

(ii) Names the article for which theprice is determinable under section 4216and states the location at which sucharticle may be purchased at retail, and

(iii) Is broadcast over a radio stationor television station, appears in anewspaper or magazine, or is displayedby means of an outdoor advertisingsign or poster.

(2) Initiating or obtaining advertising.For purposes of paragraph (b)(1) of thissection, the advertising must be initi-ated or obtained by one or more of thepersons in the chain of distribution ofthe article (wholesale distributor, job-ber, dealer, etc.) who purchased the ar-ticle for resale. For purposes of thissubparagraph, the manufacturer is notconsidered to be one of the persons inthe chain of distribution of the article.In general, advertising of an article is

considered to be initiated or obtainedby one or more persons in the chain ofdistribution of the article if any suchperson:

(i) Takes an active part in the actualplanning and development, or in the ar-rangements or negotiations leading tothe development, of the form and con-tent of the advertising, or

(ii) Contracts for the placement ofthe advertising.The participation by the manufacturerof the article in the planning, develop-ment, or placement of the advertisingis immaterial provided the advertisingis in fact initiated or obtained by oneor more persons in the chain of dis-tribution of the article. Furthermore,it is immaterial whether or not the ad-vertising is subject to the approval ofthe manufacturer of the article. How-ever, if no person in the chain of dis-tribution of the article takes an activepart in the actual planning and devel-opment, or in the arrangements or ne-gotiations leading to the development,of the form and content of the adver-tising, but, rather, all such planning,development, arrangements, and nego-tiations are accomplished by the manu-facturer of the article, then such man-ufacturer is considered to have initi-ated the advertising, and if he also con-tracts for the placement of the adver-tising, such advertising does not qual-ify as ‘‘local advertising’’.

(3) Identification of article and sales lo-cation. To meet the requirements ofparagraph (b)(1) of this section, the ad-vertising must identify the article forwhich the price is determinable undersection 4216 of the Code and give the lo-cation or locations at which the articlemay be purchased at retail. All prod-ucts taxable at the same rate under thesame section of chapter 32 of the Codeshall be considered to be an ‘‘article’’for purposes of the preceding sentence.No specific method or means of identi-fication is prescribed. The identifica-tion of the article may be madethrough the use of the name of themanufacturer or the use of an estab-lished trade-mark, such as a seal, pic-ture, letter or letters, etc., or a com-bination thereof. The advertising mustidentify the particular retail establish-ment or establishments at which thearticle may be purchased at retail but


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need not specify the location of anysuch establishment in terms of thenumber by which the premises are des-ignated or the name of the street onwhich the retail premises are situated.However, the location of the retailpremises must be described suffi-ciently, as, for example, by referenceto a particular named shopping area orshopping center, to enable customersto find the retail establishment.

(4) Determination of costs of local ad-vertising. Where an advertisement iden-tifies more than one article, and allsuch articles are not taxable, or arenot taxable at the same rate under thesame section of chapter 32 of the Code,a reasonable allocation of the cost ofthe advertisement must be madeamong:

(i) Articles taxable at the same rateunder the same section of the Code,and

(ii) Articles which are not taxableunder chapter 32 of the Code.For example, in the case of a singlepage newspaper or magazine advertise-ment, an allocation of costs reflectingthe lineage or space devoted to thespecified categories will be consideredto reflect a reasonable allocation of thecost of advertising the different arti-cles. As a general rule, only the cost ofthe ‘‘spot’’ portion identifying the re-tail establishment is considered ‘‘localadvertising’’ in the case of national tel-evision or radio programs.

(5) Meaning of ‘‘newspaper’’. The termnewspaper, as used in paragraph (b)(1)of this section, is limited to those pub-lications which are commonly under-stood to be newspapers and which areprinted and distributed periodically atdaily, weekly, or other short intervalsfor the dissemination of news of a gen-eral character and of a general inter-est. The term does not include hand-bills, circulars, flyers, or the like, un-less printed and distributed as a part ofa publication which constitutes a news-paper within the meaning of this sub-paragraph. Neither does the term in-clude any publication which is issuedto supply information on certain sub-jects of interest to particular groupsunless such publication otherwisequalifies as a newspaper within themeaning of this subparagraph. For pur-poses of this subparagraph, advertising

is not considered to be news of a gen-eral character and of a general inter-est.

(6) Meaning of ‘‘magazine’’. The termmagazine, as used in paragraph (b)(1) ofthis section, is limited to those publi-cations which are:

(i) Commonly understood to be maga-zines,

(ii) Printed and distributed periodi-cally at least twice a year, and

(iii) Published for the disseminationof information of a general nature or ofspecial interest to particular groups.

(iv) The term does not include hand-bills, circulars, flyers or the like, un-less printed and distributed as a part ofa publication which constitutes a mag-azine within the meaning of this sub-paragraph. For purposes of this sub-paragraph, advertising is not consid-ered to be information of a general na-ture or information of special interestto particular groups within the con-templation of paragraph (b)(6)(iii) ofthis section.

(7) Meaning of ‘‘outdoor advertisingsign or poster’’. The term ‘‘outdoor ad-vertising sign or poster’’, as used inparagraph (b)(1) of this section, meansa sign or poster displaying advertisingmatter, which is located outside of aroofed enclosure. This term includesboth signs or posters on billboards,whether placed on or affixed to land,buildings, or other structures, andthose which are displayed on or at-tached to moving objects, provided thesigns or posters are located outside of aroofed enclosure. The term ‘‘roofed en-closure’’ means a roof structure whichis enclosed on more than one-half of itssides by walls, fences, or other barriers.

(c) Exclusion—(1) Conditions and limi-tations. A charge for local advertisingwhich is required by a manufacturer tobe paid as a condition to his sale of anarticle is not a part of the taxable priceof the article, to the extent that suchcharge meets each of the following con-ditions and limitations:

(i) Such charge does not exceed 5 per-cent of the difference between:

(A) An amount which would con-stitute the taxable price of the article(computed at the time of the sale ofthe article) if no part of any charge forlocal advertising were excludable incomputing taxable price, and


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27 CFR Ch. I (4–1–99 Edition)§ 53.101

(B) The amount of any separatecharge for local advertising, whateverthe amount of such charge may be,

(ii) Such charge is specifically shownas a separate charge for local adver-tising on the invoice or statement cov-ering the sale of the article.

(iii) Such charge is billed by themanufacturer with the intention on hispart of repaying the amount of thecharge to the person purchasing the ar-ticle from him, or to any person whosubsequently purchases the article forresale, in reimbursement of costs in-curred for local advertising of such ar-ticle or some other article or articlestaxable at the same rate under thesame section of the Code. In the ab-sence of evidence to the contrary, thefact of such intention will be assumedin all cases where the manufacturerand his vendees are parties to an adver-tising plan which calls for such repay-ments, or the manufacturer can other-wise establish that the vendees towhom he bills such charges understandand expect that such repayments willbe made.

(2) When exclusion ceases to apply. Tothe extent that charges for local adver-tising meet the conditions and limita-tions stated in paragraph (c)(1) of thissection, such charge is excludable incomputing the taxable price of the ar-ticle in respect of which the charge wasmade. However, the exclusion willcease to apply in respect of any part ofsuch charge which the manufacturerfails to repay before May 1 of the cal-endar year following the calendar yearin which the article was sold, to theperson who purchased the article fromhim, or to some other person who sub-sequently purchases the article for re-sale, in reimbursement of costs in-curred for local advertising of such ar-ticle or some other article or articlestaxable at the same rate under thesame section of the Code. If, beforesuch May 1, any part of the charge soexcluded has not been so repaid, themanufacturer becomes liable for tax onsuch May 1 in the same manner as if anarticle taxable under such section ofthe Code had been sold by him on suchMay 1 at a taxable price equivalent tothat part of the charge not so repaid.However, see paragraph (b)(2) of § 53.175,relating to price readjustments in

cases where local advertising chargesare not repaid before such May 1 butare subsequently paid over by the man-ufacturer to his vendees in reimburse-ment of costs for local advertising. Forprovisions relating to the method ofdetermining whether a payment by amanufacturer is or is not attributableto an excluded local advertisingcharge, see paragraph (b)(3) of § 53.101.In any case where the payment is de-termined to be attributable to such acharge, the date of the sale in connec-tion with which the charge was madeshall be determined on a first-in-first-out basis in respect of the vendee towhom the charge was billed by themanufacturer.


§ 53.101 Limitation on aggregate of ex-clusions and price readjustments.

(a) In general. The sum of the amountexcluded from taxable price in respectof charges for local advertising, as pro-vided in section 4216(e)(1) of the Codeand § 53.100, plus the amount of the re-adjustments for which credits or re-funds may be claimed in respect oflocal advertising, as provided in sec-tion 6416(b)(1) of the Code and § 53.175,is subject to an overall 5 percent limi-tation. This limitation applies to eachmanufacturer, as of the close of eachcalendar quarter, in respect of all arti-cles taxable under the same section ofchapter 32 of the Code which were soldby such manufacturer in such quarter(and the preceding quarter or quarters,if any, in the calendar year).

(b) Computation of overall 5 percentlimitation—(1) In general. The limita-tion prescribed by section 4216(e)(2) ofthe Code (the ‘‘overall 5 percent limita-tion’’ referred to in paragraph (a) ofthis section) as to the total of the ex-clusions from price and readjustmentsof price which may be claimed for localadvertising in respect of all articlestaxable under the same section ofChapter 32 of the Code shall be com-puted as of the close of each calendarquarter of the calendar year. The over-all 5 percent limitation is 5 percent ofthe difference between:


689


(i) The amount which would con-stitute the total taxable price (com-puted at the time of sale) of all articlestaxable under the same section of chap-ter 32 of the Code sold by the manufac-turer during the elapsed calendar quar-ters of the calendar year, if no part ofany charge for local advertising wereexcludable in computing taxable price,and

(ii) The total of all amounts billed asseparate charges for local advertisingof such articles (whatever the amountof any single charge of the total of allcharges).

(iii) In making the computationsunder paragraphs (b)(1) (i) and (ii) ofthis section, credits or refunds undersection 6416(b) of the Code of tax paidon the sale of any such articles are tobe disregarded and articles sold tax-free by the manufacturer are to be ex-cluded. The amount by which the over-all 5 percent limitation computed as ofthe close of a particular calendar quar-ter in respect of articles taxable underthe same section of chapter 32 of theCode exceeds the sum of the charges forlocal advertising excluded in com-puting the taxable price and theamount of reimbursements for localadvertising of such articles made dur-ing the elapsed calendar quarters of thecalendar year, in respect of which cred-it or refund has been claimed, rep-resents the unused portion of the over-all 5 percent limitation. Such unusedportion is the maximum amount of re-imbursements for local advertising inrespect of which credit or refund maybe claimed at the close of the par-ticular calendar quarter, subject to theapplicable conditions and limitationsgoverning the right to claim a credit orrefund in respect of local advertising(see § 53.175). The unused portion of theoverall 5 percent limitation as of theclose of the fourth calendar quarter ofa calendar year in respect of whichcredit or refund may not be claimed asof the close of such quarter must bedisregarded in computing the overall 5percent limitation for any subsequentcalendar quarter. Moreover, theamount of any reimbursements forlocal advertising made by a manufac-turer in a calendar year which is in ex-cess of the amount of such reimburse-ments in respect of which credit or re-

fund may be claimed, within the over-all limitation, as of the close of thecalendar year, may not subsequentlyserve as the basis for a credit or refund.

(2) Alternative method of computationin certain cases. If during the portion ofthe calendar year ending with the dateas of which the overall 5 percent limi-tation is being computed the amount ofthe local advertising charge separatelybilled by the manufacturer has not, inrespect of any sale of any articles tax-able under the same section of chapter32 of the Code, exceeded the amount ex-cludable pursuant to § 53.100 in com-puting taxable price, the overall 5 per-cent limitation as of the close of a par-ticular calendar quarter in respect ofarticles taxable under such section is 5percent of the total taxable price (com-puted at the time of the sale) of allsuch articles sold taxpaid during thecalendar year.

(3) Allocation of amounts paid in reim-bursement of expenditures for local adver-tising. If a manufacturer makes con-tributions to a local advertising pro-gram in connection with which hemakes excludable local advertisingcharges, it is necessary that reimburse-ments by the manufacturer for localadvertising be attributed to thecharges for local advertising, to themanufacturer’s contributions, or allo-cated between them. Whether anamount paid by a manufacturer in re-imbursement of expenses for local ad-vertising is or is not a repayment of alocal advertising charge which was ex-cluded from taxable price under section4216(e)(1) of the Code and § 53.100, shallbe determined on the basis of an alloca-tion made under the agreement be-tween the manufacturer and his vendee(or any subsequent vendee).

(c) Examples. The application of para-graphs (a) and (b) of this section maybe illustrated by the following exam-ples:

Example (1). During the first and secondcalendar quarters of the year, a manufac-turer makes sales of articles taxable undersection 4181 to his distributors. The totalcharges for such sales, exclusive of the tax,transportation charges, delivery charges, orother charges which are excludable, pursuantto section 4216(a) of the Code, in computingtaxable price, are as follows:


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27 CFR Ch. I (4–1–99 Edition)§ 53.101

First Quarter:Articles taxable under Section

4181 ........................................ $100,000Local advertising charges ........ 3,000

Total Charges ..................... 103,000

Second Quarter:Articles taxable under Section


Total Charges ..................... 154,000

Assume further that the manufacturercontributes to the advertising plan and thatthe manufacturer pays $5,500 and $1,000 dur-ing the first and second calendar quarters ofthe year, respectively, to his distributors inreimbursement of expenses incurred by themfor local advertising of the articles pur-chased from the manufacturer.

Computation as of close of firstcalendar quarter:1. Amount which would con-

stitute total taxable price(computed at time of sale) ifno part of any charge forlocal advertising were exclud-able in computing taxableprice ...................................... $103,000

2. Amounts billed as separatecharges for local advertising ¥3,000

3. Difference ............................. 100,0004. Overall 5 percent limitation

(5 percent of item 3) .............. $5,0005. Amount excluded in com-

puting taxable price .............. ¥3,000

6. Unused portion of limitation 2,0007. Allocation, pursuant to

agreement, of $5,500 paid todistributors:Charges for local advertising $3,000Contributions by manufac-

turer ................................... $2,500

Readjustment may be claimed in respect ofthat portion of the total amount repaid tothe distributors which is allocated to themanufacturer’s contribution ($2,500) to theextent that such portion does not exceed theunused portion of the overall 5 percent limi-tation ($2,000). Accordingly, as of the close ofthe first calendar quarter the manufacturermay claim credit or refund in respect of a re-adjustment of price in the amount of $2,000.

Computation as of close of secondcalendar quarter:1. Amount which would con-

stitute total taxable price(computed at time of sale) ifno part of any charge forlocal advertising were exclud-able in computing taxableprice ($103,000+$154,000) .......... $257,000

2. Amounts billed as separatecharges for local advertising($3,000+$4,000) ......................... ¥7,000

3. Difference ............................. 250,0004. Overall 5 percent limitation

(5 percent of item 3) .............. $12,5005. Amount excluded in com-

puting taxable price($3,000+$4,000) plus readjust-ment claimed at end of firstcalendar quarter ($2,000) ........ ¥9,000

6. Unused portion of limitation 3,5007. Allocation, pursuant to

agreement, of $6,500($5,500+$1,000) paid to dis-tributors:Charges for local advertising $3,500Contributions by manufac-

turer ................................... $3,000

Although the total reimbursements forlocal advertising expenses attributable tocontributions by the manufacturer ($3,000)does not exceed the unused portion of theoverall 5 percent limitation ($3,500), themanufacturer, having taken, at the close ofthe first calendar quarter, a price readjust-ment in the amount of $2,000 in respect to hiscontributions, is entitled at the close of thesecond calendar quarter to claim credit orrefund in respect of a price readjustment inthe amount of $1,000 ($3,000¥$2,000).

Example (2). During the first calendar quar-ter of the year, a manufacturer sold articlestaxable under section 4181 to his distributorsat a total charge of $106,000, exclusive of thetax, transportation charges, deliverycharges, or other charges which are exclud-able, pursuant to section 4216(a) of the Code,in computing taxable price. This totalcharge of $106,000 was billed as follows:

Total Charge:Articles taxable under Section


Total charges ..................... 106,000

Assume further that the manufacturercontributes to the advertising plan and thatthe manufacturer pays $3,000 during the firstcalendar quarter of the year to his distribu-tors in reimbursement of expenses incurredby them for local advertising of the articlespurchased from the manufacturer.

Computation as of close of firstcalendar quarter:

1. Amount which would con-stitute total taxable price(computed at time of sale) ifno part of any charge forlocal advertising were exclud-able in computing taxableprice ...................................... $106,000


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2. Amounts billed as separatecharges for local advertising ¥6,000

d. Difference ............................. 100,0004. Overall 5 percent limitation

(5 percent of item 3) .............. 5,0005. Amount excluded in com-

puting taxable price (seeparagraph (c) of § 53.100 .......... ¥5,000

6. Unused portion of limitation 07. Allocation, pursuant to

agreement, of $3,000 paid todistributors: ...............Charges for local advertising 2,000Contributions by manufac-

turer ................................... 1,000

Credit or refund may not be claimed in re-spect of that portion of the total amount re-paid to the distributors ($3,000) which is allo-cated to the manufacturer’s contribution($1,000) since the amount excluded in com-puting taxable price is equal to the overall 5percent limitation.


§ 53.102 No exclusion or readjustmentfor other advertising charges or re-imbursements.

(a) Exclusions from price. No exclusionin computing the taxable price of anyarticle sold by the manufacturer maybe allowed in respect of any charge foradvertising if, and to the extent that,such charge:

(1) Is for advertising which does notqualify as local advertising within themeaning of section 4216(e)(4) of theCode and paragraphs (a) and (b) of§ 53.100, or

(2) Does not satisfy all of the condi-tions and limitations stated in section4216(e)(1) of the Code and paragraph (c)of § 53.100.

(b) Readjustments of price. No credit orrefund under section 6416(b)(1) of theCode may be allowed in respect of anyamount which was included in the tax-able price of an article sold by themanufacturer and which was later paidby him to his vendee in reimbursementof costs incurred for advertising, if, andto the extent that, the amount so paid:

(1) Is for advertising which does notqualify as local advertising within themeaning of section 4216(e)(4) of theCode and paragraph (b) of § 53.100, or

(2) Is not within the limitation pro-vided in section 4216(e)(2) of the Code,

as computed in accordance with§ 53.101, as of the close of the calendarquarter in which the amount is so paidover or as of the close of any subse-quent calendar quarter in the same cal-endar year. See, however, § 53.175, relat-ing to redetermination of price read-justments in cases where local adver-tising charges excluded from taxableprice in one calendar year become tax-able as of May 1 of the following cal-endar year.


§ 53.103 Lease considered as sale.For purposes of chapter 32 of the

Code, the lease of an article by a manu-facturer, producer, or importer shall beconsidered a sale of the article. Theterm lease means a contract or agree-ment, written or verbal, which givesthe lessee an exclusive, continuousright to the possession or use of a par-ticular article for a period of time. Theterm includes any renewal or extensionof a lease or any subsequent lease ofthe article.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–312, 56 FR 31084, July9, 1991; T.D. 372, 61 FR 20724, May 8, 1996]

§ 53.104 Limitation on amount of taxapplicable to certain leases.

(a) Conditions for eligibility. Section4217(b) of the Code provides for a limi-tation on the amount of tax that shallapply to the lease, any renewal, or fur-ther lease, of an article which, if sold,would be subject to tax on the basis ofsale price. Such limitation on theamount of the tax applies with respectto the lease of an article only if, at thetime of making the lease, the lessor isengaged in the business of selling inarm’s length transactions the sametype and model of article. In case of alease to which section 4217(b) of theCode does not apply, tax shall be com-puted and paid as provided in section4216(c) of the Code and paragraph (a) of§ 53.98.

(b) Lessor engaged in business of sell-ing. The lessor will be regarded asbeing engaged in the business of sellingin arm’s length transactions the sametype and model of an article as the onebeing leased if it periodically and


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27 CFR Ch. I (4–1–99 Edition)§ 53.111

recurringly makes bona fide offers forsale of such articles in the regularcourse of operation of its business,which offers if accepted would con-stitute sales at arm’s length. Whetherthe offers are bona fide shall be deter-mined on the basis of the facts in eachcase, such as sales actually made, thenature of the advertising, sales lit-erature, and other means used to effec-tuate sales. It is not necessary that theoffers for sale be made to the sameclass of purchasers as those to whomthe article is being leased.

(c) Same type and model of article. Toqualify as the ‘‘same type and model ofarticle’’, the article offered for salemust be an unused article essentiallythe same in size, design, and functionas the article being leased. Slight dif-ferences in appearance or accessorieswill not render articles dissimilarwhich are identical in all other re-spects.

(d) Basis for tax—(1) Tax payable untiltotal tax in paid. In case of a lease of anarticle to which section 4217(b) of theCode applies, tax shall be paid on eachlease payment in an amount computedby applying to such lease payment apercentage equal to the rate of tax ineffect on the date of the lease payment.Such tax payments shall continue to bemade under such lease, or any subse-quent lease of the article, until the cu-mulative total of the tax paymentsequals the total tax. Lease paymentsmade thereafter with respect to thatarticle shall not be subject to tax. Fordefinition of the term ‘‘total tax,’’ seeparagraph (e) of this section.

(2) Changes in tax rates. If the rate oftax is increased or decreased during alease period, the new rate shall applyto the lease payments made on andafter the date of the change, but theamount of the total tax shall remainthe same.

(e) Total tax. For purposes of this sec-tion, the term ‘‘total tax’’ means theamount of tax, computed at the rate ineffect on the date of the first lease ofthe article to which section 4217(b) ofthe Code applies, which would be dueon the constructive sale price of the ar-ticle as determined under section4216(b) of the Code and § 53.95, as if thearticle had been sold by a manufac-turer at retail on such date.

(f) Sale of article before total tax be-comes payable. If the lessor sells the ar-ticle before the total tax has becomepayable, the tax payable on the saleshall be the lesser of the followingamounts:

(1) The difference between:(i) The total tax, and(ii) The aggregate tax applicable to

lease payments already received; or(2) A tax computed, at the rate in ef-

fect on the date of the sale, on theprice for which the article is sold. Forpurposes of (f)(2) of this section, theprovisions of section 4216(b) of the Codefor determining a constructive saleprice shall not apply if the sale is atarm’s length. If the sale is not at arm’slength, the tax referred to in (f)(2) ofthis section shall be computed on aconstructive sale price as provided in§ 53.95.

(g) Sale of article after total tax has be-come payable. If the lessor sells an arti-cle after the total tax has become pay-able, the tax imposed under chapter 32of the Code shall not apply to suchsale.

USE BY MANUFACTURER OR IMPORTERCONSIDERED SALE

§ 53.111 Tax on use by manufacturer,producer, or importer.

(a) In general. Section 4218 of theCode imposes tax in respect of certainuses of articles by the actual manufac-turer, producer, or importer thereof.This section also applies in respect ofthe use of articles by any other personwho, pursuant to a provision of chapter32 of the Code, is considered to be, or istreated as, the manufacturer or pro-ducer of the articles. See, for example,section 4223 of the Code relating to ar-ticles purchased tax free for use in fur-ther manufacture.

(b) Taxable articles in general—(1) Ap-plication of tax. If the manufacturer,producer, or importer of an article tax-able under chapter 32 of the Code usesthe article for any purpose other thanthat indicated in paragraph (b) (3) ofthis section, he shall be liable for taxwith respect to the use of such articlein the same manner as if the articlewere sold by him.

(2) Taxable use in manufacturer of non-taxable articles—(i) In general. In the


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case of an article to which paragraph(b)(1) of this section applies, tax at-taches when the manufacturer, pro-ducer, or importer of the articles usesit as material in the manufacture orproduction of, or as a component partof, another article which is not taxableunder chapter 32 of the Code, regardlessof the disposition made of such otherarticle. (See paragraph (c) of § 53.115 forcomputation of tax on such use.)

(ii) Types of use in manufacture of non-taxable articles. Taxable use may con-sist of the incorporation of a taxablearticle into a nontaxable article. Tax-able use may also result from the com-bining of a taxable article (or the com-ponents thereof) with a nontaxable ar-ticle (or the components of a non-taxable article) resulting in a combina-tion end article which itself is not tax-able. Although the taxable article maynot be a completely separable unit,within the contemplation of the law ataxable article has been produced andincorporated in the combination endarticle.

(3) Nontaxable use in manufacturer oftaxable articles. The tax on the use of anarticle to which paragraph (b)(1) of thissection has application shall not applyif the article is used by the manufac-turer, producer, or importer thereof asmaterial in the manufacturer or pro-duction of, or as a component part of,another article taxable under chapter32 of the Code to be manfactured orproduced by him. It is immaterial whatdisposition is made of such other arti-cle.

(c) Use after lease. If the manufac-turer, producer, or importer of a tax-able article leases such article andthereafter uses the article, he incurs li-ability for tax on such use as providedin these regulations to the same extentas if the article were sold after beingleased. See section 4217 of the Code andthe regulations thereunder in this sub-part for application and computationof tax in case of leased articles.

(d) Time of application of tax. In thecase of a taxable use of an article bythe manufacturer, producer, or im-porter thereof, the tax attaches at thetime such use begins. If tax applies byreason of the sale of an article by themanufacturer, producer, or importerthereof on or in connection with his

sale of another article, the tax at-taches at the time of the sale of suchother article.

(e) Exemptions because of other statu-tory provisions. Tax does not apply onthe use of an article by the manufac-turer, producer, or importer thereof ifunder the applicable provisions of theCode the sale of the article for a simi-lar use would not be subject to tax.Also, tax need not be paid with respectto the use of an article by the manufac-turer, producer, or importer thereof ifsuch use would qualify, under the pro-visions of section 6416(b) of the Code,for credit or refund of the tax paid.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991]

EDITORIAL NOTE: At 56 FR 31084, July 9,1991, § 53.111 was amended by removing theword ‘‘manufacturer’’ and adding the word‘‘manufacture’’ in the heading of paragraph(a)(2), and removing the word ‘‘manufac-turer’’ and adding the word ‘‘manufacture’’in the first sentence of paragraph (a)(3), ef-fective July 9, 1991; however, these sub–para-graph designations are not included in§ 53.111(a). The issuing agency will publish acorrection in the FEDERAL REGISTER at alater date.

§ 53.112 Business or personal use of ar-ticles.

(a) Business use. Section 4218 of theCode applies to the use by a person, inthe operation of any business in whichhe is engaged, of a taxable articlewhich has been manufactured, pro-duced, or imported by him or his agent.

(b) Personal use. The tax on use of ataxable article does not attach in caseswhere an individual incidentially man-ufacturers, produces, or imports a tax-able article for his personal use orcauses a taxable article to be manufac-tured, produced, or imported for hispersonal use.

§ 53.113 Events subsequent to taxableuse of article.

Liability for tax incurred on the useof an article is not extinguished or re-duced because of any subsequent saleor lease of the article even if such saleor lease would have been exempt if thearticle had been so sold or leased priorto use. If a manufacturer, producer, orimporter of an article incurs liabilityfor tax on his use thereof, and there-after sells or leases the article in atransaction which otherwise would be


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27 CFR Ch. I (4–1–99 Edition)§ 53.114

subject to tax, liability for tax is notincurred on such sale or lease.


§ 53.114 Use in further manufacture.For purposes of section 4218 and

§ 53.111, an article is used as material inthe manufacture or production of, or asa component part of, another article, ifit is incorporated in, or is a part or ac-cessory of, the other article. In addi-tion, an article is considered to be usedas material in the manufacturer of an-other article if it is partly or entirelyconsumed in testing such other article;for example, shells or cartridges usedin testing new firearms. Similarly, ifan article is partly or wholly consumedin quality testing a production run oflike articles, such article is also con-sidered to have been used as materialin the manufacture of another article.However, if a taxable article that hasbeen used tax free and only partly con-sumed in testing is later sold, or put toa taxable use by the manufacturer, taxattaches to such sale or use. An articlethat is consumed in the manufacturingprocess other than in testing, so that itis not a physical part of the manufac-tured article, is not used as material inthe manufacture or production of or asa component part of, such other arti-cle.


§ 53.115 Computation of tax.(a) Tax based on price. Tax liability

incurred on the use of an article shallbe computed on the price at which suchor similar articles are sold in the ordi-nary course of trade by manufacturers,producers, or importers thereof and inthe absence of special arrangements.For additional provisions applicable incomputing the tax in the case of theuse of an article by a manufacturer andproducer who purchased the article freeof tax under section 4221(a)(1) of theCode for use by him in further manu-facture, see section 4223(b) of the Codeand the regulations thereunder(§ 53.143).

(b) Articles regularly sold by manufac-turer. If the manufacturer, producer, or

importer of an article regularly sellssuch articles at wholesale in arm’slength transactions, tax liability on hisuse of any such article shall be com-puted on his lowest established whole-sale price for such articles in effect atthe time of the taxable use. In estab-lishing such price, there shall be in-cluded and excluded, as applicable, thecharges and readjustments specified insections 4216(a) and 6416(b)(1) of theCode, as in effect at the time tax liabil-ity on the use of the article is incurred,and the regulations thereunder con-tained in this subpart and subpart L(§§ 53.91–53.94 and 53.173–53.176). If themanufacturer, producer, or importer ofan article does not regularly sell sucharticles at wholesale in arm’s lengthtransactions, a constructive price onwhich the use tax shall be computedwill be determined by the Director.This price will be established after con-sidering the selling practices and pricestructures of manfacturers, producers,and importers of similar articles.

(c) Articles governed by section 4218(a)used in manufacture of nontaxable com-bination articles. If the manufacturer,producer, or importer of an article towhich section 4218(a) of the Code ap-plies does not regularly sell such arti-cle separately but uses it as materialin the manufacture or production of, oras a component part of, a nontaxablecombination article consisting of ataxable and nontaxable article, liabil-ity for tax on his use shall be computedon the constructive price of the taxablearticle at the time of use. To determinethe constructive price of the taxablearticle in such case, the combinationarticle is considered to be composed of:

(1) Parts used exclusively in the func-tioning of the taxable article in thecombination;

(2) Parts used exclusively in the func-tioning of the nontaxable article in thecombination, and

(3) Parts, called common parts, whichserve a dual function in connectionwith the parts in both paragraphs (c)(1) and (2) of this section.The ratio which the cost of the parts inparagraph (c)(1) of this section bears tothe sum of the cost of such parts andthe parts in paragraph (c)(2) of this sec-tion is applied to the lowest estab-lished wholesale price for which like


695


combination articles are at the time ofthe taxable use being sold by the man-ufacturer or producer in the ordinarycourse of trade. The resulting amountis the constructive sale price for thetaxable article on which tax is to becomputed. The cost of the commonparts is allocable to the parts in para-graphs (c) (1) and (2) of this section inthe same ratio, and, therefore, need notbe taken into account in the computa-tion since the inclusion and allocationof the cost of such parts in the deter-mination would not result in a dif-ferent ratio. In determining the lowestestablishment wholesale price for thecombination article, there shall be in-cluded and excluded, as applicable, thecharges and readjustments specified insections 4216(a) and 6416(b)(1) of theCode, as in effect at the time tax liabil-ity on the use of the taxable article isincurred, and the regulations there-under contained in this subpart andsubpart L of this part (§§ 53.91–53.94 and§§ 53.173–53.176). The tax applicable tothe use of the article for which a con-structive sale price has been computedis not affected by any charges or read-justments of the price for which thenontaxable combination article is sold,whether by reason of the return or re-possession of the nontaxable article orits covering or container, or by a bonafide discount, rebate, allowance, orother factor.


APPLICATION OF TAX IN CASE OF SALESBY OTHER THAN MANUFACTURER ORIMPORTER

§ 53.121 Sales of taxable articles by aperson other than the manufac-turer, producer, or importer.

(a) General rule. If the title to, orownership of, an article taxable underchapter 32 of the Code is transferredfrom the manufacturer, producer, orimporter thereof, and, under the law,no tax attaches to such transfer, thesubsequent sale, lease, or use of sucharticle by the transferee is subject totax to the same extent and manner asif such transferee were the manufac-turer, producer, or importer of the arti-

cle. The following examples illustratethis rule:

(1) The surviving spouse, child orchildren, executors or administrators,or other legal representatives, as thecase may be, of a deceased manufac-turer, producer, or importer of taxablearticles, incur liability for tax on allsuch articles sold by them.

(2) A receiver or trustee in bank-ruptcy who under a court order con-ducts or liquidates the business of amanufacturer, producer, or importer oftaxable articles, incurs liability for taxon all taxable articles sold by him, re-gardless of whether the articles weremanufactured, produced, or importedbefore or after he took charge of thebusiness.

(3) An assignee for the benefit ofcreditors of a manufacturer, producer,or importer incurs liability for taxwith respect to all taxable articles soldby him as such assignee.

(4) If one or more member of a part-nership withdraw, or if new partnersare admitted, the new partnership soconstituted incurs liability for tax onall taxable articles sold by it regardlessof when such articles were manufac-tured, produced, or imported.

(5) A person who acquires title totaxable articles as a result of default ofthe manufacturer, producer, or im-porter pursuant to an agreement underthe terms of which the articles werepledged as collateral incurs liabilityfor tax with respect to his sale of thearticles so acquired.

(6) A person who succeeds to the busi-ness of a manufacturer, producer, orimporter of taxable articles, such as:

(i) A corporation which results froma consolidation, merger, or reorganiza-tion;

(ii) A corporation which acquires thebusiness of an individual or partner-ship; or

(iii) A stockholder in a corporationwho, after its dissolution, continuesthe business;incurs liability for the tax on all tax-able articles sold by such person. How-ever, where a manufacturer, producer,or importer sells only his assets, ratherthan ownership of his business, he in-curs liability for tax on the sale of anytaxable articles included in such as-sets.


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27 CFR Ch. I (4–1–99 Edition)§ 53.131

(b) Transfer of title to damaged articles.If title to a damaged taxable article istransferred by the manufacturer, pro-ducer, or importer thereof to a carrieror insurance company in adjustment ofa damage claim, such transfer is notconsidered a taxable sale of the article.If the article is usable, even thoughdamaged, the carrier or insurance com-pany incurs liability for tax on its sale,lease, or use of the article. Where thearticle has been damaged to the extentthat its only value is as scrap, and it isnot restored to usable condition, salethereof by the carrier or insurancecompany is not subject to tax.

Subpart K—Exemptions,Registration, Etc.

§ 53.131 Tax-free sales; general rule.(a) In general. Section 4221(a) of the

Code sets forth the following exemptpurposes for which an article subject totax under chapter 32 of the Code maybe sold tax-free by the manufacturer,producer, or importer:

(1) For use by the purchaser for fur-ther manufacture, or for resale by thepurchaser to a second purchaser for useby such second purchaser in furthermanufacture,

(2) For export, or for resale by thepurchaser to a second purchaser for ex-port,

(3) For use by the purchaser as sup-plies for vessels or aircraft,

(4) To a State or local governmentfor the exclusive use of a State or localgovernment, and

(5) To a nonprofit educational organi-zation for its exclusive use.Section 4221(a) of the Code applies onlyin those cases where the exportation oruse referred to is to occur before anyother use, and where the seller, firstpurchaser, and second purchaser, asmay be appropriate, have registered asrequired under section 4222 of the Codeand paragraph (a) of § 53.140. See para-graph (c) of this section for provisionsrelating to evidence required in sup-port of tax-free sales. See § 53.141 for ex-ceptions to the requirement for reg-istration.Where tax is paid on the saleof an article, but the article is used orresold for use for an exempt purpose, aclaim for credit or refund may be filedin accordance with and to the extent

provided in sections 6402(a) and 6416 ofthe Code, and the regulations there-under (§§ 53.161 and 53.171–53.186).

(b) Manufacturer relieved of liability incertain cases—(1) General rule. Under theprovisions of section 4221(c) of theCode, if an article subject to tax underChapter 32 of the Code is sold free oftax by the manufacturer of the articlefor an exempt purpose referred to insection 4221(c) of the Code and para-graph (b)(2) of this section, the manu-facturer shall be relieved of any tax li-ability under chapter 32 of the Codewith respect to such sale if the manu-facturer in good faith accepts a propercertification by the purchaser that thearticle or articles will be used by thepurchaser in the stated exempt man-ner. See paragraph (b)(2) of this sectionfor a list of the exempt purposes re-ferred to in section 4221(c) of the Code.

(2) Situations wherein section 4221(c) ofthe Code is applicable. The following aresituations wherein section 4221(c) ofthe Code is applicable with respect tosales made tax free on the assumptionthat one of the following sections ofthe Code provides exemption for suchsales:

(i) Section 4221(a)(1) of the Code, tothe extent that it relates to sales forfurther manufacture by a first pur-chaser (see § 53.132),

(ii) Section 4221(a)(3) of the Code, re-lating to supplies for vessels and air-craft (see § 53.134),

(iii) Section 4221(a)(4) of the Code, re-lating to sales to State or local govern-ments (see § 53.135),

(iv) Section 4221(a)(5) of the Code, re-lating to sales to nonprofit educationalorganizations (see § 53.136).

(3) Situations wherein section 4221(c) ofthe Code is not applicable. The relieffrom liability for the payment of taxprovided by section 4221(c) of the Codeis not applicable with respect to salesmade tax free on the assumption thatone of the following sections of theCode provides exemption for such sales:

(i) Section 4221(a)(1) of the Code, tothe extent that it relates to sales forresale to a second purchaser for use bythe second purchaser in further manu-facture (see § 53.132),

(ii) Section 4221(a)(2) of the Code, re-lating to sales for export (see § 53.133).


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(4) Duty of seller to ascertain validity oftax-free sale. If the manufacturer at thetime of its sale has reason to believethat the article sold by it is not in-tended for the exempt purpose indi-cated by the purchaser, or that the pur-chaser has failed to register as re-quired, the manufacturer is not consid-ered to have accepted certificationfrom the purchaser in good faith, and isnot relieved from liability under theprovisions of section 4221(c) of theCode.

(5) Information to be furnished to pur-chaser. A manufacturer selling articlesfree of tax under this section shall indi-cate to the purchaser that:

(i) Certain articles normally subjectto tax are being sold tax free, and

(ii) The purchaser is obtaining thosearticles tax free for an exempt purposeunder an exemption certificate or itsequivalent.

(6) The manufacturer may transmitthis information by any convenientmeans, such as coding of sales invoices,provided that the information is pre-sented with sufficient particularity sothat the purchaser is informed that hehas obtained the articles tax free and:

(i) The purchaser can compute andremit the tax due if an article sold taxfree for further manufacture is divertedto a taxable use,

(ii) The manufacturer can remit thetax due with respect to an article pur-chased tax free for resale for use in fur-ther manufacture or for export if, with-in the 6-month period described in§ 53.132(c) or § 53.133(c), the manufac-turer does not receive proof that thearticle has been exported or resold foruse in further manufacturer, or

(iii) The purchaser can notify themanufacturer if an article otherwisepurchased tax free is diverted to a tax-able use.

(c) Evidence required in support of tax-free sales—(1) Purchasers required to beregistered. Every purchaser who is re-quired to be registered (see § 53.140)shall furnish to the seller, as evidencein support of each tax-free sale madeby the seller to such purchaser, the ex-empt purpose for which the article orarticles are being purchased and theregistration number of the purchaser.Such information must be in writingand may be noted on the purchase

order or other document furnished bythe purchaser to the seller in connec-tion with each sale.

(2) Purchasers not required to be reg-istered. For the evidence which pur-chasers not required to register mustfurnish to the seller in support of eachtax-free sale made by the seller to suchpurchasers, see paragraph (b) of § 53.133for sales or resales to a foreign pur-chaser for export, paragraph (d) of§ 53.134 for sales of supplies to vessels oraircraft, paragraph (c) of § 53.135 forsales to State and local governments,and paragraph (c) of § 53.141 for salesand purchases by the United States.


§ 53.132 Tax-free sale of articles to beused for, or resold for, further man-ufacture.

(a) Further manufacture—(1) In gen-eral. Under prescribed conditions, anarticle subject to tax under Chapter 32of the Code may be sold tax free by themanufacturer, pursuant to section4221(a)(1) of the Code, for use by thepurchaser in further manufacture, orfor resale by the purchaser to a secondpurchaser for use by the second pur-chaser in further manufacture. See sec-tion 4221(d) (6) of the Code and para-graph (b) of this section for the cir-cumstances under which an article isconsidered to have been sold for use infurther manufacture. See section6416(b)(3) of the Code and § 53.180 for thecircumstances under which credit orrefund is available when tax-paid arti-cles are used in further manufacture.

(2) Proof of resale for use in furthermanufacture. See section 4221(b)(1) ofthe Code and paragraph (c) of this sec-tion for provisions under which the ex-emption provided in section 4221(a)(1)of the Code shall cease to apply in thecase of an article sold by the manufac-turer to a purchaser for resale to a sec-ond purchaser for use in further manu-facture unless the manufacturer re-ceives timely proof of resale for furthermanufacture.

(b) Circumstances under which an arti-cle is considered to have been sold for usein further manufacture. (1) For purposesof the exemption from the manufactur-ers excise tax provided by section


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27 CFR Ch. I (4–1–99 Edition)§ 53.132

4221(a)(1) of the Code, an article shallbe treated as sold for use in furthermanufacture if the article is sold foruse by the purchaser as material in themanufacture or production of, or as acomponent part of, another article tax-able under chapter 32 of the Code;

(2) An article is used as material inthe manufacture or production of, or asa component of, another article if it isincorporated in, or is a part or acces-sory of, the other article when theother article is sold by the manufac-turer. In addition, an article is consid-ered to be used as material in the man-ufacture of another article if it is con-sumed in whole or in part in testingsuch other article; for example, shellsor cartridges that are used by the man-ufacturer of firearms to test new fire-arms. However, an article that is con-sumed in the manufacturing processother than in testing, so that it is nota physical part of the manufactured ar-ticle, is not considered to have beenused as material in the manufacture of,or as a component part of, another ar-ticle.

(c) Proof of resale for further manufac-ture—(1) Cessation of exemption. The ex-emption provided in section 4221(a)(1)of the Code and described in paragraph(a) of this section in respect of an arti-cle sold by the manufacturer to a pur-chaser for resale to a second purchaserfor use by the second purchaser in fur-ther manufacture shall cease to applyon the first day following the close ofthe 6-month period which begins on thedate of the sale of such article by themanufacturer, or the date of shipmentof the article by the manufacturer,whichever is earlier, unless, withinsuch 6-month period, the manufacturerreceives proof, in the form prescribedby paragraph (c)(2) of this section, thatthe article was actually resold by thepurchaser to a second purchaser forsuch use. If, on the first day followingthe close of the 6-month period, suchproof has not been received, the manu-facturer shall become liable for tax atthat time at the rate in effect when thesale was made but otherwise in thesame manner as if the article had beensold by it on such first day at a taxableprice equivalent to that at which thearticle was actually sold. If the manu-facturer later obtains such proof, it

may file a claim for refund or credit ofthis tax. The payment of this tax bythe manufacturer is not considered anoverpayment by the subsequent manu-facturer or producer for which the sub-sequent manufacturer or producer isentitled to a credit or refund under sec-tion 6416(b)(3) of the Code. See section4221(d)(6) of the Code and paragraph (b)of this section for the circumstancesunder which an article is considered tohave been sold for use in further manu-facture.

(2) Proof of resale—(i) Certificate ofpurchaser. The proof of resale to be re-ceived by the manufacturer, as re-quired under section 4221(b)(1) of theCode, may consist of either a copy ofthe invoice of the manufacturer’s vend-ee directed to his purchaser which dis-closes the certificate of registry num-ber held by each party or a statementdescribed in this paragraph. In the caseof an invoice of manufacturer’s vendee,it must appear from such invoice (or bystatement attached thereto) that thearticle was in fact resold for use in fur-ther manufacture. In lieu of such an in-voice, proof of resale may consist of astatement, executed and signed by themanufacturer’s vendee which includesthe following:

(A) Date statement was executed.(B) Name and address of manufactur-

er’s vendee (if other than the personexecuting statement).

(C) Certificate of registry numberheld by vendee.

(D) Specify article(s) purchased tax-free, by whom purchased, certificate ofregistry number of second purchaser,date of purchase(s), whether articleswere purchased as material in the man-ufacture or production of, or as a com-ponent part or parts of, an article orarticles taxable under Chapter 32 of theCode.

(E) Statement that person executingstatement or manufacturer’s vendeepossesses proof of tax-free resale of thearticle(s) in the form of purchase or-ders and sales invoices and identifyingthe person who will maintain custodyof such proof for 3 years from the dateof the statement and will make suchproof available for inspection by ATFduring such 3 year period.

(F) Statement that a previous state-ment has not been executed in respect


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of such certificate of resale and thatthe person signing the statement isaware that fraudulent use of the state-ment may subject the person signingthe statement and all parties makingfraudulent use of the statement to allapplicable criminal penalties under theCode.

(G) Name, signature, and title of in-dividual executing statement.

(ii) Period covered. Any statement ex-ecuted and signed by the manufactur-er’s vendee, as provided in paragraph(c)(2)(i) of this section, may be exe-cuted with respect to any one or morearticles purchased tax free from a man-ufacturer and resold for use in furthermanufacture within the 6-month periodprescribed in section 4221(a)(1) of theCode and paragraph (c)(1) of this sec-tion. Such statement (or other pre-scribed proof of resale) must be re-tained for inspection by the regionaldirector as provided in section 6001 ofthe Code.

(iii) ATF I 5600.37. A preprinted state-ment, ATF I 5600.37, Statement of Man-ufacturer’s Vendee, is available fromthe Bureau’s Distribution Centerwhich, when completed, contains allnecessary information for a properlyexecuted statement. Extra copies ofATF I 5600.37 may be reproduced asneeded.


§ 53.133 Tax-free sale of articles for ex-port, or for resale by the purchaserto a second purchaser for export.

(a) In general. (1) An article subjectto tax under chapter 32 of the Codemay be sold tax free by the manufac-turer, pursuant to section 4221(a)(2) ofthe Code and this section, for export,or for resale by the purchaser to a sec-ond purchaser for export. See § 53.11 forthe meaning of the term ‘‘expor-tation’’. An article may be sold tax freeby the manufacturer under the provi-sions of this section only if the personto whom the manufacturer sells the ar-ticle intends either to export the arti-cle or to resell it to a person who in-tends to export it. An article may notbe sold tax free under the provisions ofthis section by a manufacturer to apurchaser for resale to a second pur-

chaser which does not intend to exportthe article itself but plans to resell itto a third purchaser for export. Seesection 6416(b)(2)(A) of the Code and§ 53.177 for the circumstances underwhich credit or refund of tax is avail-able where tax-paid articles are ex-ported from the United States.

(2) If an article, otherwise taxableunder chapter 32 of the Code:

(i) Is sold tax free by the manufac-turer pursuant to section 4221(a)(2) ofthe Code and this section, and

(ii) Is returned subsequently to theUnited States in an unused andundamaged condition,then the importer is liable for the taximposed by chapter 32 of the Code onthe subsequent sale or use of the arti-cle in the United States. The provi-sions of this paragraph (a)(2) of thissection may be illustrated by the fol-lowing examples:

Example (1). Q, a U.S. manufacturer ofshells and cartridges, previously sold shellsand 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 cartridgesto S, who imports the articles into theUnited States and sells them. The sale of theshells and cartridges subjects S to an excisetax liability under section 4181.

Example (2). X, a U.S. firearms manufac-turer, 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 individualin the City of Nice, France. After initial use,W resold the rifle to X. X returned the rifleto the United States where it was resold. Theresale of the rifle by X does not subject X toan excise tax liability under section 4181.

(b) Sales or resales to a foreign pur-chaser for export. In the case of sales orresales to a foreign purchaser for ex-port, if the first or the second pur-chaser is located in a foreign countryor possession of the United States,such purchaser is not required to reg-ister as provided in section 4222(a) ofthe Code and § 53.140. To establish theright to sell articles tax free for exportto a purchaser who is not registeredand who is located in a foreign countryor a possession of the United States,the manufacturer must obtain fromsuch purchaser at the time title to thearticle passes or at the time of ship-ment, whichever is earlier, either:

(1) A written order or contract of saleshowing that the manufacturer is to


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ship the article to a foreign destina-tion; or

(2) Where delivery by the manufac-turer is to be made within the UnitedStates, a statement from the purchasershowing:

(i) That the article is purchased ei-ther to fill existing or future orders fordelivery to a foreign destination or forresale to another person engaged in thebusiness of exporting who will exportthe article, and

(ii) That such article will be trans-ported to its foreign destination in duecourse prior to use or further manufac-ture and prior to any resale except forexport. See section 4221(b) of the Codeand paragraphs (c) and (d) of this sec-tion for requirements as to timelyproof of exportation and cessation ofthe exemption for export unless theevidence to show actual exportationhas been received by the manufacturer.

(c) Cessation of exemption. The exemp-tion provided in section 4221(a)(2) of theCode and paragraph (a) of this sectionfor an article sold by the manufacturerfor export or for resale by the pur-chaser to a second purchaser for exportshall cease to apply on the first dayfollowing the close of the 6-month pe-riod which begins on the date of thesale of the article by the manufacturer,or the date of shipment of the articleby the manufacturer, whichever is ear-lier, unless within the 6-month periodthe manufacturer receives proof, in theform prescribed by paragraph (d) ofthis section, that the article was actu-ally exported. If, on the first day fol-lowing the close of the 6-month period,the proof has not been received, themanufacturer shall become liable fortax at that time at the rate in effectwhen the sale was made but otherwisein the same manner as if the articlehad been sold by it on such first day ata taxable price equivalent to that atwhich the article was actually sold.

(d) Proof of exportation. (1) Expor-tation may be evidenced by:

(i) A copy of the export bill of ladingissued by the delivering carrier,

(ii) A certificate by the agent or rep-resentative of the export carrier show-ing actual exportation of the article,

(iii) A certificate of landing signed bya customs officer of the foreign coun-try to which the article is exported,

(iv) Where the foreign country has nocustoms administration, a statementof the foreign consignee showing re-ceipt of the article, or

(v) Where a department or agency ofthe United States Government is un-able to furnish any one of the foregoingfour types of proof of exportation, astatement or certification on the de-partment or agency stationery, exe-cuted by an authorized officer, that thelisted or identified articles have, infact, been exported.

(2) In any case where the manufac-turer is not the exporter, the manufac-turer must have in its possession astatement from the vendee to whomthe manufacturer sold the article stat-ing the following:

(i) Date statement was executed.(ii) Name and address of manufactur-

er’s vendee (if other than the personexecuting statement).

(iii) Certificate of registry numberheld by vendee.

(iv) Specify article(s) purchased tax-free, by whom purchased, and date ofpurchase.

(v) Statement that article(s) was ei-ther exported in due course by thevendee or was sold to another personwho in due course exported the arti-cle(s).

(vi) Name and address of vendee whowill maintain possession of the proof ofexportation documents, description ofthe documents, and statement thatvendee will maintain documents for 3years and make them available to ATFfor inspection.

(vii) Statement that a previous state-ment has not been executed in respectof the articles covered by this state-ment and that fraudulent use of thisstatement may subject person exe-cuting statement and all parties mak-ing fraudulent use of statement to allapplicable criminal penalties under theCode.

(viii) Name, signature, title, and ad-dress of individual executing certifi-cate.

(3) The statement executed andsigned by the manufacturer’s vendee,as provided in paragraph (d)(2) of thissection, may be executed with respectto any one or more articles purchased


701


tax free from a manufacturer and ex-ported within the 6-month period pre-scribed in section 4221(b)(2) of the Codeand paragraph (c) of this section. Suchstatement shall be kept for inspectionby the regional director as provided insection 6001 of the Code.

(4) ATF I 5600.36. A preprinted state-ment, ATF I 5600.36, Statement of Man-ufacturer’s Vendee, is available fromthe Bureau’s Distribution Centerwhich, when completed, contains allnecessary information for a properlyexecuted statement. Extra copies ofATF I 5600.36 may be reproduced asneeded.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–344, 58 FR 40354, July28, 1993; T.D. 372, 61 FR 20724, May 8, 1996;T.D. ATF–380, 61 FR 37006, July 16, 1996]

§ 53.134 Tax-free sale of articles foruse by the purchaser as supplies forvessels or aircraft.

(a) Supplies for vessels or aircraft—(1)In general. An article subject to taxunder chapter 32 of the Code may besold tax free by the manufacturer, pur-suant to section 4221(a)(3) of the Codeand this section, for use by the pur-chaser as supplies for vessels or air-craft. See paragraph (b) of this sectionfor the meaning of the term ‘‘suppliesfor vessels or aircraft.’’ An article maybe sold tax free under the provisions ofthis section only in those cases wherethe sale of an article by the manufac-turer is made directly to the owner, of-ficer, charterer, or authorized agent ofa vessel or aircraft for use as suppliesfor the vessel or aircraft. No sale maybe made tax free to a dealer for resalefor use as supplies for vessels or air-craft, even though it is known at thetime of sale by the manufacturer thatthe article will be so resold. See sec-tion 6416(b)(2)(B) of the Code and para-graph (c) of § 53.178 for circumstancesunder which credit or refund of tax isavailable where tax-paid articles areused, or sold for use, as supplies forvessels or aircraft. An article may notbe sold tax free under the provisions ofthis section by the manufacturer topassengers or members of the crew of avessel or aircraft.

(2) Civil aircraft of foreign registry. Inthe case of any article sold by the man-ufacturer for use by the purchaser as

supplies for civil aircraft of foreignregistry employed in foreign trade orin trade between the United States andany of its possessions, the provisions ofthis paragraph apply only if the reci-procity requirements of section4221(e)(1) of the Code are met. See para-graph (c) of this section.

(b) Meaning of terms—(1) Supplies forvessels or aircraft. The term ‘‘suppliesfor vessels or aircraft’’ means fuel sup-plies, ships’ stores, sea stores, or legiti-mate equipment on vessels of war ofthe United States or of any foreign na-tion, vessels employed in the fisheriesor in the whaling business, or vesselsactually engaged in foreign trade ortrade between the Atlantic and Pacificports of the United States or betweenthe United States and any of its posses-sions.

(2) Fuel supplies, ships’ stores, and le-gitimate equipment. The terms ‘‘fuel sup-plies’’, ‘‘ships’ stores’’, and ‘‘legitimateequipment’’ include all articles, mate-rials, supplies, and equipment nec-essary for the navigation, propulsion,and upkeep of vessels of war of theUnited States or of any foreign nation,vessels employed in the fisheries or inthe whaling business, or vessels actu-ally engaged in foreign trade or intrade between the Atlantic and Pacificports of the United States or betweenthe United States and any of its posses-sions, even though such vessels maymake intermediate stops in the UnitedStates. The term does not include sup-plies for vessels engaged in trade:

(i) Between domestic ports in the At-lantic Ocean and the Gulf of Mexico,

(ii) Between domestic ports on thePacific Ocean,

(iii) Between domestic ports on theGreat Lakes, or

(iv) On the inland waterways of theUnited States.

(3) Sea stores. The term sea stores in-cludes any article purchased for use orconsumption by the passengers orcrew, or both, of a vessel during itsvoyage.

(4) Vessel. The term vessel includes:(i) Every description of watercraft or

other contrivance used, or capable ofbeing used, as a means of transpor-tation on water,

(ii) Civil aircraft registered in theUnited States and employed in foreign


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27 CFR Ch. I (4–1–99 Edition)§ 53.134

trade or in trade between the UnitedStates and any of its possessions, and

(iii) Civil aircraft registered in a for-eign country and employed in foreigntrade or trade between the U.S. and itspossessions.

(5) Vessels of war of the United Statesor of any foreign nation. The term ves-sels of war of the United States or of anyforeign nation includes:

(i) Every description of watercraft orother contrivance used, or capable ofbeing used, as a means of transpor-tation on water and constituting equip-ment of the armed forces (includingthe U.S. Coast Guard and U.S. NationalGuard) of the United States or of a for-eign nation, and

(ii) Aircraft owned by the UnitedStates or by any foreign nation andconstituting equipment of the armedforces thereof.

(iii) For purposes of this section, ves-sels or aircraft owned by armed forcesare not considered to be equipment ofsuch armed forces while on lease orloan to an organization that is not partof the armed forces.

(6) Vessels used in fisheries or whalingbusiness. The exemption provided bysection 4221(a)(3) of the Code and para-graph (a) of this section in the case ofarticles sold for the prescribed use onvessels employed in the fisheries orwhaling business is limited to articlessold by the manufacturer for such useon vessels while employed, and to theextent employed, exclusively in thefisheries or in the whaling business.For purposes of this section, vessels en-gaged in sport fishing are not consid-ered to be employed in the fisheriesbusiness.

(7) Civil aircraft. The exemption pro-vided by section 4221(a)(3) of the Codeand paragraph (a) of this section relat-ing to supplies for vessels or aircraft,with respect to civil aircraft, extendsonly to civil aircraft when employed inforeign trade, or in trade between theUnited States and any of its posses-sions. Sales of supplies to civil aircraftwhen engaged in trade between the At-lantic and the Pacific ports of theUnited States are not exempt from thetax imposed under chapter 32 of theCode. See section 4221(e)(1) of the Codeand paragraph (c) of this section for re-quirement of reciprocal exemption in

the case of a civil aircraft registered ina foreign country.

(8) Trade. The term ‘‘trade’’ includesthe transportation of persons or prop-erty for hire and the making of thenecessary preparations for such trans-portation. The term ‘‘trade’’ also in-cludes the transportation of propertyon a vessel or aircraft owned or char-tered by the owner of the property inconnection with the purchase, sale, orexchange of the property in a commer-cial business operation. However, a ves-sel owned or chartered by a companyand used in the transportation of per-sonnel or property of such company toor from its business properties locatedin a foreign country, or in a possessionof the United States, is not engaged in‘‘trade’’.

(c) Reciprocity required in the case ofcivil aircraft. The exemption providedby section 4221(a)(3) of the Code andparagraph (a) of this section with re-spect to the sales of supplies for civilaircraft registered in a foreign countryis further limited in that the privilegeof exemption may be granted only ifthe Secretary of Commerce advises theSecretary of the Treasury that the for-eign country allows, or will allow, sub-stantially the same reciprocal privi-leges. If a foreign country discontinuesthe allowance of such substantially re-ciprocal exemption, the exemption al-lowed by the United States will notapply after the Secretary of the Treas-ury is notified by the Secretary ofCommerce of the discontinuance of theexemption allowed by the foreign coun-try.

(d) Evidence required to establish—(1)In general. The exemption provided insection 4221(a)(3) of the Code and para-graph (a) of this section for articlessold for use by the purchaser as sup-plies for vessels or aircraft appliesonly:

(i) If both the manufacturer and pur-chaser are registered under the provi-sions of section 4222 of the Code, or

(ii) The purchaser or both the manu-facturer and the purchaser are not reg-istered but have satisfied the provi-sions of paragraph (d)(2) of this section.

See paragraph (c) of § 53.131 for the evi-dence required to establish exemption


703


where the purchaser is registered pur-suant to section 4222 of the Code and§ 53.140.

(2) Exemption certificates for use in sup-port of tax-free sales of supplies for ves-sels and aircraft. (i) In order to establishexemption from tax under section4221(a)(3) of the Code in those instanceswhere the purchaser or both the manu-facturer and purchaser are not reg-istered under section 4222 of the Code,the manufacturer must obtain (prior toor at the time of the sale) from theowner, charterer, or authorized agentof the vessel or aircraft and retain inthe manufacturer’s possession a prop-erly executed exemption certificate inthe form prescribed by paragraph(d)(2)(iii) of this section. If articles aresold tax-free for use as supplies forcivil aircraft employed in foreign tradeor in trade between the United Statesand any of its possessions, the exemp-tion certificate must show the name ofthe country in which the aircraft isregistered.

(ii) Where only occasional sales of ar-ticles are made to a purchaser for useas supplies for vessels or aircraft, aseparate exemption certificate shall befurnished for each order. However,where sales are regularly or frequentlymade to a purchaser for such exemptuse, a certificate covering all orders fora specified period not to exceed 12 cal-endar quarters will be acceptable. Suchcertificates and proper records of in-voices, orders, etc., relative to tax-freesales must be kept for inspection bythe regional director as provided insection 6001 of the Code.

(iii) Acceptable form of exemption cer-tificate. A certificate of exemption tosupport tax-free sales under this sec-tion must include the following:

(A) Name of owner, charterer, or au-thorized agent.

(B) Name of company and vessel.(C) List article(s) covered by the cer-

tificate or beginning and ending datesduring which orders will be placed (notto exceed 12 calendar quarters).

(D) Statement that articles will beused only for fuel supplies, ships’stores, sea stores, or legitimate equip-ment on a vessel belonging to one ofthe class of vessels to which section4221 of the Code applies. Identify class

of vessel certificate covers (see para-graphs (a) and (b) of this section).

(E) If articles are purchased for useon civil aircraft engaged in foreigntrade or trade between the UnitedStates and any of its possessions, statethe country in which the aircraft isregistered.

(F) Statement that it is understoodthat if any articles are used for anypurpose other than as stated in the cer-tificate, or are resold or otherwise dis-posed of, the person executing the cer-tificate must notify the manufacturer.

(G) Statement that the certificateshall not be used to purchase tax-freearticles for use as supplies, etc. onpleasure vessels or any type of aircraftexcept: (1) Civil aircraft employed inforeign trade or trade between theUnited States and any of its posses-sions; (2) Aircraft owned by the UnitedStates or any foreign country and con-stituting a part of the armed forcesthereof.

(H) Statement that it is understoodthat any fraudulent use of the certifi-cate may subject person executing cer-tificate and all parties making fraudu-lent use of the certificate to all appli-cable criminal penalties under theCode.

(I) Statement that person executingcertificate is prepared to establish bysatisfactory evidence the purpose forwhich the article(s) was used.

(J) Date, name, signature, and ad-dress of person executing the certifi-cate.

(iv) ATF I 5600.34. A preprinted cer-tificate, ATF I 5600.34, Exemption Cer-tificate, is available from the Bureau’sDistribution Center which, when com-pleted, contains all necessary informa-tion for a properly executed certificate.Extra copies of ATF I 5600.34 may bereproduced as needed.


§ 53.135 Tax-free sale of articles toState and local governments fortheir exclusive use.

(a) In general. An article subject totax under Chapter 32 of the Code maybe sold tax free by the manufacturer,pursuant to section 4221(a)(4) of thecode and this section, to a State or


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27 CFR Ch. I (4–1–99 Edition)§ 53.135

local government for the exclusive useof such State or local government. Seeparagraph (b) of this section for themeaning of the term ‘‘State or localgovernment’’. An article may be soldtax free by the manufacturer underthis paragraph only in those caseswhere the sale is made directly to aState or local government for its ex-clusive use. Accordingly, no sale maybe made tax free to a dealer for resaleto a State or local government for itsexclusive use, even though it is knownat the time of sale by the manufacturerthat the article will be so resold. A saleof an article to a State or local govern-ment for resale is not considered to bea sale for the ‘‘exclusive use’’ of theState or local government, within themeaning of section 4221(a)(4) of theCode, and, therefore, such sales maynot be made tax free. Such sales arenot exempt regardless of whether theresales are made to government em-ployees, or the fact that the article isan item of equipment the employee isrequired to possess in carrying out hisduties. For example, pistols or revolv-ers may not be sold tax free to a Stateor local government for resale to itspolice officers. See section 6416(b)(2)(C)of the Code, and paragraph (d) of§ 53.178, for the circumstances underwhich credit or refund of tax is avail-able where tax-paid articles are soldfor the exclusive use of a State or localgovernment.

(b) State or local government. The termState or local government includes anyState, the District of Columbia, andany political subdivision of any of theforegoing. See, section 7871(a)(2)(B) ofthe Code and 26 CFR 305.7701–1 et seq.,which provide that an Indian tribalgovernment shall be treated as a Statefor purposes of exemption from an ex-cise tax imposed by chapter 32. Section7871(b) of the Code provides that the ex-emption from tax applies only if thetransaction involves the exercise of anessential governmental function of theIndian 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 gov-ernment which is registered (see § 53.141for provisions under which a State orlocal government may register if it sodesires), the provisions of paragraph (c)

of § 53.131 have application as to theevidence required in support of tax-freesales. If a State or local government isnot registered, the evidence required insupport of a tax-free sale to the Stateor local government shall, except asprovided in paragraph (c)(2) of this sec-tion, consist of a certificate, executedand signed by an officer or employeeauthorized by the State or local gov-ernment to execute and sign the cer-tificate. If it is impracticable to fur-nish a separate certificate for eachorder or contract because of frequencyof purchases, a certificate covering allorders between given dates (such periodnot to exceed 12 calendar quarters) willbe acceptable. The certificates andproper records of invoices, orders, etc.,relative to tax-free sales must be re-tained by the manufacturer as providedin § 53.24(d). A certificate of exemptionto support tax-free sales under this sec-tion must contain the following:

(i) Title of official executing certifi-cate, branch of government, date exe-cuted, and statement that official isauthorized to execute certificate.

(ii) List articles covered by the cer-tificate or beginning and ending datesduring which orders will be placed bythe purchaser (period not to exceed 12calendar quarters).

(iii) Name of manufacturer fromwhich articles purchased.

(iv) Governmental unit purchasingarticles.

(v) Statement that is understoodthat articles purchased under this cer-tificate of exemption are limited to useexclusively by the purchasing govern-mental entity.

(vi) Statement that is understoodthat any fraudulent use of this certifi-cate may subject the person executingthe certificate and all parties makingfraudulent use of the certificate to allapplicable criminal penalties under theCode.

(vii) Name, address, and signature ofperson executing the certificate.

(2) A purchase order, provided thatall of the information required by para-graph (c)(1) of this section is includedtherein, is acceptable in lieu of a sepa-rate exemption certificate.

(3) ATF I 5600.35. A preprinted certifi-cate, ATF I 5600.35, Exemption Certifi-cate, is available from the Bureau’s


705


Distribution Center which, when com-pleted, contains all necessary informa-tion for a properly executed certificate.Extra copies of ATF I 5600.35 may bereproduced as needed.

(d) Resale of articles purchased tax freeby a State or local government. If articlespurchased tax free for the exclusive useof a State or local government (wheth-er on the basis of a registration num-ber or an exemption certificate) are,prior to use by the State or local gov-ernment, resold under circumstancesthat do not amount to an exclusive useby the State or local government (suchas pistols or revolvers that are resoldby a police department to its police of-ficers), the parties responsible in theState or local government are requiredto inform the manufacturer, producer,or importer from whom the articleswere purchased that they were disposedof in a manner that did not amount toan exclusive use by the State or localgovernment. A willful failure to supplythe manufacturer, producer, or im-porter with the information requiredby this subparagraph will subject re-sponsible parties to the penalties pro-vided by section 7203 of the Code.


§ 53.136 Tax-free sales of articles tononprofit educational organiza-tions.

(a) In general. An article subject totax under chapter 32 of the Code maybe sold tax free by the manufacturer,pursuant to section 4221(a)(5) of theCode and this section, to a nonprofiteducational organization for its exclu-sive use. See paragraph (b) of this sec-tion for the meaning of the term ‘‘non-profit educational organization’’. Anarticle may be sold tax free by themanufacturer under this paragraphonly in those cases where the sale of anarticle by the manufacturer is made di-rectly to a nonprofit educational orga-nization for its exclusive use. Accord-ingly, no sale may be made tax free toa dealer for resale to a nonprofit edu-cational organization for its exclusiveuse even though it is known at thetime of sale by the manufacturer thatthe article will be so resold. See sec-tion 6416(b)(2)(D) of the Code, and para-

graph (e) of § 53.178, for the cir-cumstances under which credit or re-fund of tax is available where tax-paidarticles are sold for the exclusive useof a nonprofit educational organiza-tion.

(b) Nonprofit educational organization.The term ‘‘nonprofit educational orga-nization’’ means an organization de-scribed in section 170(b)(1)(A)(ii) of theCode that is exempt from income taxunder section 501(a) of the Code. Sec-tion 170(b)(1)(A)(ii) describes an ‘‘edu-cational organization’’ as one that nor-mally maintains a regular faculty andcurriculum and normally has a regu-larly enrolled body of pupils or stu-dents in attendance at the place whereits educational activities are regularlycarried on. The term also includes aschool operated as an activity of an or-ganization described in section 501(c)(3)of the Code which is exempt from in-come tax under section 501(a) of theCode, provided the primary function ofsuch school is the presentation of for-mal instruction and provided suchschool normally maintains a regularfaculty and curriculum and normallyhas a regularly enrolled body of pupilsor students in attendance at the placewhere its educational activities areregularly carried on.

(c) Evidence required in support of tax-free sales to nonprofit educational organi-zations. Every nonprofit educational or-ganization purchasing tax free undersection 4221(a)(5) of the Code must fur-nish the following information to theseller:

(1) The tax exempt purpose for whichthe article or articles are being pur-chased, and

(2) Its registration number, and theregional director’s office that issuedthe registration number. Such informa-tion must be in writing and may benoted on the purchase order or otherdocument furnished by the purchaserto the seller in connection with eachsale ‘‘except that a single notificationcontaining the information describedin this paragraph may cover all salesby the seller to the purchaser madeduring a designated period not to ex-ceed 12 successive calendar quarters.’’.See paragraph (c) of § 53.131 for the evi-dence required to establish exemption.


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27 CFR Ch. I (4–1–99 Edition)§§ 53.137–53.139

§§ 53.137–53.139 [Reserved]

§ 53.140 Registration.

(a) General rule. Except as provided in§ 53.141, tax-free sales under section 4221of the Code may be made only if themanufacturer, first purchaser, and sec-ond purchaser, as the case may be,have registered as required by this sec-tion. To secure a Certificate of Reg-istry, the applicant must furnish theinformation required in paragraph (b)of this section.

(b) Information to be submitted. Exceptas provided in § 53.141, any person whois eligible to sell or purchase articlesfree of a tax imposed by section 4181 ofthe Code and who has not registeredwith the Commissioner of the InternalRevenue Service prior to January 1,1991 or with ATF in accordance withthe provisions of this section shall,prior to making a tax-free sale or pur-chase, file ATF Form 5300.28, in dupli-cate, executed in accordance with theinstructions contained on the reverseof ATF Form 5300.28. This form shall befiled with the regional director of ATFfor the region in which the principalplace of business of the applicant is lo-cated (or the applicant has no principalplace of business in the United States,with the Director, ATF). Copies of theATF Form 5300.28 may be obtainedfrom any regional office. The personwho receives an approved Certificate ofRegistry shall be considered to be reg-istered for purposes of selling or pur-chasing articles tax free as provided inthis section. In the case of a nonprofiteducational organization, informationshall be furnished showing that the or-ganization is an educational organiza-tion described in section 170(b)(1)(A)(ii)of the Code that is exempt from incometax under section 501(a) of the Code, oris a school operated as an activity ofan organization described in section501(c)(3) that is exempt from incometax under section 501(a).

(c) Evidence required in support of tax-free sales. See § 53.131(c)(1) for evidencerequired in support of tax-free sales topurchasers who are required to be reg-istered.

(d) Failure to register. If either theseller or purchaser is not registered asrequired by this section of the regula-

tions, tax-free sales may not be made,except as indicated in § 53.141.

(e) Cross references. (1) For exceptionsto the requirement for registration, seesection 4222(b) of the Code and § 53.141.

(2) For revocation or suspension ofregistration, see § 53.142.

§ 53.141 Exceptions to the requirementfor registration.

(a) State and local governments. (1) AState or local government purchasingarticles direct from the manufacturerfor its exclusive use may, but is not re-quired to, register as provided in§ 53.140. To establish the right to sellarticles tax free to a State or local gov-ernment that is not registered, themanufacturer must obtain from an au-thorized official of the State or localgovernment and retain in the manufac-turer’s possession either a properly ex-ecuted exemption certificate, or a pur-chase order that contains the same in-formation required to be furnished inan exemption certificate. See § 53.135(c)for the information necessary to sub-stantiate a tax-free sale under such cir-cumstances.

(2) Each State requesting registra-tion will be assigned one Certificate ofRegistry. The registration numbershown on this certificate may be usedby all agencies, boards, and commis-sions of the State that are authorizedby the State to make purchases for theexclusive use of the State. However,the registration number assigned to aState may not be used by any politicalsubdivision of that State, such as acounty or municipality. Each politicalsubdivision of a State desiring to ob-tain a Certificate of Registry must ob-tain a separate registration number.

(b) Sales or resales to foreign purchasersfor export. Persons whose principalplace of business is not within theUnited States may, but are not re-quired to, register in order to purchasearticles tax free for export. To estab-lish the right to sell articles tax freefor export to a purchaser who is notregistered and who is located in a for-eign country or a possession of theUnited States, the manufacturer mustobtain the evidence required by§ 53.133(b).

(c) United States. The registration re-quirements of the regulations in this


707


part do not apply to purchases andsales by the United States or any of itsagencies or instrumentalities. The evi-dence required in support of such tax-free purchases and sales is a notationon the purchase order or other docu-ment furnished to the seller clearly in-dicating that the article or articles arebeing purchased tax free as authorizedby chapter 32 of the Code.

(d) Supplies for vessels and aircraft. Anarticle subject to an excise tax imposedby chapter 32 of the Code may be soldtax free by the manufacturer under theprovisions of § 53.134 for use by the pur-chaser as supplies for a vessel or air-craft if both the manufacturer and thepurchaser are registered under the pro-visions of § 53.140. The article also maybe sold tax free for such use eventhough neither the manufacturer northe purchaser is so registered if theprovisions of paragraph (d) of § 53.134are satisfied.


§ 53.142 Denial, revocation or suspen-sion of registration.

(a) The regional director is author-ized to deny, revoke or temporarilysuspend, upon written notice, the reg-istration of any person and the right ofsuch person to sell or purchase articlestax free under section 4221 of the Codein any case in which he finds that:

(1) The registrant is not a bona fidemanufacturer, or a purchaser resellingdirect to manufacturers or exporters;

(2) The registrant is for some otherreason not eligible under these regula-tions to retain a Certificate of Reg-istry; or

(3) The registrant has used his reg-istration to avoid payment of the taximposed by section 4181 of the Code, orto postpone or interfere in any mannerwith the collection of such tax;

(4) Such denial, revocation, or sus-pension is necessary to protect the rev-enue; or

(5) The registrant failed to complywith the requirements of paragraph (c)of § 53.140, relating to the evidence re-quired to support a tax-free sale.

(b) The denial, revocation, or suspen-sion of registration is in addition toany other penalty that may apply

under the law for any act or failure toact.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–365, 60 FR 33671, June28, 1995]

§ 53.143 Special rules relating to fur-ther manufacture.

(a) Purchasing manufacturer to betreated as the manufacturer. For pur-poses of Chapter 32 of the Code, a man-ufacturer or producer to whom an arti-cle is sold or resold tax free under sec-tion 4221(a)(1) of the Code for use by itin further manufacture shall be treatedas the manufacturer or producer ofsuch article. If a manufacturer whopurchases an article tax free for fur-ther manufacture does not use the arti-cle for further manufacture, the sale ofthe article by it, or its use of the arti-cle other than in further manufacture,shall, for purposes of the taxes imposedby chapter 32 of the Code, be treated asa sale or use of the article by the man-ufacturer thereof. See paragraphs (b)and (c) of this section for determina-tion of taxable sale price where an arti-cle purchased tax free for further man-ufacture is resold, or used other thanin further manufacture.

(b) Computation of tax. Except as pro-vided in paragraph (c) of this section,the tax liability referred to in para-graph (a) of this section shall be basedon the price for which the article wassold by the purchasing manufacturer,or, where the manufacturer uses thearticle for a purpose other than thatfor which it was purchased, the taxshall be based on the price at whichsuch or similar articles are sold, in theordinary course of trade, by manufac-turers, producers, or importers thereof.See section 4218(e) of the Code and§ 53.115.

(c) Election. (1) Instead of computingthe tax as described under paragraph(b) of this section, the purchasing man-ufacturer who has incurred liability fortax on its sale or use of an article asprovided by paragraph (a) of this sec-tion may compute the tax incurredunder chapter 32 of the Code by usingas the tax base either the price forwhich the article was sold to it by thefirst purchaser, if any, or the price for


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27 CFR Ch. I (4–1–99 Edition)§ 53.151

which such article was sold by the ac-tual manufacturer, producer, or im-porter of such article. The purchasingmanufacturer must have in its posses-sion information upon which to sub-stantiate such basis for tax. For pur-poses of this paragraph, the price forwhich the article was sold by the ac-tual manufacturer or by the first pur-chaser shall be determined as providedin section 4216 of the Code and §§ 53.91–53.102. However, such price shall not beadjusted for any discount, rebate, al-lowance, return, or repossession of acontainer or covering, or otherwise.

(2) The election under this paragraphshall be in the form of a statement at-tached to the return reporting the taxapplicable to the sale or use of the arti-cle which gave rise to such tax liabil-ity. Such election, once made, may notbe revoked.

Subpart L—Refunds and Other Ad-ministrative Provisions of Spe-cial Application to Manufac-turers Taxes

§ 53.151 Returns.(a) In general. (1) Liability for tax im-

posed under chapter 32 of the Codeshall be reported on ATF Form 5300.26,Federal Firearms and Ammunition Ex-cise Tax Return. Except as provided inparagraphs (a)(2) and (b) of this sec-tion, a return on Form 5300.26 shall befiled for a period of one calendar quar-ter.

(2) Return periods after September 30,1992. For return periods after Sep-tember 30, 1992, every person requiredto make a return on ATF Form 5300.26who does not incur any firearms andammunition excise tax liability in agiven calandar quarter shall not be re-quired to file a return on ATF Form5300.26 for that calandar quarter. Ex-cept as provided in paragraph (a)(5) ofthis section, every person required tomake a return on ATF Form 5300.26who does not incur any firearms andammunition excise tax liability for theentire calendar year and who has notfiled a final return in accordance with§ 53.152 shall file an annual return onATF Form 5300.26.

(3) Return periods prior to October 1,1992. For return periods prior to Octo-ber 1, 1992, every person required to

make a return on ATF Form 5300.26shall make a return for each calendarquarter (whether or not liability wasincurred for any tax reportable on thereturn for the return period) until theperson has filed a final return in ac-cordance with § 53.152.

(4) Forms, etc. Each return requiredunder the regulations in this part, to-gether with any prescribed copies,records, or supporting data, shall becompleted in accordance with the ap-plicable forms, instructions, and regu-lations.

(5) Special rule for one-time or occa-sional filings for return periods on or afterJuly 1, 1995. One-time or occasional fil-ers are not required to file quarterly orannual returns pursuant to paragraph(a)(2) of this section if the person re-porting tax does not engage in any ac-tivity with respect to which tax is re-portable on the return in the course ofa trade or business. Such persons shallfile and pay tax for periods only whenliability is incurred. See § 53.159(b)(2),providing that a deposit of taxes is notrequired for a one-time or occasionalfiling.

(b) Monthly and semimonthly returns—(1) Requirement. If the regional directordetermines that any taxpayer who isrequired to deposit taxes under the pro-vision of §§ 53.157 or 53.159 has failed tomake deposits of those taxes, the tax-payer shall be required, if so notified inwriting by the regional director, to filea monthly or semimonthly return onATF Form 5300.26. Every person so no-tified by the regional director shall filea return for the calendar month orsemimonthly period in which the no-tice is received and for each calendarmonth or semimonthly period there-after until the person has filed a finalreturn in accordance with § 53.152 or isrequired to file returns on the basis ofa different return period pursuant tonotification as provided in paragraph(b)(2) of this section.

(2) Change of requirement. The re-gional director may require the tax-payer, by notice in writing, to file aquarterly or monthly return, if thetaxpayer has been filing returns for asemimonthly period, or may requirethe taxpayer to file a quarterly orsemimonthly return, if the taxpayerhas been filing monthly returns.


709


(3) Return for period change takes ef-fect. (i) If a taxpayer who has been fil-ing quarterly returns receives notice tofile a monthly or semimonthly return,or a taxpayer who has been filingmonthly returns receives notice to filea semimonthly return, the first returnrequired pursuant to the notice shallbe filed for the month or semimonthlyperiod in which the notice is receivedand all months or semimonthly periodswhich are not includable in an earlierperiod for which the taxpayer is re-quired to file a return.

(ii) If a taxpayer who has been filingmonthly or semimonthly returns re-ceives notice to file a quarterly return,the last month or semimonthly periodfor which a return shall be filed is thelast month or semimonthly period ofthe calendar quarter in which the no-tice is received.

(iii) If a taxpayer who has been filingsemimonthly returns receives notice tofile a monthly return, the last semi-monthly period for which a returnshall be made is the last semimonthlyperiod of the month in which the no-tice is received.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–330, 57 FR 40325, Sept.3, 1992; T.D. ATF–365, 60 FR 33671, June 28,1995]

§ 53.152 Final returns.(a) In general. Any person who is re-

quired to make a return on ATF Form5300.26 pursuant to § 53.151 and who inany return period ceases operations inrespect of which the person is requiredto make a return on the form, shallmake the return for that return periodas a final return. A return made as afinal return shall be marked ‘‘Final Re-turn’’ by the person filing the return. Ataxpayer who has only temporarilyceased to incur liability for tax re-quired to be reported on ATF Form5300.26 because of temporary or sea-sonal suspension of business or forother reasons, shall not make a finalreturn until such operations are per-manently ceased.

(b) Statement to accompany final re-turn. Each final return shall have at-tached a statement showing the ad-dress at which the records required bythe regulations in this part will bekept, the name of the person keeping

the records, and, if the business of thetaxpayer has been sold or otherwisetransferred to another person, thename and address of that person andthe date on which the sale or transfertook place. If no sale or transfer oc-curred or if the taxpayer does not knowthe name of the person to whom thebusiness was sold or transferred, thatfact should be included in the state-ment.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–330, 57 FR 40325, Sept.3, 1992. Redesignated in part by T.D. ATF–365, 60 FR 33670, June 28, 1995]

§ 53.153 Time for filing returns.(a) Quarterly returns. Each return re-

quired to be made under § 53.151(a) for areturn period of one calendar quartershall be filed on or before the last dayof the first calendar month followingthe close of the period for which it ismade. However, a return may be filedon or before the 10th day of the secondcalendar month following the close ofthe period if timely deposits under sec-tion 6302(c) of the Code and § 53.157 havebeen made in full payment of the taxesdue for the period. For purposes of thepreceding sentence, a deposit which isnot required by regulations in respectof the return period may be made on orbefore the last day of the first calendarmonth following the close of the pe-riod.

(b) Monthly, semimonthly and annualreturns—(1) Monthly returns. Each re-turn required to be made under§ 53.151(b) for a monthly period shall befiled not later than the 15th day of themonth following the close of the periodfor which it is made.

(2) Semimonthly returns. Each returnrequired to be made under § 53.151(b) fora semimonthly period shall be filed notlater than the 10th day of the semi-monthly period following the close ofthe period for which it is made.

(3) Annual returns. Each return filedunder the provisions of § 53.151(a) for areturn period of one calendar year shallbe filed not later than the 31st day fol-lowing the close of the calendar year.

(c) Last day for filing. If the due datefalls on a Saturday, Sunday, or legalholiday, the return and remittanceshall be due on the next succeeding daywhich is not a Saturday, Sunday, or


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27 CFR Ch. I (4–1–99 Edition)§ 53.154

legal holiday. For purposes of this sec-tion, ‘‘legal holiday’’ is defined by sec-tion 7503 of the Code and 26 CFR301.7503(b).

(d) Late filing. The taxpayer is subjectto a penalty for failure to file a returnor to pay tax within the prescribedtime as imposed by section 6651 of theCode, if the return and remittance arenot filed before the close of business onthe prescribed last day of filing. Foradditions to the tax in the case of fail-ure to file a return within the pre-scribed time, see 27 CFR 70.96.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–330, 57 FR 40325, Sept.3, 1992]

§ 53.154 Manner of filing returns.(a) Each return on ATF Form 5300.26

shall be filed with ATF, in accordancewith the instructions on the form.

(b) When the taxpayer sends the re-turn on ATF Form 5300.26 by U.S. Mail,the official postmark of the U.S. PostalService stamped on the cover in whichthe return was mailed shall be consid-ered the date of delivery of the return.When the postmark on the cover is il-legible, the burden of proving when thepostmark was made will be on the tax-payer. When the taxpayer sends the re-turn with or without remittance byregistered mail or by certified mail,the date of registry or the date of thepostmark on the sender’s receipt ofcertified mail, as the case may be,shall be treated as the date of deliveryof the return and, if accompanied, ofthe remittance.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–330, 57 FR 40325, Sept.3, 1992]

§ 53.155 Extension of time for filing re-turns.

(a) In general. Ordinarily, no exten-sion of time will be granted for filingany return statement or other docu-ment required with respect to the taxesimpose by chapter 32, because the in-formation required for the filing ofthose documents is under normal cir-cumstances readily available. However,if because of temporary conditions be-yond the taxpayer’s control, a taxpayerbelieves an extension of time for filingis justified, the taxpayer may apply tothe regional director for an extension.

An extension of time for filing a returndoes not operate to extend the time forpayment of the tax or any part of thetax unless so specified in the extension.For extensions of time for payment ofthe tax, see § 53.156.

(b) Application for extension of time.The application for an extension oftime for filing the return shall be ad-dressed to the regional director withwhom the return is to be filed andmust contain a full recital of thecauses for the delay. It should be madeon or before the due date of the return,and failure to do so many indicate neg-ligence and constitute sufficient causefor denial. It should, where possible, bemade sufficiently early to permit con-sideration of the matter and reply be-fore what otherwise would be the duedate of the return.

(c) Filing the return. If an extension oftime for filing the return is granted, areturn shall be filed before the expira-tion of the period of extension.

§ 53.156 Extension of time for payingtax shown on return.

(a) In general. (1) Ordinarily, no ex-tensions of time will be granted forpayment of any tax imposed by Chap-ter 32 of the Code, and shown or re-quired to be shown on any return. How-ever, if because of temporary condi-tions beyond the taxpayer’s control ataxpayer believes an extension of timefor payment is justified, the taxpayermay apply to the regional director foran extension. The period of an exten-sion shall not be in excess of 6 monthsfrom the date fixed for payment of thetax, except that if the taxpayer isabroad the period of the extension maybe in excess of 6 months.

(2) The granting of an extension oftime for filing a return does not oper-ate to extend the time for the paymentof the tax or any part of the tax unlessso specified in the extension. See§ 53.155.

(b) Undue hardship required for exten-sion. An extension of the time for pay-ment shall be granted only upon a sat-isfactory showing that payment on thedue date of the amount with respect towhich the extension is desired will re-sult in an undue hardship. The exten-sion will not be granted upon a generalstatement of hardship. The term


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‘‘undue hardship’’ means more than aninconvenience to the taxpayer. It mustappear that substantial financial loss,for example, loss due to the sale ofproperty at a sacrifice price, will resultto the taxpayer from making paymenton the due date of the amount with re-spect to which the extension is desired.If a market exists, the sale of propertyat the current market price is not ordi-narily considered as resulting in anundue hardship.

(c) Application for extension. An appli-cation for an extension of time for pay-ment of the tax shown or required to beshown on any return shall be made onATF Form 5300.29, Application for Ex-tension of Time for Payment of Tax,and shall be accompanied by evidenceshowing the undue hardship that wouldresult to the taxpayer if the extensionwere refused. The application shall alsobe accompanied by a statement of theassets and liabilities of the taxpayerand an itemized statement showing allreceipts and disbursements for each ofthe 3 months immediately precedingthe due date of the amount to whichthe application relates. The applica-tion, with supporting documents, mustbe filed on or before the date prescribedfor payment of the amount with re-spect to which the extension is desired,with the regional director shown onthe form. The application will be exam-ined, and within 30 days, if possible,will be denied, granted, or tentativelygranted subject to certain conditions ofwhich the taxpayer will be notified. Ifan additional extension is desired, therequest for it must be made on or be-fore the expiration of the period forwhich the prior extension is granted.

(d) Payment pursuant to extension. Ifan extension of time for payment isgranted, the payment shall be made onor before the expiration of the period ofthe extension without the necessity ofnotice and demand. The granting of anextension of time for payment of thetax does not relieve the taxpayer fromliability for the payment of interest onthe tax during the period of the exten-sion. See section 6601 of the Code and 26CFR 301.6601–1.


§ 53.157 Deposit requirement for de-posits made for calendar quartersprior to July 1, 1995.

NOTE: For deposit requirement for depositsmade for calendar quarters beginning on orafter July 1, 1995, see § 53.159.

(a) Monthly deposits. Except as pro-vided in paragraph (b) of this section, iffor any calendar month (other than thelast month of a calendar quarter) anyperson required to file a quarterly ex-cise tax return on ATF Form 5300.26has a total liability under this part ofmore than $100 for all excise taxes re-portable on that form, the amount ofliability for taxes shall be deposited bythe person in accordance with the in-structions on ATF Form 5300.27 on orbefore the last day of the month fol-lowing the calendar month.

(b) Semimonthly deposits. (1) If anyperson required to file an excise tax re-turn on ATF Form 5300.26 for any cal-endar quarter has a total liabilityunder this part of more than $2,000 forall excise taxes reportable on that formfor any calendar month in the pre-ceding calendar quarter, the amount ofthat liability for taxes under this partfor any semimonthly period (as definedin paragraph (d)(1) of this section) inthe succeeding calendar quarter shallbe deposited by the person in accord-ance with the instructions on ATFForm 5300.27 on or before the deposi-tary date (as defined in paragraph (d)(2)of this section) applicable to the semi-monthly period.

(2) A person will be considered tohave complied with the requirementsof paragraph (b)(1) of this section for asemimonthly period if—

(i)(A) The person’s deposit for thesemimonthly period is not less than 90percent of the total amount of the ex-cise taxes reportable by the person onATF Form 5300.26 for the period, and

(B) If the semimonthly period occursin a calendar month other than thelast month in a calendar quarter, theperson deposits any underpayment forthe month by the 9th day of the secondmonth following the calendar month;or

(ii)(A) The person’s deposit for eachsemimonthly period in the calendarmonth is not less than 45 percent of the


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27 CFR Ch. I (4–1–99 Edition)§ 53.157

total amount of the excise taxes re-portable by the person on ATF Form5300.26 for the month, and

(B) If such month is other than thelast month in a calendar quarter, theperson deposits any underpayment forsuch month by the 9th day of the sec-ond month following the calendarmonth; or

(iii)(A) The person’s deposit for eachsemimonthly period in the calendarmonth is not less than 50 percent of thetotal amount of the excise taxes re-portable by the person on ATF Form5300.26 for the second preceding cal-endar month, and

(B) If such month is other than thelast month in a calendar quarter, theperson deposits any underpayment forsuch month by the 9th day of the sec-ond month following the calendarmonth; or

(iv)(A) The requirements of para-graph (b)(2) (i)(A), (ii)(A), or (iii)(A) ofthis section are satisfied for the firstsemimonthly period of a calendarmonth after December 1990,

(B) If the person’s deposit for the sec-ond semimonthly period of the cal-endar month is, when added to the de-posit for the first semimonthly period,not less than 90 percent of the totalamount of the excise taxes reportableby the person on ATF Form 5300.26 forthe calendar month, and

(C) If the semimonthly periods occurin a calendar month other than thelast month in a calendar quarter, theperson deposits any underpayment forthe month by the 9th day of the secondmonth following the calendar month.

(3)(i) Paragraph (b)(2) (ii) and (iii) ofthis section shall not apply to any per-son who normally incurs in the firstsemimonthly period in each calendarmonth more than 75 percent of the per-son’s total excise tax liability underthis part for the month.

(ii) Persons who make their depositsin accordance with paragraph (b)(2) (ii),(iii), or (iv) of this section will find itunnecessary to keep their books andrecords on a semimonthly basis.

(c) Deposit of certain excess undepositedamounts. Notwithstanding paragraphs(a) and (b) of this section, if any personrequired to file an excise tax return onATF Form 5300.26 for any calendarquarter beginning after December 31,

1990, has a total liability under thispart for all excise taxes reportable onthe form for the calendar quarterwhich exceeds by more than $100 thetotal amount of taxes deposited by theperson pursuant to paragraph (a) or (b)of this section for the calendar quarter,the person shall, on or before the lastday of the calendar month followingthe calendar quarter for which the re-turn is required to be filed, deposit inaccordance with the instructions onATF Form 5300.27 the full amount bywhich the person’s liability for all ex-cise taxes reportable on the return forthat calendar quarter exceeds theamount of excise taxes previously de-posited by the person for that calendarquarter.

(d) Definitions—(1) Semimonthly period.The term semimonthly period means thefirst 15 days of a calendar month or theportion of a calendar month followingthe 15th day of that month.

(2) Depositary date. The term deposi-tary date means, in the case of depositsfor semimonthly periods beginningafter December 31, 1990, the 9th day ofthe semimonthly period following thesemimonthly period for which thetaxes are reportable.

(3) Lockbox financial institution. Theterm lockbox financial institution meansthe financial institution designated asa depository for the payment of excisetaxes on ATF Form 5300.27, FederalFirearms and Ammunition Excise TaxDeposit form.

(e) Depositary forms and procedures—(1) In general. Each remittance ofamounts required to be deposited forperiods beginning after December 31,1990 shall be accompanied by an ATFForm 5300.27, Federal Firearms andAmmunition Excise Tax Deposit form,or ATF Form 5300.26, Federal Firearmsand Ammunition Excise Tax Return,which shall be prepared in accordancewith the applicable instructions. Tax-payers electing to remit deposits byEFT pursuant to § 53.158 shall prepareand submit ATF Form 5300.26 or ATFForm 5300.27 in accordance with the in-structions on the form. The timelinessof the deposit will be determined bythe date it is received (or is deemed re-ceived under section 7502(e) and 26 CFR


713


301.7502–1) by the lockbox financial in-stitution, or the ATF officer des-ignated on ATF Form 5300.27 or ATFForm 5300.26 accompanying the de-posit, or when made by electronic fundtransfer, the Treasury Account.Amounts deposited pursuant to thisparagraph shall be considered to bepaid on the last day prescribed for fil-ing the return in respect of the tax (de-termined without regard to any exten-sion of time for filing the returns), orat the time deposited, whichever islater.

(2) Number of remittances. A person re-quired by this section to make depositsmay make one or more remittanceswith respect to the amount required tobe deposited. An amount of tax whichis not otherwise required by this sec-tion to be deposited may, nevertheless,be deposited if the person liable for thetax so desires.

(3) Information required. Each personmaking deposits pursuant to this sec-tion shall report on the return for theperiod with respect to which the depos-its are made information regarding thedeposits in accordance with the in-structions applicable to the return andpay (or deposits by the due date of thereturn) the balance, if any, of the taxesdue for the period.

(4) Procurement of prescribed forms.Copies of the Federal Firearms andAmmunition Excise Tax Deposit formwill be furnished, so far as possible, topersons required to make depositsunder this section. Such a person willnot be excused from making a deposit,however, by the fact that no form hasbeen furnished. A person not suppliedwith the form is required to apply forit in ample time to make the requireddeposits within the time prescribed,supplying with the application the per-son’s name, employer identificationnumber, address, and the taxable pe-riod to which the deposits will relate.Copies of the Federal Firearms andAmmunition Excise Tax Deposit formmay be obtained by applying for themwith the ATF Distribution Center, 7943Angus Court, Springfield, Virginia22153.

(f) Nonapplication to certain taxes.This section does not apply to taxesfor:

(1) Any month or semimonthly periodin which the taxpayer receives noticefrom the regional director pursuant to§ 53.151(b) to file ATF Form 5300.26 or

(2) Any subsequent month or semi-monthly period for which a return onATF Form 5300.26 is required.

[T.D. ATF–308, 56 FR 303, Jan. 3, 1991, asamended by T.D. ATF–312, 56 FR 31084, July9, 1991; T.D. ATF–330, 57 FR 40325, Sept. 3,1992; T.D. ATF–365, 60 FR 33671, June 28, 1995]

§ 53.158 Payment of tax by electronicfund transfer.

(a) In general. For return periodsafter September 30, 1992, any taxpayerliable for firearms and ammunition ex-cise taxes incurred under this part mayelect to remit payments and deposits ofthe taxes (taxpayments) by electronicfund transfer (EFT). A taxpayer whoelects to make remittance by EFTmust use that method of remitting ex-cise taxes on firearms and ammunitionfor a minimum of four consecutive cal-endar quarters. A taxpayer who makesremittance by EFT for a calendar quar-ter may not use any other method ofremitting and ammunition excise taxesfor that quarter.

(b) Requirements. (1) On or before the10th day of the calendar quarter pre-ceding the calendar quarter in whichthe taxpayer will begin remitting taxesby EFT, each taxpayer who elects tomake remittances by EFT of firearmsand ammunition excise taxes incurredunder this part shall give written no-tice to the regional director (compli-ance) of the ATF region in which taxesare paid, indicating that remittanceswill be paid by EFT. Taxpayers whogave written notification in a previouscalendar quarter electing to make re-mittances of tax by EFT are not re-quired to give additional written noti-fications to continue remitting tax byEFT for succeeding calendar quarters.

(2) For each deposit made or returnfiled in accordance with this subpart,the taxpayer shall direct the tax-payer’s financial institution to makean EFT in the amount of thetaxpayment to the Treasury Accountas provided in paragraph (e) of this sec-tion. The request will be made to thefinancial institution early enough forthe transfer of funds to be made to theTreasury Account no later than the


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27 CFR Ch. I (4–1–99 Edition)§ 53.159

close of business on the last day formaking the deposit or filing the returnas prescribed in §§ 53.157 or 53.159, and53.153. The request will take into ac-count any time limit established bythe financial institution.

(3) Taxpayers who elect to dis-continue making remittances by EFTof firearms and ammunition excisetaxes may make such election at anytime following four consecutive cal-endar quarters in which tax is remittedby EFT. Taxpayers electing to dis-continue making remittances by EFTshall remit the tax with the next de-posit or return as prescribed in §§ 53.157or 53.159, and 53.151 for remittances notmade by EFT and notify the regionaldirector by attaching a written notifi-cation to the tax deposit form or re-turn stating that remittance of fire-arms and ammunition excise taxes willno longer be made by EFT.

(c) Remittance. (1) Taxpayers whoelect to make firearms and ammuni-tion excise taxpayments by EFT shallfile the deposit form and/or return withATF in accordance with the applicableinstructions on the forms.

(2) Remittances will be considered asmade when the taxpayment by EFT isreceived by the Treasury Account whenit is paid to a Federal Reserve Bank.

(3) When the taxpayer directs the fi-nancial institution to effect an elec-tronic fund transfer message as re-quired by paragraph (b)(2) of this sec-tion, the transfer data record furnishedto the taxpayer through normal bank-ing procedures will serve as the recordof payment and will be retained as partof the required records.

(d) Failure to make a taxpayment byEFT. The taxpayer is subject to pen-alties imposed by 26 U.S.C. 6651 and6656, as applicable, for failure to makea payment or deposit of tax by EFT onor before the close of business on theprescribed last day for making suchpayment or deposit.

(e) Procedure. Upon the notificationrequired under paragraph (b)(1) of thissection, the regional director (compli-ance) will issue to the taxpayer an ATFProcedure entitled Payment of Tax byElectronic Fund Transfer. This publi-cation outlines the procedure a tax-payer follows when preparing deposits,

returns and EFT remittances in ac-cordance with this subpart.

[T.D. ATF–330, 57 FR 40326, Sept. 3, 1992, asamended by T.D. ATF–365, 60 FR 33671, June28, 1995]

§ 53.159 Deposit requirement for de-posits made for calendar quartersbeginning on or after July 1, 1995.

(a) Definitions—(1) Definition of tax li-ability. For purposes of this section, theterm ‘‘tax liability’’ means the totaltax liability for the specified periodplus or minus any allowable adjust-ments made in accordance with the in-structions applicable to the form onwhich the return is made.

(2) Semimonthly period. Except as pro-vided in paragraph (c)(4)(ii) of this sec-tion, the term ‘‘semimonthly period’’means the first 15 days of a calendarmonth or the remaining portion of acalendar month following the 15th dayof that month.

(b) In general—(1) Semimonthly depos-its. Except as provided in paragraphs(b)(2), (c)(2), and (j) of this section, anyperson required to file a quarterly ex-cise tax return on ATF Form 5300.26must make a deposit of tax for eachsemimonthly period as prescribed inparagraph (c) of this section.

(2) One-time or occasional filings. Nodeposit is required in the case of anytaxes reportable on a one-time or occa-sional filing (as defined in § 53.151(a)(5)).

(c) Amount of deposit—(1) In general.Except as provided in paragraphs (c)(2),(c)(3) and (c)(6) of this section, the de-posit of tax for each semimonthly pe-riod must be equal to the amount oftax liability incurred during that semi-monthly period. Except as provided inparagraph (c)(3) of this section, no de-posit is required for any semimonthlyperiod in which no tax liability is in-curred.

(2) De minimis exception. Except asprovided in paragraph (c)(3) of this sec-tion, any person who has a tax liabilityfor the current calendar quarter of$2,000 or less is not required to makedeposits for that quarter. However,semimonthly deposits of tax are re-quired beginning with the semimonthlyperiod in which unpaid tax liability ex-ceeds $2,000 and for every semimonthlyperiod thereafter in which tax liabilityis incurred. The first deposit for the


715


current quarter shall be equal to theunpaid tax liability; thereafter, depos-its shall be equal to the amount of taxliability incurred during that semi-monthly period.

(3) Amount of deposit; safe harbor rulebased on look-back quarter liability; Ingeneral. Except as provided in para-graph (c)(6) of this section, any personwho made a return of tax on ATF Form5300.26 reporting taxes for the secondpreceding calendar quarter (the ‘‘look-back quarter’’), or who did not file a re-turn for the look-back quarter becauseof the provisions of § 53.151(a)(2), is con-sidered to have complied with the re-quirement for deposit of taxes for thecurrent calendar quarter if—

(i) The deposit of taxes for each semi-monthly period in the current calendarquarter is an amount equal to not lessthan 1/6 (16.67 percent) of the total taxliability incurred for the look-backquarter;

(ii) Each deposit is made on time; and(iii) The amount of any under-

payment of taxes for the current cal-endar quarter is paid by the due date ofthe return.

(4) Modification for third calendarquarter. The safe harbor rule in para-graph (c)(3) of this section does notapply for the third calendar quarterunless—

(i) The deposit of taxes for the semi-monthly period July 1–September 15meets the requirements of paragraph(c)(3) of this section; and

(ii) Each deposit of taxes for the peri-ods September 16–25 and September 26–30 is not less than 1/12th (8.34 percent)of the total tax liability incurred forthe look-back quarter.

(5) Modification for tax rate increase—(i) Application. The safe harbor rule asprescribed in paragraph (c)(3) is modi-fied for the first and second calendarquarters beginning on or after the ef-fective date of an increase in the rateof any tax prescribed by 26 U.S.C. 4181to which this part 53 applies.

(ii) Modification. The amount of de-posit for calendar quarters referred toin paragraph (c)(3) of this section mustbe adjusted so that the deposit of taxesfor each semimonthly period in the cal-endar quarter is not less than 1/6 (16.67percent) of the tax liability the personwould have had with respect to the tax

for the look-back quarter if the in-creased rate of tax had been in effectfor that look-back quarter.

(6) First time filers. Any person whodid not file a return of tax on ATFForm 5300.26 for the first and secondpreceding calendar quarters becausethey were not engaged in any activitywith respect to which tax is reportableon the return in the course of a tradeor business, is considered to have com-plied with the requirement for depositof taxes for the current calendar quar-ter if—

(i) The deposit of taxes for each semi-monthly period in the calendar quarteris not less than 95 percent of the tax li-ability incurred with respect to thosetaxes during the semimonthly period;

(ii) Each deposit is made on time; and(iii) The amount of any under-

payment of taxes for the current cal-endar quarter is paid by the due date ofthe return.

(d) Failure to comply with deposit re-quirements. (1) If a person fails to makedeposits as required under this part,the regional director may withdraw theperson’s right to use the safe harborrule provided by paragraph (c)(3) of thissection.

(2) Cross reference. The regional direc-tor may also require a taxpayer whofails to make deposits of tax to file amonthly or semimonthly return, see§ 53.151(b)(1).

(e) Time for making deposit. Except fordeposits for the period September 16–25,each deposit required to be made bythis section shall be made not laterthan the 9th day of the semimonthlyperiod following the close of the periodfor which it is made. The deposit forthe period September 16–25 shall bemade not later than September 28. Thedeposit for the period September 26–30,is due not later than October 9.

(f) Last day for filing. (1) Except asprovided by paragraph (f)(2) of this sec-tion, if the due date of the deposit fallson a Saturday, Sunday, or legal holi-day, the deposit and remittance shallbe due on the next succeeding daywhich is not a Saturday, Sunday, orlegal holiday. For purposes of this sec-tion, ‘‘legal holiday’’ is defined by sec-tion 7503 of the Code and 27 CFR70.306(b) of this chapter.


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27 CFR Ch. I (4–1–99 Edition)§ 53.159

(2) If the required due date of the de-posit for the period September 16–25falls on a Saturday, the deposit and re-mittance shall be due on the precedingday. If such required due date falls ona Sunday, the return and remittanceshall be due on the following day.

(g) Forms and procedures. Each remit-tance of amounts required to be depos-ited shall be accompanied by ATFForm 5300.27, Federal Firearms andAmmunition Excise Tax Deposit form,or ATF Form 5300.26, Federal Firearmsand Ammunition Excise Tax Return,which shall be prepared in accordancewith the applicable instructions. Tax-payers electing to remit deposits byEFT pursuant to § 53.158 shall prepareand submit ATF Form 5300.26 or ATFForm 5300.27 in accordance with the in-structions contained in ATF Procedure92–1, Publication 5000.11. The timeli-ness of the deposit will be determinedby the date it is received by thelockbox financial institution, or theATF officer designated on the form ac-companying the deposit, or the Treas-ury Account, when made by EFT. Inorder for deposits of less than $20,000made by U.S. Mail to be considered re-ceived timely, the date of mailing mustbe on or before the second day pre-ceding the due date of the deposit asevidenced by the official postmark ofthe U.S. Postal Service stamped on thecover in which the deposit was mailed.When the postmark on the cover is il-legible, the burden of proving when thepostmark was made will be on the tax-payer. When the taxpayer sends the de-posit by registered mail or by certifiedmail, the date of registry or the date ofthe postmark on the sender’s receipt ofcertified mail, as the case may be,shall be treated as the date of deliveryof the deposit. Any deposit of $20,000 ormore must be received by the last dayprescribed for making such deposit, re-gardless of when mailed. Amounts de-posited pursuant to this paragraphshall be considered to be paid on thelast day prescribed for filing the returnin respect of the tax (determined with-out regard to any extension of time forfiling the returns), or at the time de-posited, whichever is later.

(h) Number of remittances. A person re-quired by this section to make deposits

shall make one deposit for a semi-monthly period.

(i) Procurement of prescribed forms.Copies of the Federal Firearms andAmmunition Excise Tax Deposit formwill be furnished, so far as possible, topersons required to make depositsunder this section. Such a person willnot be excused from making a deposithowever, by the fact that no form hasbeen furnished. A person not suppliedwith the form is required to obtain theform in ample time to make the re-quired deposits within the time pre-scribed. Copies of the Federal Firearmsand Ammunition Excise Tax Depositform may be obtained by request fromthe ATF Distribution Center, P.O. Box5950, Springfield, Virginia 22153–5950.

(j) Taxpayers required to file monthly orsemimonthly returns. This section doesnot apply to taxes for:

(1) Any month or semimonthly periodin which the taxpayer receives noticefrom the regional director pursuant tosection 53.151(b) to file ATF Form5300.26; or

(2) Any subsequent month or semi-monthly period for which a return onATF Form 5300.26 is required.

(3) Taxpayers required to file month-ly returns shall make semimonthly de-posits of 100 percent of the liability in-curred during each semimonthly periodby the 9th day of the month followingthe last day of the semimonthly period.Taxpayers required to file semi-monthly returns shall pay any tax duefor the semimonthly period with eachreturn.

(k) Examples.

Example 1. One-time filing or occasional fil-ing—(1) Facts. On October 18, 1995, A, an indi-vidual who lives in the United States pur-chases a custom made rifle outside theUnited States and imports it into the UnitedStates. A uses the rifle on October 20, 1995. Ais liable for the firearms excise tax imposedby sections 4181 and 4218(a). Since A does notregularly sell rifles in arm’s length trans-actions, a constructive sale price of $20,000 isdetermined (§ 53.115(b)). The amount of A’stax liability is $2200, 11 percent of the con-structive sale price of the rifle. The liabilityis incurred during the fourth calendar quar-ter of 1995, the quarter during which the rifleis used (§ 53.111(d)). A did not import the riflein the course of its trade or business anddoes not engage in any activities with re-spect to which tax is reportable on ATF


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Form 5300.26 in the course of a trade or busi-ness.

(2) Filing requirement. A must file a returnon Form 5300.26 (§ 53.151(a)) for the fourthcalendar quarter of 1995 reporting A’s $2200firearms excise tax liability. The Form5300.26 is due by January 31, 1996, the last dayof the first month following the calendarquarter (§ 53.153(a)). Because A did not im-port the firearm in the course of its trade orbusiness and does not engage in any activi-ties with respect to which tax is reportablein the course of a trade or business, the re-turn is a one-time filing or occasional filing.

(3) Payment requirement. Because A’s Form5300.26 is a one-time filing, A is not requiredto make deposits of tax (§ 53.159(b)(2)). In-stead, A pays the $2200 of tax with the re-turn.

Example 2. Deposit requirement; based onlook-back quarter liability—(1) Facts. B is amanufacturer of firearms. B sells 75 pistolswhich have a taxable sale price of $500 eachduring the second calendar quarter of 1996. Bsold 50 of the pistols in the first semi-monthly period of May, 1996, and the other 25pistols in the second semimonthly period ofApril, 1996. B did not incur tax liability inany other semimonthly period in the secondquarter. The amount of B’s tax liability forthe second calendar quarter is $3,750, 10 per-cent of the taxable sale price of the pistols.B filed Form 5300.26 for the second precedingcalendar quarter, the look-back quarter, onJanuary 31, 1996 reporting tax liability in theamount of $2,700.

(2) Deposit requirement. B is required tomake deposits of tax for each semimonthlyperiod in the calendar quarter because B hasincurred more than $2,000 in liability for thecurrent quarter. B may use the safe harborrule based on look-back quarter liability todetermine the amount of the required depos-its (§ 53.159(c)(3)). Under this safe harbor rule,B’s deposit for each semimonthly periodmust equal at least $450.00, 1/6 (16.67 percent)of the tax liability incurred for the look-back quarter. B’s deposit must be timely andB must pay the amount of any under-payment by the due date of the return. Ac-cordingly, B meets the deposit requirementif B makes the following deposits:

Semimonthly period Deposit due by Amountof deposit

April 1–15 ..................... April 24, 1996 .............. $450.00April 16–31 ................... May 9, 1996 ................ 450.00May 1–15 ..................... May 24, 1996 .............. 450.00May 16–30 ................... June 10, 1996 ............. 450.00June 1–15 .................... June 24, 1996 ............. 450.00June 16–30 .................. July 9, 1996 ................. 450.00

The deposit due on June 10, 1996, would or-dinarily be due on June 9, 1996. However, be-cause June 9, 1996 is a Sunday, under section7503, B has an additional day to make the re-quired deposit.

(3) Filing requirement. B must file a returnon Form 5300.26 for the second calendar quar-ter of 1996 reporting B’s $3750 tax liability(§ 53.151(a)). The form 5300.26 is due by July31, 1996, the last day of the first month fol-lowing the calendar quarter (§ 53.153(a)). Bmust also pay $1050.00, the underpaymentamount by which the total tax liability forthe second calendar quarter exceeds thetotal tax liability for the look-back quarter,by the due date of the return.

Example 3. Deposit amount; no liability inlook-back quarter—(1) Facts. C, a manufac-turer of ammunition, filed returns for thefirst, second and third quarters of 1995 re-porting C’s tax liability. During the fourthquarter of 1995, C did not make any taxablesales of shells or cartridges, thereby incur-ring no tax liability for that return period. Cdid not file Form 5300.26 for the fourth cal-endar quarter since no tax liability was in-curred (§ 53.151(a)(2)). C made taxable sales inthe second quarter of 1996 amounting to$25,500.00, incurring a tax liability of $2805.

(2) Deposit requirement. Ordinarily, C wouldbe required to make deposits of tax for eachsemimonthly period in the calendar quarterbecause C’s total liability for the currentcalendar quarter exceeds $2,000. However,since C incurred a tax liability of $0 in thesecond preceding calendar quarter (the look-back quarter) (§ 53.159(c)(3)), under the safeharbor rule, C is not required to make depos-its of tax.

(3) Filing requirement. C is required to file areturn on Form 5300.26 reporting C’s $2805ammunition excise tax liability. The form5300.26 is due by July 31, 1996.

(4) Payment requirement. C must pay the$2805 tax with the return.

Example 4. Deposit requirement; First timeFiler—(1) Facts. D, a manufacturer of fire-arms, began business on 2/16/96. D sold 300shotguns which had a taxable sales price of$210 each during the first quarter of 1996. Dsold 70 shotguns in the second semimonthlyperiod of February, 1996, 130 shotguns in thefirst semimonthly period of March, 1996 and100 shotguns in the second semimonthly pe-riod of March, 1996. The amount of D’s tax li-ability for the first quarter of 1996 is $6,930,11 percent of the taxable sale price of theshotguns.

(2) Deposit requirement. D is required tomake a deposit of tax when D’s tax liabilityexceeds $2,000 (§ 53.159(c)(2)). Therefore, Dmust make a deposit of tax beginning withthe first semimonthly period in March, thesemimonthly period in which D’s unpaid taxliability exceeded $2,000. Because D, a firsttime filer, does not have an established look-back quarter, D’s deposit of tax must be atleast 95 percent of the incurred tax liability.D is required to make deposits of at least 95percent of incurred tax liability for everysemimonthly period in the quarter there-after. D’s deposits must be timely and any


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27 CFR Ch. I (4–1–99 Edition)§ 53.161

underpayment of tax must be paid by the duedate of the return. Accordingly, D meets thedeposit requirement if D makes the fol-lowing deposits:


Feb. 16–29 ................... March 11, 1996 ........... $0March 1–15 .................. March 25, 1996 ........... 4,389March 16–31 ................ April 9, 1996 ................ 2,194.50

The deposits due on March 11, 1996, andMarch 25, 1996, would ordinarily be due onMarch 9, 1996, and March 24, 1996, respec-tively. However, because March 9, 1996, is aSaturday, and March 24, 1996, is a Sunday,under section 7503, D has until March 11,1996, to make the deposit due on March 9,1996, and until March 25, 1996, to make thedeposit due on March 24, 1996.

(3) Filing requirement. D must file a returnon Form 5300.26 for the first calendar quarterof 1996 reporting D’s $6,930 tax liability(§ 53.151(a)). The form 5300.26 is due by April30, 1996, the last day of the first month fol-lowing the calendar quarter (§ 53.153(a)). Dmust also pay $346.50, the amount by whichthe tax liability for the quarter was under-paid, by the due date of the return.

Example 5. Deposit amount; third calendarquarter—(1) Facts. E, a manufacturer of fire-arms, is a semimonthly depositor who makesdeposits of tax using the safe harbor rulebased on the look-back quarter to determinethe amount of tax required to be depositedfor the third calendar quarter of 1995. E in-curred a tax liability amounting to $38,000for the third quarter. E filed Form 5300.26 forthe second preceding calendar quarter, thelook-back quarter on May 1, 1995, reportingtax liability in the amount of $30,000.

(2) Deposit requirement. Because E has in-curred more than $2,000 in liability and haschosen to make deposits of tax based on thelook-back quarter, E is required to make de-posits of tax equal to $5,000, 1/6 (16.67 percent)of the tax liability incurred in the look-backquarter, for each semimonthly period in thecalendar quarter. However, because of thespecial rule which modifies the safe harborrule for deposits of tax for the month of Sep-tember (§ 53.159(c)(4)), E must make depositsequal to $2500.00 each, 1/12th (8.34 percent) ofthe tax liability incurred in the look-backquarter for the periods September 16–25 andSeptember 26–30. E’s deposits must be timelyand E must pay the amount of any under-payment by the due date of the return. Ac-cordingly, E meets the deposit requirementif E makes the following deposits:


July 1–15 ..................... July 24, 1995 ............... $5000.00July 16–31 ................... August 9, 1995 ............ 5000.00Aug. 1–15 .................... August 24, 1995 .......... 5000.00Aug. 16–31 .................. Sept. 11, 1995 ............. 5000.00


Sept. 1–15 ................... Sept. 25, 1995 ............. 5000.00Sept. 16–25 ................. Sept. 28, 1995 ............. 2500.00Sept. 26–30 ................. October 9, 1995 .......... 2500.00

The deposits due on September 11, 1995, andSeptember 25, 1995, would ordinarily be dueon September 9, 1995, and September 24, 1995,respectively. However, because September 9,1995, is a Saturday, and September 24, 1995, isa Sunday, under section 7503, D has untilSeptember 11, 1995, to make the deposit dueon September 9, 1995, and until September 25,1995, to make the deposit due on September24, 1995.

(3) Filing requirement. E must file a returnon Form 5300.26 for the third calendar quar-ter of 1995 reporting E’s $38,000 tax liability(§ 53.153(a)). E must also pay $8,000, the un-derpayment amount by which the total taxliability for the third calendar quarter ex-ceeds the total tax liability for the look-back quarter, by the due date of the return.

[T.D. ATF–365, 60 FR 33671, June 28, 1995]

§ 53.161 Authority to make credits orrefunds.

For provisions relating to credits andrefunds of certain taxes on sales andservices see section 6416 of the Codeand §§ 53.171–53.186. For regulationsunder section 6402 of the Code of gen-eral application in respect of credits orrefunds, see 27 CFR 70.122, 70.123, and70.124 (Procedure and Administration).

§ 53.162 Abatements.

For regulations under section 6404 ofthe Code of general application in re-spect of abatements of assessments totax, see 27 CFR 70.125 (Procedure andAdministration).

§§ 53.163–53.170 [Reserved]

§ 53.171 Claims for credit or refund ofoverpayments of manufacturerstaxes.

Any claims for credit or refund of anoverpayment of a tax imposed by chap-ter 32 of the Code shall be made in ac-cordance with the applicable provisionsof this subpart and the applicable pro-visions of 27 CFR 70.123 (Procedure andAdministration). A claim on ATF Form2635 (5620.8) is not required in the caseof a claim for credit, but the amount ofthe credit shall be claimed by enteringthat amount as a credit on a return of


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tax under this subpart filed by the per-son making the claim. In this regard,see § 53.185.

§ 53.172 Credit or refund of manufac-turers tax under Chapter 32.

(a) Overpayment not described in sec-tion 6416(b)(2) of the Code—(1) Claims in-cluded. This paragraph applies only toclaims for credit or refund of an over-payment of manufacturers tax imposedby Chapter 32. It does not apply, how-ever, to a claim for credit or refund onany overpayment described in para-graph (b) of this section which arisesby reason of the application of section6416(b)(2) of the Code.

(2) Supporting evidence required. Nocredit or refund of any overpayment towhich this paragraph (a) applies shallbe allowed unless the person who paidthe tax submits with the claim a writ-ten consent of the ultimate purchaserto the allowance of the credit or re-fund, or submits with the claim astatement, supported by sufficientavailable evidence, asserting that:

(i) The person has neither includedthe tax in the price of the article withrespect to which it was imposed norcollected the amount of the tax from avendee, and identifying the nature ofthe evidence available to establishthese facts, or

(ii) The person has repaid the amountof the tax to the ultimate purchaser ofthe article.

(3) Ultimate purchaser—(i) Generalrule. The term ‘‘ultimate purchaser’’,as used in paragraph (a)(2) of this sec-tion, means the person who purchasedthe article for consumption, or for usein the manufacture of other articlesand not for resale in the form in whichpurchased.

(ii) Special rule under section6416(a)(3)—(A) Conditions to be met. Iftax under chapter 32 of the Code is paidin respect of an article and the Direc-tor determines that the article is notsubject to tax under chapter 32, theterm ‘‘ultimate purchaser’’, as used inparagraph (a)(2) of this section, in-cludes any wholesaler, jobber, dis-tributor, or retailer who, on the 15thday after the date of the determinationholds for sale any such article with re-spect to which tax has been paid, if theclaim for credit or refund of the over-

payment in respect of the articles heldfor sale by wholesaler, jobber, dis-tributor, or retailer is filed on or beforethe date on which the person who paidthe tax is required to file a return forthe period ending with the first cal-endar quarter which begins more than60 days after the date of the determina-tion by the Director.

(B) Supporting statement. A claim forcredit or refund of an overpayment oftax in respect of an article as to whicha wholesaler, jobber, distributor, or re-tailer is the ultimate purchaser, as pro-vided in this paragraph (a)(3)(ii), mustbe supported by a statement that theperson filing the claim has a state-ment, by each wholesaler, jobber, dis-tributor, or retailer whose articles arecovered by the claim, showing total in-ventory, by model number and quan-tity, of all such articles purchased tax-paid and held for sale as of 12:01 a.m. ofthe 15th day after the date of the deter-mination by the Director that the arti-cle is not subject to tax under chapter32 of the Code.

(C) Inventory requirement. The inven-tory shall not include any such article,title to which, or possession of which,has previously been transferred to anyperson for purposes of consumption un-less the entire purchase price was re-paid to the person or credited to theperson’s account and the sale was re-scinded or any such article purchasedby the wholesaler, jobber, distributor,or retailer as a component part of, oron or in connection with, another arti-cle. An article in transit at the firstmoment of the 15th day after the dateof the determination is regarded asbeing held by the person to whom itwas shipped, except that if title to thearticle does not pass until delivered tothe person the article is deemed to beheld by the shipper.

(b) Overpayments described in section6416(b)(2) of the Code—(1) Claims in-cluded. This paragraph applies only toclaims for credit or refund of amountspaid as tax under chapter 32 of theCode that are determined to be over-payments by reason of section6416(b)(2) of the Code (relating to taxpayments in respect of certain uses,sales, or resales of a taxable article).

(2) Supporting evidence required. Nocredit or refund of an overpayment to


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27 CFR Ch. I (4–1–99 Edition)§ 53.173

which this paragraph (b) applies shallbe allowed unless the person who paidthe tax submits with the claim a state-ment, supported by sufficient availableevidence, asserting that:

(i) The person neither included thetax in the price of the article with re-spect to which it was imposed nor col-lected the amount of the tax from avendee, and identifying the nature ofthe evidence available to establishthese facts, or

(ii) The person repaid, or agreed torepay, the amount of the tax to the ul-timate vendor of the article, or

(iii) The person has secured, and willsubmit upon request of the RegionalDirector, the written consent of the ul-timate vendor to the allowance of thecredit or refund.

(3) Ultimate vendor—General rule. Theterm ultimate vendor, as used in para-graph (b)(2) of this section, means theseller making the sale which gives riseto the overpayment or which last pre-cedes the exportation or use which hasgiven rise to the overpayment.

(c) Overpayments not included. Thissection does not apply to any overpay-ment determined under section6416(b)(1) of the Code (relating to pricereadjustments), section 6416(b)(3)(A) ofthe Code (relating to certain cases inwhich refund or credit is allowable tothe manufacturer who uses, in the fur-ther manufacture of a second article, ataxable article purchased by the manu-facturer taxpaid), or section 6416(b)(5)of the Code (relating to the return tothe seller of certain installment ac-counts which the seller had previouslysold). In this regard, see §§ 53.173, 53.180,and 53.183.


§ 53.173 Price readjustments causingoverpayments of manufacturers tax.

In the case of any payment of taxunder chapter 32 of the Code that is de-termined to be an overpayment by rea-son of a price readjustment within themeaning of section 6416(b)(1) of theCode and § 53.174 or § 53.175, the personwho paid the tax may file a claim forrefund of the overpayment or mayclaim credit for the overpayment onany return of tax under this subpart

which the person subsequently files.Price readjustments may not be antici-pated. However, if the readjustmenthas actually been made before the re-turn is filed for the period in which thesale was made, the tax to be reportedin respect of the sale may, at the elec-tion of the taxpayer, be based either:

(a) On the price as so readjusted, or(b) On the original sale price and a

credit or refund claimed in respect ofthe price readjustment.A price readjustment will be deemed tohave been made at the time when theamount of the readjustment has beenrefunded to the vendor or the vendorhas been informed that the vendor’s ac-count has been credited with theamount. No interest shall be paid onany credit or refund allowed under thissection. For provisions relating to theevidence required in support of a claimfor credit or refund, see 27 CFR 70.123(Procedure and Administration),§ 53.172(a)(2) and § 53.176. For provisionsauthorizing the taking of a credit inlieu of filing a claim for refund, seesection 6416(d) of the Code and § 53.185.


§ 53.174 Determination of price read-justments.

(a) In general—(1) Rules of usual appli-cation—(i) Amount treated as overpay-ment. If the tax imposed by chapter 32of the Code has been paid and there-after the price of the article on whichthe tax was based is readjusted, thatpart of the tax which is proportionateto the part of the price which is repaidor credited to the purchaser is consid-ered to be an overpayment. A readjust-ment of price to the purchaser mayoccur by reason of:

(A) The return of the article,(B) The repossession of the article,(C) The return or repossession of the

covering or container of the article, or(D) A bona fide discount, rebate, or

allowance against the price at whichthe article was sold.

(ii) Requirements of price readjustment.A price readjustment will not bedeemed to have been made unless theperson who paid the tax either:

(A) Repays part or all of the purchaseprice in cash to the vendee,


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(B) Credits the vendee’s account forpart or all of the purchase price, or

(C) Directly or indirectly reimbursesa third party for part or all of the pur-chase price for the direct benefit of thevendee.

In addition, to be deemed a price read-justment, the payment or credit mustbe contractually or economically re-lated to the taxable sale that the pay-ment or credit purports to adjust.Thus, commissions or bonuses paid to amanufacturer’s own agents or sales-person for selling the manufacturer’staxable products are not price readjust-ments for purposes of this section,since those commissions or bonuses arenot paid or credited either to the man-ufacturer’s vendee or to a third partyfor the vendee’s benefit. On the otherhand, a bonus paid by the manufac-turer to a dealer’s salesperson for nego-tiating the sale of a taxable article pre-viously sold to the dealer by the manu-facturer is considered to be a readjust-ment of the price on the original saleof the taxable article, regardless ofwhether the payment to the sales-person is made directly by the manu-facturer or to the salesperson throughthe dealer. In such a case, the paymentis related to the sale of a taxable arti-cle and is made for the benefit of thedealer because it is made to the deal-er’s salesperson to encourage the saleof a product owned by the dealer. Simi-larly, payments or credits made by amanufacturer to a vendee as reim-bursement of interest expense incurredby the vendee in connection with a so-called ‘‘free flooring’’ arrangement forthe purchase of taxable articles is aprice readjustment, regardless ofwhether the payment or credit is madedirectly to the vendee or to the vend-ee’s creditor on behalf of the vendee.

(iii) Limitation on credit or refund. Thecredit or refund allowable by reason ofa price readjustment in respect of thesale of a taxable article may not ex-ceed an amount which bears the sameratio to the total tax originally dueand payable on the article as theamount of the tax-included readjust-ment bears to the original tax-includedsale price of the article.

(2) Rules of special application—(i)Constructive sale price. If, in the case ofa taxable sale, the tax imposed bychapter 32 of the Code is based on aconstructive sale price determinedunder any paragraph of section 4216(b)of the Code and §§ 53.94–53.97, as deter-mined without reference to section 4218of the Code, then any price readjust-ment made with respect to the salemay be taken into account under thissection only to the extent that theprice readjustment reduces the actualsale price of the article below the con-structive sale price.

Examples:

(A) A manufacturer sells a taxable articleat retail for $110 tax included. Under section4216(b)(1) of the Code the constructive saleprice (tax included) of the article is deter-mined to be $93. Thereafter, the manufac-turer grants an allowance of $10 to the pur-chaser, which reduces the actual sellingprice (tax included) to $100. Since the read-justment price exceeds the amount of theconstructive sale price, this readjustment isnot recognized as a price readjustment underthis section.

(B) Subsequently, the manufacturer ex-tends to the purchaser an additional price al-lowance of $10, thereby reducing the actualsale price to $90. Since the actual sale priceis now $3 less than the constructive saleprice of $93, the manufacturer has overpaidby the amount of tax attributable to the $3.Assuming the tax rate involved is 10 percent,and the prices involved are tax-included, theoverpayment of tax would be $0.27, deter-mined as follows:

tax rate100 + tax rate

tax - included readjustment = tax overpayment ((10/110) $3 = $0.27)× ×

(ii) Price determined under section4223(b)(2) of the Code. If a manufacturer(within the meaning of section 4223(a)of the Code) to whom an article is sold

or resold free of tax in accordance withthe provisions of section 4221(a)(1) ofthe Code for use in further manufac-ture diverts the article to a taxable use


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27 CFR Ch. I (4–1–99 Edition)§ 53.174

or sells it in a taxable sale, and pursu-ant to the provisions of section4223(b)(2) of the Code computes the taxliability in respect of the use or sale onthe price for which the article was soldto the manufacturer or on the price atwhich the article was sold by the ac-tual manufacturer, a reduction of theprice on which the tax was based doesnot result in an overpayment withinthe meaning of section 6416(b)(1) of theCode of this section. Moreover, if amanufacturer purchases an article taxfree and computes the tax in respect ofa subsequent sale of the article pursu-ant to the provisions of section4223(b)(2) of the Code, an overpaymentdoes not arise by reason of readjust-ment of the price for which the articlewas sold by the manufacturer exceptwhere the readjustment results fromthe return or repossession of the arti-cle by the manufacturer, and all of thepurchase price is refunded by the man-ufacturer. See, however, paragraph(b)(4) of this section as to repurchasedarticles.

(b) Return of an article—(1) Price read-justment. If a taxable article is returnedto the manufacturer who paid the taximposed by Chapter 32 of the Code onthe sale of the article, a price readjust-ment giving rise to an overpayment re-sults:

(i) If the article is returned beforeuse, and all of the purchase price is re-paid to the vendee or credited to thevendee’s account, or

(ii) If the article is returned under anexpress or implied warranty as to qual-ity or service, and all or a part of thepurchase price is repaid to the vendeeor credited to the vendee’s account, or

(iii) If title is still in the seller, as,for example, in the case of certain in-stallment sales contracts, and all or apart of the purchase price is repaid tothe vendee or credited to the vendee’saccount.

(2) Return of purchase price. For pur-poses of paragraph (b)(1) of this sec-tion, if all of the purchase price of anarticle has been returned to the vend-ee, except for an amount retained bythe manufacturer pursuant to contractas reimbursement of expense incurredin connection with the sale (such as ahandling or restocking charge), all of

the purchase price is considered tohave been returned to the vendee.

(3) Taxability of subsequent sale or use.If, under any of the conditions de-scribed in paragraph (b)(1) of this sec-tion, an article is returned to the man-ufacturer who paid the tax and all ofthe purchase price is returned to thevendee, the sale is considered to havebeen rescinded. Any subsequent sale oruse of the article by the manufacturerwill be considered to be an original saleor use of the article by the manufac-turer which is subject to tax underChapter 32 of the Code unless otherwiseexempt. If under any such condition anarticle is returned to the manufacturerwho paid the tax and only part of thepurchase price is returned to the vend-ee, a subsequent sale of the article bythe manufacturer will be subject to taxto the extent that the sale price ex-ceeds the adjusted sale price of thefirst taxable sale.

(4) Treatment of other transactions asrepurchases. Except as provided in para-graph (b)(1) of this section, a price re-adjustment will not result when a tax-able article is returned to the manufac-turer who paid the tax on the sale ofthe article, even though all or a part ofthe purchase price is repaid to thevendee or credited to the vendee’s ac-count, since such a transaction will beconsidered to be a repurchase of the ar-ticle by the manufacturer.

(c) Repossession of an article. If a tax-able article is repossessed by the manu-facturer who paid the tax imposed bychapter 32 of the Code on the sale ofthe article, and all or a part of the pur-chase price is repaid to the vendee orcredited to the vendee’s account, aprice readjustment giving rise to anoverpayment will result. However, ifthe manufacturer later resells the re-possessed article for a price in excess ofthe original adjusted sale price, themanufacturer will be liable for taxunder chapter 32 of the Code to the ex-tent that the resale price exceeds theoriginal adjusted sale price.

(d) Return or repossession of covering orcontainer. If the covering or containerof a taxable article is returned to, orrepossessed by the manufacturer whopaid the tax imposed by chapter 32 ofthe Code on the sale of the article, andall or a portion of the purchase price is


723


repaid to the vendee or credited to thevendee’s account by reason of the re-turn or repossession of the covering orcontainer, a price adjustment givingrise to an overpayment will result. If ataxable article is considered to havebeen repurchased, as provided in para-graph (b)(4) of this section, and thecovering or container accompanies thetaxable article as part of the trans-action, the covering or container willalso be considered to have been repur-chased.

(e) Bona fide discounts, rebates, or al-lowances—(1) In general. Except as pro-vided in § 53.175 (relating to readjust-ments in respect of local advertising),the basic consideration in determining,for purposes of this section, whether abona fide discount, rebate, or allow-ance has been made is whether theprice actually by, or charged against,the purchaser has in fact been reducedby subsequent transactions betweenthe parties. Generally, the price will beconsidered to have been readjusted byreason of a bona fide discount, rebate,or allowance, only if the manufacturerwho made the taxable sale repays apart of the purchase price in cash tothe vendee, or credits the vendee’s ac-count, or directly or indirectly reim-burses a third party for part or all ofthe purchase price for the direct ben-efit of the vendee, in consideration offactors which, if taken into account atthe time of the original transaction,would have resulted at that time in alower sale price. For example, a pricereadjustment will be considered tohave been made when a bona fide dis-count, rebate, or allowance is given inconsideration of such factors as promptpayment, quantity buying over a speci-fied period, the vendee’s inventory ofan article when new models are intro-duced, or a general price reduction af-fecting articles held in stock by thevendee as of a certain date. On theother hand, repayments made to thevendee do not effectuate price readjust-ments if given in consideration of cir-cumstances under which the vendeehas incurred, or is required to incur, anexpense which, if treated as a separateitem in the original transaction, wouldhave been incudable in the price of thearticle for purposes of computing thetax.

Examples. The provisions of para-graph (e)(1) of this section may be il-lustrated by the following examples:

Example (1). B, a manufacturer of shotguns,bills its distributors in a specified amountper shotgun purchased by them. Thereafter,B issues to each distributor a credit memo-randum in the amount of X dollars for eachdemonstration by the distributor of the shot-guns at a sporting goods exhibition. Thecredit which B allows the distributor fordemonstration of B’s product does not effecta readjustment of price.

Example (2). C, a manufacturer of firearms,bills its dealers in a specified amount perfirearm purchased by them. Thereafter, C re-mits to the dealer X dollars of the originalsale price for each firearm sold by the dealer.An additional amount of Y dollars is paid tothe dealer upon a showing by the dealer thatthe dealer has paid Y dollars to the sales-person who made the sale. In this case, the Xdollars paid to the dealer by C constitutes abona fide discount, rebate, or allowancesince payment of such amount is in the na-ture of a price reduction. In addition, the Ydollars paid to the dealer in reimbursementfor the amount paid by the dealer to thesalesperson who made the sale, also con-stitutes a bona fide discount, rebate, or al-lowance.

(2) Inability to collect price. A charge-off of an amount outstanding in anopen account, due to inability to col-lect, is not a bona fide discount, rebate,or allowance and does not, in and ofitself, give rise to a price readjustmentwithin the meaning of this section.

(3) Loss or damage in transit. If title toan article has passed to the vendee, thesubsequent loss, damage, or destruc-tion of the article while in the posses-sion of a carrier for delivery to thevendee does not, in and of itself, affectthe price at which the article was sold.However, if the article was sold under acontract providing that, if the articlewas lost, damaged, or destroyed intransit, title would revert to the ven-dor and the vendor would reimbursethe vendee in full for the sale price,then the original sale is considered tohave been rescinded. The vendor is en-titled to credit or refund of the taxpaid upon reimbursement of the fulltax-included sale price to the vendee.

§ 53.175 Readjustment for local adver-tising charges.

(a) In general. If a manufacturer haspaid the tax imposed by chapter 32 of


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27 CFR Ch. I (4–1–99 Edition)§ 53.176

the Code on the price of any articlesold by the manufacturer and there-after has repaid a portion of the priceto the purchaser or any subsequentvendee in reimbursement of expensesfor local advertising of the article orany other article sold by the manufac-turer which is taxable at the same rateunder the same section of chapter 32 ofthe Code, the reimbursement will beconsidered a price readjustment consti-tuting an overpayment which the man-ufacturer may claim as a credit or re-fund. The amount of the reimburse-ment may not, however, exceed thelimitation provided by section4216(e)(2) of the Code and § 53.101, deter-mined as of the close of the calendarquarter in which the reimbursement ismade or as of the close of any subse-quent calendar quarter of the same cal-endar year in which it is made. Theterm ‘‘local advertising,’’ as used inthis section, has the same meaning asprescribed by section 4216(e)(4) of theCode and includes generally, adver-tising which is broadcast over a radiostation or television station, or ap-pears in a newspaper or magazine, or isdisplayed by means of an outdoor ad-vertising sign or poster.

(b) Local advertising charges excludedfrom taxable price in one year but repaidin following year—(1) Determination ofprice readjustments for year in whichcharge is repaid. If the tax imposed bychapter 32 of the Code was paid with re-spect to local advertising charges thatwere excluded in computing the tax-able price of an article sold in any cal-endar year but are not repaid to themanufacturer’s purchaser or any subse-quent vendee before May 1 of the fol-lowing calendar year, the subsequentrepayment of those charges by themanufacturer in reimbursement of ex-penses for local advertising will be con-sidered a price readjustment consti-tuting an overpayment which the man-ufacturer may claim as a credit or re-fund. The amount of the reimburse-ment may not, however, exceed thelimitation provided by section4216(e)(2) of the Code and § 53.101, deter-mined as of the close of the calendarquarter in which the reimbursement ismade or as of the close of any subse-quent calendar quarter of the same cal-endar year in which it is made.

(2) Redetermination of price readjust-ments for year in which charge was made.If the tax imposed by chapter 32 of theCode was paid with respect to local ad-vertising charges that were excluded incomputing the taxable price of an arti-cle sold in any calendar year but arenot repaid to the manufacturer’s pur-chaser or any subsequent vendor beforeMay 1 of the following calendar year,the manufacturer may make a redeter-mination, in respect of the calendaryear in which the charge was made, ofthe price readjustments constitutingan overpayment which the manufac-turer may claim as a credit or refund.This redetermination may be made byexcluding the local advertising chargesmade in the calendar year that becametaxable as of May 1 of the followingcalendar year.

§ 53.176 Supporting evidence requiredin case of price readjustments.

No credit or refund of an overpay-ment arising by reason of a price read-justment described in § 53.174 or § 53.175shall be allowed unless the manufac-turer who paid the tax submits a state-ment, supported by sufficient availableevidence:

(a) Describing the circumstanceswhich gave rise to the price readjust-ment,

(b) Identifying the article in respectof which the price readjustment was al-lowed,

(c) Showing the price at which thearticle was sold, the amount of taxpaid in respect of the article, and thedate on which the tax was paid,

(d) Giving the name and address ofthe purchaser to whom the article wassold, and

(e) Showing the amount repaid to thepurchaser or credited to the pur-chaser’s account.

§ 53.177 Certain exportations, uses,sales, or resales causing overpay-ments of tax.

In the case of any payment of taxunder chapter 32 of the Code that is de-termined to be an overpayment by rea-son of certain exportations, uses, sales,or resales described in section 6416(b)(2)of the Code and § 53.178, the person whopaid the tax may file a claim for refundof the overpayment or, in the case of


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overpayments under chapter 32 of theCode, may claim credit for the over-payment on any return of tax underthis subpart which the person subse-quently files. However, under the cir-cumstances described in section 6416(c)of the Code and § 53.184, the overpay-ments under chapter 32 may be re-funded to an exporter or shipper. No in-terest shall be paid on any credit or re-fund allowed under this section. Forprovisions relating to the evidence re-quired in support of a claim for creditor refund under this section, see 27CFR 70.123 (Procedure and Administra-tion) and 53.179. For provisions author-izing the taking of a credit in lieu offiling a claim for refund, see section6416(d) of the Code and § 53.185.

§ 53.178 Exportations, uses, sales, andresales included.

(a) In general. The payment of tax im-posed by chapter 32 of the Code on thesale of any article, will be consideredto be an overpayment by reason of anyexportation, use, sale, or resale de-scribed in any one of paragraphs (b) to(e), inclusive, of this section. This sec-tion applies only in those cases wherethe exportation, use, sale, or resale (orany combination thereof) referred to inany one or more of these paragraphsoccurs before any other use. If any ar-ticle is sold or resold for a use de-scribed in any one of these paragraphsand is not in fact so used, the para-graph is treated in all respects as inap-plicable.

(b) Exportation of tax-paid articles. Apayment of tax under chapter 32 of theCode on the sale of any article will beconsidered to be an overpayment undersection 6416(b)(2)(A) of the Code if thearticle is by any person exported to aforeign country or shipped to a posses-sion of the United States. It is immate-rial for purposes of this paragraph,whether the person who made the tax-able sale had knowledge at the time ofthe sale that the article was being pur-chased for export to a foreign countryor shipment to a possession of theUnited States. See § 53.184 for the cir-cumstances under which a claim for re-fund by reason of the exportation of anarticle may be claimed by the exporteror shipper, rather than by the personwho paid the tax. For definition of the

term ‘‘possession of the UnitedStates’’, see § 53.11.

(c) Supplies for vessels or aircraft. Apayment of tax under chapter 32 of theCode on the sale of any article, will beconsidered to be an overpayment undersection 6416(b)(2)(B) of the Code if thearticle is used by any person, or is soldby any person for use by the purchaser,as supplies for vessels or aircraft. Theterm ‘‘supplies for vessels or aircraft’’,as used in this paragraph, has the samemeaning as when used in sections4221(a)(3), 4221(d)(3), and 4221(e)(1) of theCode, and the regulations thereunder(§ 53.134(b)(1)).

(d) Use by State or local government. Apayment of tax under chapter 32 of theCode on the sale of any article will beconsidered to be an overpayment undersection 6416(b)(2)(C) of the Code if thearticle is sold by any person to a State,any political subdivision thereof, orthe District of Columbia for the exclu-sive use of a State, any political sub-division thereof, or the District of Co-lumbia. For provisions relating to tax-free sales to a State, any political sub-division thereof, or the District of Co-lumbia, see section 4221(a)(4) of theCode and § 53.131.

(e) Use by nonprofit educational organi-zation. A payment of tax under chapter32 of the Code on the sale of any articlewill be considered to be an overpay-ment under section 6416(b)(2)(D) of theCode if the article is sold by any personto a nonprofit educational organizationfor its exclusive use. The term ‘‘non-profit educational organization’’, asused in this paragraph (e), has thesame meaning as when used in section4221 (a)(5) or (d)(5) of the Code, which-ever applies, and the regulations under§ 53.136.

§ 53.179 Supporting evidence requiredin case of manufacturers tax involv-ing exportations, uses, sales, or re-sales.

(a) Evidence to be submitted by claim-ant. No claim for credit or refund of anoverpayment, within the meaning ofsection 6416(b)(2) of the Code and§ 53.178, of tax under chapter 32 of theCode shall be allowed unless the personwho paid the tax submits with theclaim the evidence required by


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27 CFR Ch. I (4–1–99 Edition)§ 53.179

§ 53.172(b)(2) and a statement, supportedby sufficient available evidence:

(1) Showing the amount claimed inrespect of each category of expor-tations, uses, sales, or resales on whichthe claim is based and which give riseto a right of credit or refund under sec-tion 6416(b)(2) of the Code and § 53.177,

(2) Identifying the article, both as tonature and quantity, in respect ofwhich credit or refund is claimed,

(3) Showing the amount of tax paid inrespect of the article or articles andthe dates of payment, and

(4) Indicating that the person claim-ing a credit or refund possesses evi-dence (as set forth in paragraph (b)(1)of this section) that the article hasbeen exported, or has been used, sold,or resold in a manner or for a purposewhich gives rise to an overpaymentwithin the meaning of section 6416(b)(2)of the Code and § 53.178.

(b) Evidence required to be in possessionof claimant—(1) Evidence required underparagraph (a)(4)—(i) In general. The evi-dence required to be retained by theperson who paid the tax, as provided inparagraph (a)(4) of this section, must,in the case of an article exported, con-sist of proof of exportation in the formprescribed in § 53.133 or must, in thecase of other articles sold tax-paid bythat person, consist of a certificate, ex-ecuted and signed by the ultimate pur-chaser of the article, in the form pre-scribed in paragraph (b)(1)(ii) of thissection. However, if the article towhich the claim relates has passedthrough a chain of sales from the per-son who paid the tax to the ultimatepurchaser, the evidence required to beretained by the person who paid thetax may consist of a certificate, exe-cuted and signed by the ultimate ven-dor of the article, in the form providedin paragraph (b)(1)(iii) of this section,rather than the proof of exportationitself or the certificate of the ultimatepurchaser.

(ii) Certificate of ultimate purchaser.(A) The certificate executed and signedby the ultimate purchaser of the arti-cle to which the claim relates mustidentify the article, both as to natureand quantity; show the address of theultimate purchaser of the article, andthe name and address of the ultimatevendor of the article; and describe the

use actually made of the article in suf-ficient detail to establish that credit orrefund is due, except that the use to bemade of the article must be describedin lieu of actual use if the claim ismade by reason of the sale or resale ofan article for a specified use whichgives rise to the overpayment.

(B) If the certificate sets forth theuse to be made of any article, ratherthan its actual use, it must show thatthe ultimate purchaser has agreed tonotify the claimant if the article is notin fact used as specified in the certifi-cate.

(C) The certificate must also containa statement that the ultimate pur-chaser understands that the ultimatepurchaser and any other party may, forfraudulent use of the certificate, besubject to all applicable criminal pen-alties under the Internal RevenueCode.

(D) A purchase order will be accept-able in lieu of a separate certificate ofthe ultimate purchaser if it containsall the information required by thisparagraph.

(iii) Certificate of ultimate vendor. Anycertificate executed and signed by anultimate vendor as evidence to be re-tained by the person who paid the taxas provided in paragraph (a)(4) of thissection may be executed with respectto any one or more overpayments bythe person which arose under section6416(b)(2) and § 53.178 by reason of ex-portations, uses, sales or resales, oc-curring within any period of not morethan 12 consecutive calendar quarters,the beginning and ending dates ofwhich are specified in the certificate. Acertificate supporting a claim for cred-it or refund under this section shallcontain the following:

(A) Name of ultimate vendor if otherthan person executing the certificate.

(B) Statement that article(s) waspurchased by the ultimate vendor tax-paid and was thereafter exported, used,sold, or resold.

(C) Description of proof which sup-ports exportation or certificate as touse executed by ultimate purchaser.

(D) Statement that ultimate vendorretains such proof for 3 years from thedate of the statement and will, uponrequest, supply such proof at any time


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within such 3 year period to the tax-payer to establish that credit or refundis due in respect of the article.

(E) Statement that to the bestknowledge and belief of the person exe-cuting the certificate, no statement inrespect of the proof of exportation orcertificate has previously been exe-cuted and that the person executingthe certificate understands that anyfraudulent use of the certificate maysubject the person executing the cer-tificate or any other party to all appli-cable criminal penalties under theCode.

(F) Name, title, address and signa-ture of person executing certificate anddate signed.

(G) Description of all articles coveredby the certificate, with the cor-responding vendor’s invoice number,date of resale of article, quantity,whether articles were exported or usedand the use made of article or to bemade of article.

(iv) ATF I 5600.33. ATF I 5600.33,Statement of Ultimate Vendor, isavailable from the Bureau’s Distribu-tion Center which, when completed,contains all necessary information fora properly executed certificate. Addi-tional copies may be reproduced asneeded.

(2) Repayment or consent of ultimatevendor. If the person claiming credit orrefund or an overpayment to whichthis section applies has repaid, oragreed to repay, the amount of theoverpayment to the ultimate vendor orif the ultimate vendor consents to theallowance of the credit or refund, astatement to that effect, signed by theultimate vendor, must be shown on, ormade a part of, the supporting evidencerequired under this section to be re-tained by the person claiming the cred-it or refund. In this regard, see§ 53.172(b)(2).


§ 53.180 Tax-paid articles used for fur-ther manufacture and causing over-payments of tax.

In the case of any payment of taxunder chapter 32 of the Code that is de-termined to be an overpayment undersection 6416(b)(3) of the Code and

§ 53.181 by reason of the sale of an arti-cle, directly or indirectly, by the man-ufacturer of the article to a subsequentmanufacturer who uses the article infurther manufacture of a second articleor who sells the article with, or as apart of, the second article manufac-tured or produced by the subsequentmanufacturer, the subsequent manu-facturer may file claim for refund ofthe overpayment or may claim creditfor the overpayment on any return oftax under this subpart subsequentlyfiled. No interest shall be paid on anycredit or refund allowed under this sec-tion. For provisions relating to the evi-dence required in support of a claim forcredit or refund, see 27 CFR § 70.123(Procedure and Administration), 53.172and 53.182. For provisions authorizingthe taking of a credit in lieu of filing aclaim for refund, see section 6416(d) ofthe Code and § 53.185.

§ 53.181 Further manufacture in-cluded.

(a) In general. The payment of tax im-posed by chapter 32 of the Code on thesale of any article by a manufacturerof the article will be considered to bean overpayment by reason of any usein further manufacture, or sale as partof a second manufactured article, de-scribed in paragraph (b) of this section.This section applies in those caseswhere the exportation, use, or sale (orany combination of those activities)referred to in this paragraph occurs be-fore any other use.

(b) Use of tax-paid articles in furthermanufacture described in section6416(b)(3)(A) of the Code. A payment oftax under chapter 32 of the Code on thesale of any article, directly or indi-rectly, by the manufacturer of the arti-cle to a subsequent manufacturer willbe considered to be an overpaymentunder section 6416(b)(3)(A) of the Codeif the article is used by the subsequentmanufacturer as material in the manu-facture or production of, or as a compo-nent part of, a second article manufac-tured or produced by the subsequentmanufacturer which is taxable underchapter 32 of the Code. For this purposeit is immaterial whether the second ar-ticle is sold or otherwise disposed of, orif sold, whether the sale is a taxable


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27 CFR Ch. I (4–1–99 Edition)§ 53.182

sale. Any article to which this para-graph applies which would have beenused in the manufacture or productionof a second article, except for the factthat it was broken or rendered uselessin the process of manufacturing or pro-ducing the second article, will be con-sidered to have been used as a compo-nent part of the second article.


§ 53.182 Supporting evidence requiredin case of tax-paid articles used forfurther manufacture.

(a) Evidence to be submitted by claim-ant. No claim for credit or refund of anoverpayment, within the meaning ofsection 6416(b)(3) of the Code and§ 53.181 shall be allowed unless the sub-sequent manufacturer submits with theclaim the evidence required by § 53.132and a statement, supported by suffi-cient available evidence:

(1) Showing the amount claimed inrespect of each category of expor-tations, uses, or sales on which theclaim is based and which give rise to aright of credit or refund under section6416(b)(3) of the Code and § 53.180,

(2) Showing the name and address ofthe manufacturer, producer, or im-porter of the article in respect of whichcredit or refund is claimed,

(3) Identifying the article, both as tonature and quantity, in respect ofwhich credit or refund is claimed,

(4) Showing the amount of tax paid inrespect of the article by the manufac-turer or producer of the article and thedate of payment.

(5) Indicating that the article wasused by the claimant as material in themanufacture or production of, or as acomponent part of, a second articlemanufactured or produced by the man-ufacturer or was sold on or in connec-tion with, or with the sale of, a secondarticle manufactured or produced bythe manufacturer, and

(6) Identifying the second article,both as to nature and quantity.

(b) Evidence required to be in possessionof claimant—(1) Certificate of ultimatepurchaser of second article. The certifi-cate executed and signed by the ulti-mate purchaser of the second articlemust contain the same information as

that required in § 53.179(b)(1)(ii), exceptthat the information must be furnishedin respect of the second article, ratherthan the article to which the claim re-lates.

(2) Certificate of ultimate vendor of sec-ond article. Any certificate executedand signed by an ultimate vendor asevidence to be retained by the personclaiming credit or refund must be exe-cuted in the same form and manner asthat provided in § 53.179(b)(2)(iii).

(3) Repayment or consent of ultimatevendor. If the person claiming credit orrefund of an overpayment to which thissection applies has repaid, or agreed torepay, the amount of the overpaymentto the ultimate vendor or if the ulti-mate vendor consents to the allowanceof the credit or refund, a statement tothat effect, signed by the ultimate ven-dor, must be shown on, or made a partof, the evidence required to be retainedby the person claiming the credit or re-fund. In this regard, see § 53.172(b)(2).


§ 53.183 Return of installment ac-counts causing overpayments oftax.

(a) In general. In the case of any pay-ment of tax under section 4216(d)(1) ofthe Code in respect of the sale of anyinstallment account that is determinedto be an overpayment under section6416(b)(5) of the Code and paragraph (b)of this section upon return of the in-stallment account, the person who paidthe tax may file a claim for refund ofthe overpayment or may claim creditfor the overpayment on any return oftax under this subpart which that per-son subsequently files. No interestshall be paid on any credit or refund al-lowed under this section. For provi-sions relating to the evidence requiredin support of a claim for credit or re-fund under this section, see 27 CFR70.123 (Procedure and Administration)and paragraph (c) of this section. Forprovisions authorizing the taking of acredit in lieu of filing a claim for re-fund, see section 6416(d) of the Code and§ 53.185.

(b) Overpayment of tax allocable to re-paid consideration. The payment of taximposed by section 4216(d)(1) of the


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Code on the sale of an installment ac-count by the manufacturer will be con-sidered to be an overpayment undersection 6416(b)(5) of the Code to the ex-tent of the tax allocable to any consid-eration repaid or credited to the pur-chaser of the installment account uponthe return of the account to the manu-facturer pursuant to the agreementunder which the account originally wassold, if the readjustment of the consid-eration occurs pursuant to the provi-sions of the agreement. The tax allo-cable to the repaid or credited consid-eration is the amount which bears thesame ratio to the total tax paid undersection 4216(d)(1) of the Code with re-spect to the installment account as theamount of consideration repaid or cred-ited to the purchaser bears to the totalconsideration for which the accountwas sold. This paragraph (b) does notapply where an installment account isoriginally sold pursuant to the orderof, or subject to the approval of, acourt of competent jurisdiction in abankruptcy or insolvency proceeding.

(c) Evidence to be submitted by claim-ant. No claim for credit or refund of anoverpayment, within the meaning ofsection 6416(b)(5) of the Code and para-graph (b) of this section, of tax undersection 4216(d)(1) of the Code shall beallowed unless the person who paid thetax submits with the claim a state-ment, supported by sufficient availableevidence, indicating:

(1) The name and address of the per-son to whom the installment accountwas sold,

(2) The amount of tax due under sec-tion 4216(d)(1) of the Code by reason ofthe sale of the installment account, theamount of the tax paid under section4216(d)(1) with respect to the sale, andthe date of payment,

(3) The amount for which the install-ment account was sold,

(4) The amount which was repaid orcredited to the purchaser of the ac-count by reason of the return of the ac-count to the person claiming the creditor refund, and

(5)(i) The fact that the amount repaidor credited to the purchaser of the ac-count was so repaid or credited pursu-ant to the agreement under which theaccount was sold, and

(ii) The fact that the account was re-turned to the manufacturer pursuantto that agreement.

§ 53.184 Refund to exporter or shipper.

(a) In general. Any payment of taximposed by chapter 32 of the Code thatis determined to be an overpaymentwithin the meaning of section6416(b)(2)(A) of the Code and §§ 53.178and 53.179, by reason of the exportationof any article may be refunded to theexporter or shipper of the article pur-suant to section 6416(c) of the Code, if:

(1) The exporter or shipper files aclaim for refund of the overpayment,and

(2) The person who paid the taxwaives the right to claim credit or re-fund of the tax.

No interest shall be paid on any refundallowed under this section. For provi-sions relating to the evidence requiredin support of a claim under this para-graph, see 27 CFR 70.123 (Procedure andAdministration) and paragraph (b) ofthis section.

(b) Supporting evidence required. Noclaim for refund of any overpayment oftax to which this section applies shallbe allowed unless the exporter or ship-per submits with that claim proof ofexportation in the form prescribed by§ 53.133, and a statement, signed by theperson who paid the tax, showing:

(1) That the person who paid the taxwaives the right to claim credit or re-fund of the tax, and

(2) The amount of tax paid on thesale of the article and the date of pay-ment.

§ 53.185 Credit on returns.

Any person entitled to claim refundof any overpayment of tax imposed bychapter 32 of the Code may, in lieu ofclaiming refund of the overpayment,claim credit for the overpayment onany return of tax under this subpartsubsequently filed. Any such creditclaimed on a return must be supportedby the evidence prescribed in the appli-cable regulations in this subpart and 27CFR 70.123 (Procedure and Administra-tion).


730

27 CFR Ch. I (4–1–99 Edition)§ 53.186

§ 53.186 Accounting procedures forlike articles.

(a) Identification of manufacturer. Inapplying section 6416 of the Code andthe regulations thereunder, a personwho has purchased like articles fromvarious manufacturers may determinethe particular manufacturer fromwhom that person purchased any one ofthose articles by a first-in, first-out(FIFO) method, by a last-in, first-out(LIFO) method, or by any other con-sistent method approved by the re-gional director. For the first year forwhich a person makes a determinationunder this section, the person mayadopt any one of the following methodswithout securing prior approval by theregional director.

(1) FIFO method.(2) LIFO method.(3) Any method by which the actual

manufacturer of the article is in factidentified.

(4) Any other method of determiningthe manufacturer of a particular arti-cle must be approved by the regionaldirector before its adoption. After anymethod for identifying the manufac-turer has been properly adopted, itmay not be changed without first se-curing the consent of the regional di-rector.

(b) Determining amount of tax paid. Inapplying section 6416 and §§ 53.171–53.186, if the identity of the manufac-turer of any article has been deter-mined by a person pursuant to a meth-od prescribed in paragraph (a) of thissection, that manufacturer of the arti-cle must determine the tax paid underChapter 32 of the Code with respect tothat article consistently with themethod used in identifying the manu-facturer.

§ 53.187 OMB control numbers.(a) Purpose. This section collects and

displays the control numbers assignedto collections of information in thispart by the Office of Management andBudget (OMB) under the PaperworkReduction Act of 1980. ATF intendsthat this section comply with the re-quirements of §§ 1320.12, 1320.13, and1320.14 of 5 CFR part 1320 (OMB regula-tions implementing the Paperwork Re-duction Act), for the display of controlnumbers assigned by OMB to collec-

tions of information in the regulationsin this part.

(b) Display.

27 CFR part 53 section num-ber OMB control number(s)

§ 53.1 ..................................... 1545–0723§ 53.3 ..................................... 1545–0685§ 53.11 ................................... 1545–0723§ 53.92 ................................... 1545–0023§ 53.93 ................................... 1545–0023§ 53.99 ................................... 1545–0023§ 53.131 ................................. 1545–0023§ 53.132 ................................. 1545–0023§ 53.133 ................................. 1545–0023§ 53.134 ................................. 1545–0023§ 53.136 ................................. 1545–0023§ 53.140 ................................. 1545–0023§ 53.141 ................................. 1545–0023§ 53.142 ................................. 1545–0023§ 53.143 ................................. 1545–0023§ 53.151 ................................. 1545–0023, 1545–0723§ 53.152 ................................. 1545–0723§ 53.153 ................................. 1545–0257, 1545–0723§ 53.155 ................................. 1545–0723§ 53.157 ................................. 1545–0257§ 53.171 ................................. 1545–0023, 1545–0723§ 53.172 ................................. 1545–0723§ 53.173 ................................. 1545–0723§ 53.174 ................................. 1545–0723§ 53.175 ................................. 1545–0723§ 53.176 ................................. 1545–0723§ 53.177 ................................. 1545–0723§ 53.178 ................................. 1545–0723§ 53.179 ................................. 1545–0723§ 53.180 ................................. 1545–0723§ 53.181 ................................. 1545–0723§ 53.182 ................................. 1545–0723§ 53.183 ................................. 1545–0723§ 53.184 ................................. 1545–0023, 1545–0723§ 53.185 ................................. 1545–0023, 1545–0723§ 53.186 ................................. 1545–0723

PART 55—COMMERCE INEXPLOSIVES


Sec.55.1 Scope of regulations.55.2 Relation to other provisions of law.


55.11 Meaning of terms.


55.21 Forms prescribed.55.22 Alternate methods or procedures;

emergency variations from require-ments.

55.23 List of explosive materials.55.24 Right of entry and examination.55.25 Disclosure of information.55.26 Prohibited shipment, transportation,

receipt, possession, or distribution of ex-plosive materials.


taxes—firearms and ammu- - gpo · 669 bureau of alcohol, tobacco and firearms, treasury pt. 53...

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