26 CFR Part 48 — Manufacturers and Retailers Excise Taxes

PART 48—MANUFACTURERS AND RETAILERS EXCISE TAXES Authority: 26 U.S.C. 7805, unless otherwise noted. Section 48.4052-1 also issued under 26 U.S.C. 4052(g). Section 48.4064-1(b)(3) also issued under 26 U.S.C. 4064(b)(1)(C)(iii). Section 48.4064-1(d)(3)(iii) also issued under 26 U.S.C. 4064(d)(1). Section 48.4064-1(d)(5) also issued under 26 U.S.C. 4064(d)(2). Section 48.4081-4 also issued under 26 U.S.C. 4083(a)(2). Section 48.4081-6 also issued under 26 U.S.C. 4081(c); Section 48.4081-7 also issued under 26 U.S.C. 4081(e). Section 48.4082-1 also issued under 26 U.S.C. 4082. Section 48.4082-1T also issued under 26 U.S.C. 4082(a). Section 48.4082-2 also issued under 26 U.S.C. 4082. Section 48.4082-5 also issued under 26 U.S.C. 4082. Section 48.4082-6 also issued under 26 U.S.C. 4082(d). Section 48.4082-7 also issued under 26 U.S.C. 4082(d). Section 48.4101-1 also issued under 26 U.S.C. 4101(a). Section 48.4101-2 also issued under 26 U.S.C. 6071(a). Section 48.4191-1 also issued under 26 U.S.C. 4191. Section 48.4191-2 also issued under 26 U.S.C. 4191(b)(2). Section 48.4221-3(e) also issued under 26 U.S.C. 4221(a). Section 48.6416(b)(2)-2(b) also issued under 26 U.S.C. 6416(b). Section 48.6427-8 also issued under 26 U.S.C. 6427(m). Section 48.6427-9 also issued under 26 U.S.C. 6427(m). Section 48.6427-10 also issued under 26 U.S.C. 6427(m). Section 48.6427-11 also issued under 26 U.S.C. 6427(m). Section 48.6435-1T also issued under 26 U.S.C. 6435(a) and 6001. Subpart A—Introduction § 48.0-1 Introduction. The regulations in this part 48 are designated “Manufacturers and Retailers Excise Tax Regulations.” The regulations relate to the excise taxes imposed by chapter 31 and 32 of the Internal Revenue Code. Chapter 31 (relating to retail taxes) imposes tax on certain luxury items, special fuels, fuel used in commercial transportation on inland waterways, and heavy trucks and trailers. Chapter 32 (relating to manufacturers taxes) imposes tax on gas guzzler automobiles, highway-type tires, taxable fuel, aviation fuel, coal, certain vaccines, sporting goods, and taxable medical devices. Although chapter 32 also imposes a tax on firearms, this tax is under the jurisdiction of the Bureau of Alcohol, Tobacco, and Firearms. See part 40 of this chapter for regulations relating to returns, payments, and deposits of taxes imposed by chapters 31 and 32 (other than the tax on firearms imposed by section 4181). [T.D. 8442, 57 FR 48186, Oct. 22, 1992, as amended by T.D. 8659, 61 FR 10453, Mar. 14, 1996; T.D. 9604, 77 FR 72934, Dec. 7, 2012] § 48.0-2 General definitions and attachment of tax. (a) Meaning of terms. (1) The terms defined in the provisions of law contained in the regulations in this part shall have the meanings so assigned to them. (2) [Reserved] (3) The term calendar quarter (4)(i) The term manufacturer (ii) Under certain circumstances, as where a person manufactures or produces a taxable article for another person who furnishes materials under an agreement whereby the person who furnished the materials retains title thereto and to the finished article, the person for whom the taxable article is manufactured or produced, and not the person who actually manufactures or produces it, will be considered the manufacturer. (iii) A manufacturer who sells a taxable article in a knockdown condition is liable for the tax as a manufacturer. Whether the person who buys such component parts and assembles a taxable article from them will also be liable for tax as a further manufacturer of a taxable article will depend on the relative amount of labor, material, and overhead required to assemble the completed article and on whether the article is assembled for a business or personal use. See section 4218 and the regulations thereunder. (5) The term sale (6) The term taxable article (7) The term vendor (8) The term purchaser (9) The term exporter (10) The term exportation (11) The term possession of the United States (b) Attachment of tax. (2) When title passes is dependent upon the intention of the parties as gathered from the contract of sale and the attendant circumstances. In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale is made govern in determining when title passes. (3) In the case of a sale on credit, the tax attaches whether or not the purchase price is actually collected. (4) Where a consignor (such as a manufacturer) consigns articles to a consignee (such as a dealer), retaining ownership in them until they are disposed of by the consignee, title does not pass, and the tax does not attach, until sale by the consignee. Where the relationship between a manufacturer and a dealer is that of principal and agent, title does not pass, and the tax does not attach, until sale by the dealer. (5) In the case of a lease, an installment sale, a conditional sale, or a chattel mortgage arrangement or similar arrangement creating a security interest, a proportionate part of the tax attaches to each payment. See section 4217 and the regulations thereunder for a limitation on the amount of tax payable on lease payments. (6) In the case of use by the manufacturer, the tax attaches at the time the use begins. [T.D. 7536, 43 FR 13515, Mar. 31, 1978, as amended by T.D. 8879, 65 FR 17155, Mar. 31, 2000] § 48.0-3 Exemption certificates. Several sections of the regulations in this part, relating to sales exempt from retailers or manufacturers excise tax, require the retailer or manufacturer (as the case may be) to obtain an exemption certificate from the purchaser to substantiate the exempt character of the sale. Many of these sections also contain specimen forms of acceptable exemption certificates. However, any form of exemption certificate will be acceptable if it includes all the information required to be contained in such a certificate by the pertinent sections of the regulations in this part. If it contains all the required information, a form of exemption certificate that is processed by data processing equipment is acceptable. [T.D. 7536, 43 FR 13516, Mar. 31, 1978. Redesignated by T.D. 8043, 50 FR 32014, Aug. 8, 1985] Subparts B-E [Reserved] Subpart F—Special Fuels Source: T.D. 6505, 25 FR 11217, Nov. 26, 1960, unless otherwise noted. § 48.4041-0 Applicability of regulations relating to diesel fuel after December 31, 1993. Sections 48.4041-3 through 48.4041-17 do not apply to sales or uses of diesel fuel after December 31, 1993. For rules relating to the diesel fuel tax imposed by section 4041 after that date, see § 48.4082-4. [T.D. 8659, 61 FR 10453, Mar. 14, 1996] § 48.4041-3 Application of tax on sales of special motor fuel for use in motor vehicles and motorboats. (a) In general. (b) Liability for tax. (c) Rate of tax In general. (2) Special motor fuel sold for use as a fuel in a motor vehicle. (3) Special motor fuel sold for use as fuel in a motorboat. (d) Example. Example. The N Company is engaged in the manufacture of ceramic products. It has a vehicle which is used to haul clay from a clay pit to its factory. This vehicle has not been registered for highway use and under the applicable State law is not required to be registered for highway use since none of the hauling of clay is done on public highways. The N Company also uses a ditch digging machine in the vicinity of the clay pit for the construction of drains. A fork lift truck is used to move cartons of merchandise from place to place inside the company's warehouse and to assist in the loading of merchandise onto the company's highway trucks for delivery to purchasers. The highway trucks are registered by the State for use on highways. Special motor fuel is used for the operation of all of these items of equipment. Before April 1, 1983, the special motor fuel sold for use as a fuel in the registered highway trucks is subject to tax at the rate specified in § 48.4041-1(b)(2)(i)(A). On or after January 1, 1979, and before April 1, 1983, the special motor fuel sold for use as a fuel in the unregistered truck used to haul clay from the pit to the factory and in the fork lift truck, assuming both of these are used in qualified business uses, is subject to tax at the rate specified in § 48.4041-1(b)(2)(i)(C). If the unregistered truck and forklift are not used in qualified business uses, then the special motor fuel sold for use in these vehicles is taxable at the rate specified in § 48.4041-1(b)(2)(i)(A) since both are motor vehicles. No tax is payable with respect to the special motor fuel sold for use in the ditch digging machine since that machine is not a motor vehicle. On and after April 1, 1983, and before October 1, 1988, special motor fuel sold for use in the registered trucks is taxable at the rate specified in § 48.4041-1(b)(2)(ii)(A) because the trucks are motor vehicles. On and after April 1, 1983, and before October 1, 1988, special motor fuel sold for use in the unregistered truck and the fork lift, assuming that both vehicles are used in off-highway business uses, is exempt from tax as specified in § 48.4041-1(b)(2)(ii)(C). If the unregistered truck and fork lift are not used in off-highway business uses, then the special motor fuel sold for use in these vehicles is taxable at the rate specified in § 48.4041-1(b)(2)(ii)(A) since both are motor vehicles. No tax is payable with respect to the special motor fuel sold for use in the ditch digging machine since that machine is not a motor vehicle. (e) Cross reference. (2) For the definition of the terms “highway”, “motor vehicle”, “special motor fuel”, and “registered”, see paragraphs (a), (c), (f), and (i) of § 48.4041-8. For the definition of the term “off-highway business use”, see section 6421(d)(2). (3) For the exemption from tax with respect to special motor fuel sold for use on a farm for farming purposes or as supplies for vessels, see §§ 48.4041-9 and 48.4041-10, respectively. (4) For credit or refund of tax paid on special motor fuel resold or used otherwise than for the purpose for which purchased, see section 6427(a). [T.D. 8066, 51 FR 14, Jan. 2, 1986] § 48.4041-4 Application of tax on sales of liquid for use as fuel in aircraft in noncommercial aviation. (a) In general. (b) Liability of tax. (c) Rate of tax. (d) Cross references. (2) For the definition of the term “noncommercial aviation”, see paragraph (j) of § 48.4041-8. (3) For the exemption of tax with respect to liquids used as fuel in aircraft in noncommercial aviation sold for use on a farm for farming purposes or as supplies for vessels or aircraft, see §§ 48.4041-9 and 48.4041-10, respectively. For tax-free sales if sellers and purchasers are registered, see § 48.4041-11. (4) For credit or refund of tax paid on fuel used in noncommercial aviation that is resold or used otherwise than for the purpose for which purchased, see section 6427(a). (e) Effective date. [T.D. 8066, 51 FR 15, Jan. 2, 1986] § 48.4041-5 Sales of diesel and special motor fuels and fuel for use in aircraft; rules of general application. (a) Taxability of liquid fuel delivered into purchaser's tanks Fuel supply tanks. (ii) If the seller maintains special devices at the unattended location to account accurately for sales of liquid fuel for nontaxable uses (such as assigning a separate “nontaxable” meter or, in a cardlock system, issuing a special “nontaxable” card to a customer who regularly purchases fuel for nontaxable uses), then such sales of liquid fuel shall be considered nontaxable. The seller must maintain sufficient records of such nontaxable sales and include in these records the name of the purchaser, the date of the purchase, and the quantity of fuel purchased in each sale. (2) Bulk tanks. (i) The liquid fuel is delivered by the seller into a bulk supply tank (or other container) that is not the fuel supply tank of a vehicle, motorboat, or aircraft; and (ii) The purchaser furnishes a written statement to the seller before or at the time of the sale stating that the entire quantity of the liquid fuel covered by the sale is for a taxable purpose as a fuel in such a vehicle, motorboat, or aircraft. If the purchaser fails to provide the written statement required by paragraph (a)(2)(ii) of this section, the purchaser is liable for the tax on the later taxable sale or use. If a purchaser acquires both fuel that is to be used for taxable purposes and fuel that is to be used for nontaxable purposes, and the fuel that is to be used for taxable purposes is stored in a different storage tank (or container) from the tank used to store the fuel to be used for nontaxable purposes, the written statement described in paragraph (a)(2)(ii) of this section will relate to the fuel to be used for taxable purposes if proper records are kept by the purchaser that sufficiently identify the tanks (or containers) into which tax-paid fuel is delivered and the quantities of fuel delivered into those tanks (or containers). If only occasional sales for delivery into a bulk storage tank (or other container) are made to a purchaser, a separate statement must be furnished for each order. However, if sales are regularly or frequently made to a purchaser, a written statement covering all orders for a specified period not to exceed 12 calendar quarters is acceptable. (b) Sales for resale and to consignees. (2) The tax is payable by the person who makes the taxable sale. If a taxable liquid fuel is consigned to a person for sale and the consignor retains ownership in the liquid fuel until it is disposed of by the consignee, the consignor is the person liable for the tax when a taxable sale of the liquid fuel is made by the consignee. If the consignor transfers ownership in the taxable liquid fuel to the consignee before sale of the liquid fuel by the consignee, the consignee is the person liable for the tax upon a subsequent taxable sale of the liquid. However, if ownership of the liquid fuel is transferred back to the consignor or to another person before a taxable sale is made, as described in paragraph (a) of this section, and thereafter a taxable sale of the liquid fuel is made by such person or by another person acting as the person's agent, such person is liable for the tax. See paragraph (d) of § 48.4041-8 for definition of the term “taxable liquid fuel.” [T.D. 8066, 51 FR 15, Jan. 2, 1986, as amended by T.D. 8154, 52 FR 32008, Aug. 25, 1987] § 48.4041-6 Application of tax on use of taxable liquid fuel. (a) In general Diesel fuel. (ii) On or after April 1, 1983, and before August 1, 1984, if a person acquires any diesel fuel by any means other than through a transaction subject to tax under section 4041(a)(1)(A) and uses it as a fuel in a diesel-powered highway vehicle, the person is liable for a tax under section 4041(a)(1)(B) on the quantity of diesel fuel so used at the appropriate rate set forth in paragraph (b)(1)(ii) of § 48.4041-1. If a person acquired any diesel fuel through a transaction for which no tax is imposed by reason of paragraph (b)(1)(ii)(C) of § 48.4041-1 and uses it in other than a nontaxable use, the person is liable for a tax under section 4041(a)(1)(B) on the quantity of fuel so used. See paragraph (b)(1)(ii) (D) or (E) of § 48.4041-1 for the applicable rate of tax. See section 6427(a) for credit or refund of tax where diesel fuel acquired in a transaction subject to tax at the rate set forth in paragraph (b)(1)(ii)(A) of § 48.4041-1 is used as described in paragraph (b)(1)(ii)(C) of § 48.4041-1 or in another nontaxable use. (iii) On or after August 1, 1984, and before October 1, 1988, if a person acquires any diesel fuel by any means other than through a transaction subject to tax under section 4041(a)(1)(A) and uses it as a fuel in a diesel-powered highway vehicle, the person is liable for a tax under section 4041(a)(1)(B) on the quantity of diesel fuel so used at the appropriate rate set forth in paragraph (b)(1)(iii) of § 48.4041-1. If a person acquired any diesel fuel through a transaction for which no tax is imposed by reason of paragraph (b)(1)(iii)(C) of § 48.4041-1 and uses it in other than a nontaxable use, the person is liable for a tax under section 4041(a)(1)(B) on the quantity of fuel so used. See paragraph (b)(1)(iii)(D) of § 48.4041-1 for the applicable rate of tax. See section 6427(a) for credit or refund of tax where diesel fuel acquired in a transaction subject to tax at the rate set forth in paragraph (b)(1)(iii)(A) of § 48.4041-1 is used as described in paragraph (b)(1)(iii)(C) of § 48.4041-1 or in another nontaxable use. (2) Special motor fuel. (ii) On or after April 1, 1983, and before October 1, 1988, if a person acquired any special motor fuel by any means other than through a transaction subject to tax under section 4041(a)(2)(A) and uses it as a fuel in a motor vehicle or motorboat, the person is liable for a tax under section 4041(a)(2)(B) on the quantity of spcial motor fuel so used at the appropriate rate set forth in paragraph (b)(2)(ii) of § 48.4041-1. If a person acquired any special motor fuel through a transaction for which no tax is imposed by reason of paragraph (b)(2)(ii)(C) of § 48.4041-1 and uses it in other than a nontaxable use, the person is liable for a tax under section 4041(a)(2)(B) on the quantity of fuel so used. See paragraph (b)(2)(ii)(D) of § 48.4041-1 for the applicable rate of tax. See section 6427(a) for credit or refund of tax where special motor fuel acquired in a transaction subject to tax at the rate set forth in paragraph (b)(2)(ii)(A) of § 48.4041-1 is used for a purpose described in paragraph (b)(2)(ii)(C) of § 48.4041-1 or in another nontaxable use. (3) Noncommercial aviation. (b) Bulk purchases by users. [T.D. 8066, 51 FR 15, Jan. 2, 1986] § 48.4041-7 Dual use of taxable liquid fuel. Tax applies to all taxable liquid fuel sold for use or used as a fuel in the motor which is used to propel a diesel-powered vehicle or in the motor used to propel a motor vehicle, motorboat, or aircraft, even though the motor is also used for a purpose other than the propulsion of the vehicle, motorboat, or aircraft. Thus, if the motor of a diesel-powered highway vehicle or a motorboat operates special equipment by means of a power take-off or power transfer, tax applies to all taxable liquid fuel sold for this use or so used, whether or not the special equipment is mounted on the vehicle or boat. For example, tax applies to diesel fuel sold to operate the mixing unit on a concrete mixer truck if the mixing unit is operated by means of a power take-off from the motor of the vehicle. Similarly, tax applies to all taxable liquid fuel sold for use or used in a motor propelling a fuel oil truck even though the same motor is used to operate the pump (whether or not mounted on the truck) for discharging the fuel into customers' storage tanks. However, tax does not apply to liquid fuel sold for use or used in a separate motor to operate special equipment (whether or not the equipment is mounted on the vehicle). If the taxable liquid fuel used in a separate motor is drawn from the same tank as the one which supplies fuel for the propulsion of the vehicle, a reasonable determination of the quantity of taxable liquid fuel used in such separate motor or during such period is acceptable for purposes of application of the tax. This determination must be based, however, on the operating experience of the person using the taxable liquid fuel, and the taxpayer must maintain records which support the allocation used. Devices to measure the number of miles the vehicle has traveled, such as hubometers, may be used in making a preliminary determination of the number of gallons of fuel used to propel the vehicle. In order to make a final determination of the number of gallons of fuel used to propel the vehicle, there must be added to this preliminary determination the amount of fuel consumed while idling or warming up the motor preparatory to propelling the vehicle. [T.D. 8066, 51 FR 16, Jan. 2, 1986] § 48.4041-8 Definitions. For purposes of the regulations in this subpart, unless otherwise expressly indicated: (a) Highway. (b) Highway vehicle In general. (2) Exceptions Certain specially designed mobile machinery for nontransportation functions. (ii) Certain vehicles specially designed for off-highway transportation. (iii) Certain trailers and semi-trailers specially designed to perform nontransportation functions off the public highways. (3) Optional application. (4) Diesel-powered highway vehicle. (c) Motor vehicles. (d) Taxable liquid fuel. (1) Diesel fuel as defined in paragraph (e) of this section, (2) Special motor fuel as defined in paragraph (f) of this section, or (3) Any liquid fuel used in an aircraft in “noncommercial aviation”, as defined in paragraph (h) of this section. (e) Diesel fuel. (f) Special motor fuel. special motor fuel (i) Any liquefied petroleum gas (such as propane, butane, pentane, or mixtures of the same); (ii) Liquefied natural gas; or (iii) Benzol, benzene, naptha, or any other liquid, whether a refined, partly refined, or unrefined product, 10 percent of which has been recovered when the thermometer reads 347 °F. (175 °C.) or 95 percent of which has been recoverd when the thermometer reads 464 °F. (240 °C.) when subjected to distillation in accordance with the “Standard Method of Test for Distillation of Gasoline, Naptha, Kerosene, and Similar Petroleum Products” (A.S.T.M. designation: D86) of the American Society for Testing Materials, regardless of the trade name under which sold. (2) The term “special motor fuel” does not include any product taxable under the provisions of section 4081, nor does it include “kerosene, gas oil, or fuel oil”, as defined in paragraph (g) of this section. (g) Kerosene, gas oil, or fuel oil. (2) Products designated as kerosene, gas, oil, or fuel oil which do not fall within the specifications of both paragraphs (g)(1) (i) and (ii) of this section are taxable as special motor fuel if sold or used as a fuel in a motor vehicle or motorboat. (h) Fuel used in the aircraft in noncommercial aviation. (i) Registered. (1) Registered for highway use under the laws of any State, District of Columbia, or foreign country, or (2) Required to be registered for highway use under the law of the State, District of Columbia, or foreign country in which it is operated or situated. Any highway vehicle which is operated under a dealer's tag, license, or permit is considered to be registered. A highway vehicle is not considered to be “registered” solely because there has been issued a special permit for operation of the vehicle at particular times and under specified conditions. However, a highway vehicle which is required to be registered and which also has been issued a special permit for operation of the vehicle under specified conditions, such as carrying an oversized load, is still considered to be “registered”. (j) Noncommercial aviation. [T.D. 8066, 51 FR 17, Jan. 2, 1986, as amended by T.D. 8609, 60 FR 40081, Aug. 7, 1995] § 48.4041-9 Exemption for farm use. (a) In general. (b) Application of exemption. (c) Termination of exemption. [T.D. 8066, 51 FR 18, Jan. 2, 1986] § 48.4041-10 Exemption for use as supplies for vessels or aircraft. (a) Application of exemption. (b) Evidence required to establish exemption. (2) If only occasional sales of fuels are made to a purchaser for use which is exempt from tax as provided in this section, a separate exemption certificate must be furnished for each order. However, if sales are regularly or frequently made to a purchaser for such exempt use, a certificate covering all orders for a specified period not to exceed 12 calendar quarters is acceptable. Such certificates and proper records of invoices, orders, etc., relative to tax-free sales must be kept for inspection by the district director as provided in section 6001. If a seller's records with respect to any sale claimed to be tax free do not include a proper certificate, with supporting invoices and such other evidence as may be necessary to establish the exempt character of the sale, tax is payable by the seller on the sale. (c) Acceptable form of exemption certificate. Exemption Certificate (For use by purchasers of fuels for use as supplies for certain vessels or aircraft (section 4041(g) of the Internal Revenue Code of 1954).) (Date), 19— The undersigned purchaser hereby certifies that he/she is the (owner, charterer, or authorized agent of owner or charterer) of (Name of company and vessel) and that the fuel specified in the accompanying order, or as specified below or on the reverse side hereof, will be used only as fuel supplies for a vessel belonging to one of the following classes of vessels (including aircraft) to which section 4041(g) of the Internal Revenue Code applies: (Check class to which vessel belongs): (1) Vessels (including aircraft) engaged in foreign trade. (2) Vessels engaged in trade between the Atlantic and Pacific ports of the United States. (3) Vessels (including aircraft) engaged in trade between the United States and any of its possessions. (4) Vessels employed in the fisheries or whaling business. (5) Vessels (including aircraft) of war of the United States or a foreign nation. The undersigned understands that if the fuels are sold or used otherwise than as stated above and for a taxable purpose specified in section 4041 of the Internal Revenue Code, the undersigned will be liable for the tax upon such sale or use. It is also understood that this certificate may not be used in purchasing fuels, if such fuels are for use as fuels in pleasure vessels, or of any type of aircraft except— (1) Civil aircraft employed in foreign trade or trade between the United States and any of its possessions, and otherwise entitled to exemption, and (2) Aircraft owned by the United States or any foreign country and constituting a part of the armed forces thereof. The undersigned understands that the fraudulent use of this certificate to secure exemption will subject the undersigned and all others making fraudulent use to a penalty equivalent to the amount of tax due on the sale of the fuel and, upon conviction, to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with the costs of prosecution. The purchaser also understands that it must be prepared to establish by satisfactory evidence the purpose for which the fuel purchased under this certificate was used. (Signature) (Address) Registration Number if fuel used as supplies for civil aircraft engaged in foreign trade or in trade between the United States and any of its possessions. (d) Exemption certificate not obtained prior to filing of seller's excise tax return. (e) Liability of purchaser. (f) Credit or refund. (2) If aviation fuel upon which the tax imposed by section 4041(c) has been paid is sold or used as supplies for aircraft, credit or refund of the tax is available only as a payment under section 6427 to the operator of the aircraft who uses the fuel or to the person who resells the fuel for such use. [T.D. 8066, 51 FR 18, Jan. 2, 1986] § 48.4041-11 Tax-free sales of fuel for use in noncommercial aviation only if sellers and certain purchasers are registered. (a) In general. (b) Form of registration. (c) Transactions excepted from registration. (2) Any purchaser of aircraft fuel who purchases fuel from any customs bonded warehouse or from continuous customs custody elsewhere than in a bonded warehouse is not required to register to purchase aircraft fuel from these sources tax free. (3) Any purchaser of fuel for use in an aircraft which is owned by the United States or any foreign country and constitutes a part of the armed forces thereof is not required to register to purchase aircraft fuel tax free. (4) The exceptions from registration in paragraphs (c) (1), (2), and (3) of this section do not relieve purchasers from the requirement of furnishing an exemption certificate as required by paragraph (d) of this section. (d) Evidence of tax-free sale. (i) Date of purchase, (ii) The purchaser's registration number (or the exception from registration which is relied upon), and (iii) A brief statement of the intended tax-free use of the fuel (for example, by an airline in the business of transporting persons or property for hire). (2) The following form of certificate, which must be adhered to in substance, is acceptable for the purposes of this paragraph. (Date) ____________________, 19____ The undersigned signifies that he/she, or the (Name of purchaser if other than undersigned) of which the undersigned is (Title) holds Certificate of Registry No. __________ or has not registered because (Brief statement of exception from registration relied upon) delivered into a supply tank of the subject aircraft may be purchased free of tax because the fuel will be used (Brief statement of tax-free use) The undersigned understands that if the fuel is used otherwise than as stated above and for a purpose taxable under section 4041 of the Internal Revenue Code, the undersigned will be liable for the tax upon such use, and that the undersigned must be prepared to establish by satisfactory evidence the purpose for which the fuel purchased under this certificate was used. The undersigned also understands that the fraudulent use of this certificate to secure exemption will subject the undersigned and all others making fraudulent use to a penalty equivalent to the amount of tax due on the sale of the fuel and, upon conviction, to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with the costs of prosecution. (Signature) (Address) (3) Except as provided in paragraph (d)(4) of this section, a separate exemption certificate must be furnished for each sale of fuel delivered into a fuel supply tank of an aircraft. If a portion of the fuel is intended to be used for a nontaxable purpose, the entire amount of the fuel may be sold tax free. Exemption certificates and proper supporting records such as invoices, orders, etc., relative to tax-free sales must be readily accessible for inspection by internal revenue officers and retained as provided in section 6001 of the Code and the regulations thereunder. (4) If the purchaser of fuel to be used in an aircraft has reasonable grounds to believe that 90 percent or more of the total of the fuel to be purchased by it during a specified period not to exceed 12 calendar quarters will be used in a tax-free use, it may furnish each of its suppliers an exemption certificate covering all purchases for the specified period. The certificate shall be substantially in the same form as the certificate in paragraph (d)(2) of this section, except that in place of the date the purchaser shall specify the period covered by the certificate, and the purchaser shall give a brief explanation of its grounds for belief that 90 percent or more of its total fuel will be used in a tax-free use. (5) The presumption under section 4041(i) that any liquid delivered into a fuel supply tank of an aircraft is taxable places the duty on the seller of the liquid fuel to use reasonable diligence to satisfy itself that a tax-free sale of fuel to the purchaser is allowed by law. In the absence of circumstances surrounding a sale that would raise a question as to whether a tax-free sale is allowable, the requirement of reasonable diligence is satisfied if the seller receives and retains the required certificate evidencing the right of the purchaser to buy the fuel tax free. However, if the circumstances are such as to indicate the seller has failed to use reasonable diligence, it is not relieved of liability for the tax imposed by section 4041(c). In addition, if the seller fails to obtain and retain the evidence of tax-free sales as required by this paragraph (d), it is not relieved of liability for the tax imposed by section 4041(c). [T.D. 8066, 51 FR 19, Jan. 2, 1986] § 48.4041-12 Sales by United States, etc. The taxes imposed by section 4041 apply to the sale at retail of taxable liquid fuels by the United States or by any agency or instrumentality of the United States, unless by statute specifically exempted from these taxes. However, the exemptions from these taxes provided by section 4041 (f), (g), and (h) and the regulations thereunder contained in this subpart F are available to the extent therein provided. [T.D. 8066, 51 FR 20, Jan. 2, 1986] § 48.4041-13 Other credits or refunds. (a) In general. (b) Tax-paid liquid fuel used by local transit systems. (c) Credit or refund of diesel fuel differential amount. [T.D. 8066, 51 FR 20, Jan. 2, 1986] § 48.4041-14 Exemption for sale to or use by certain aircraft museums. (a) In general. (2) In the case of liquid sold for use in an aircraft owned by an aircraft museum and to be used for the pruposes described in paragraph (a)(1) of this section, a tax-free sale may be made only if the requirements of § 48.4041-11 are met. (b) Cross reference. [T.D. 8066, 51 FR 20, Jan. 2, 1986] § 48.4041-15 Sales to States or political subdivisions thereof. (a) Application of exemption. (b) Evidence required to establish exemption. Exemption Certificate (For use by States and local governments. (section 4041(g)(2) of the Internal Revenue Code).) Date ____________________, 19____. I hereby certify that I am ______________ of ______________ (State or local government) that I am authorized to execute this certificate; and that (Check applicable type of certificate) ______the liquid or liquids specified in the accompanying order, or on the reverse side hereof, (or) ______all orders placed by the purchaser for the period commencing __________ (Date) and ending __________ (Date) (period not to exceed 12 calendar quarters) are, or will be, purchased from __________ (Name of vendor) for the exclusive use of __________ (Governmental unit) of ____________________ (State or local government). I understand that the exemption from tax in the case of sales of liquids under this exemption certificate is limited to the sale of articles purchased for the exclusive use of a State, etc. I understand that the fraudulent use of this certificate for the purpose of securing this exemption will subject me and all parties making such fraudulent use of this certificate to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. Signature ____________________ Address ____________________ [T.D. 7536, 43 FR 13516, Mar. 31, 1978. Redesignated by T.D. 8066, 51 FR 14, Jan. 2, 1986] § 48.4041-16 Sales for export. (a) General rule. (b) Proof of exportation. (c) Shipment to possessions of the United States. [T.D. 7536, 43 FR 13516, Mar. 31, 1978. Redesignated by T.D. 8066, 51 FR 14, Jan. 2, 1986] § 48.4041-17 Tax-free retail sales to certain nonprofit educational organizations. (a) In general. (b) Definition of nonprofit educational organization. (c) Evidence required to establish tax-free sales to a nonprofit educational organization; general rule. (d) Forms of exemption certificates. (1) Form of certificate for exemption from retailers excise taxes for use by a nonprofit educational organization, other than a school operated as an activity of a church or other exempt organization that in itself is not a nonprofit educational organization. Exemption Certificate (For use by a nonprofit educational organization (other than a school operated as an activity of a church or other exempt organization that in itself is not a nonprofit educational organization) purchasing articles subject to retailers excise tax for its exclusive use) __________________, 19____ (Date) I hereby certify that I am __________ (Title) of __________ (Exempt organization); that I am authorized to execute this certificate; and that the articles specified in the accompanying order or on the reverse side hereof are purchased by such organization exclusively for use in its educational activities. I understand that this exemption certificate is for use only by a nonprofit educational organization in the tax-free purchase for its exclusive use of articles subject to the retailers excise tax; and it is agreed that if any article purchased tax free under this exemption certificate is used otherwise, such fact will be reported to the retailer from whom the tax-free purchase was made. The organization claiming exemption under this certificate has received a determination letter (or a ruling) from the Internal Revenue Service holding the organization to be exempt from income tax as an organization described in section 170(b)(1)(A)(ii) that is exempt from income tax under section 501(a) of the Internal Revenue Code (or has received a determination letter (or ruling) under the corresponding provisions of prior revenue laws). The date of such determination letter (or ruling) is ______ and such determination letter (or ruling) has not been withdrawn or revoked. I understand that the fraudulent use of this certificate for the purpose of securing this exemption will subject me and all parties making such fraudulent use of this certificate to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. (Signature of authorized individual) (Address) (2) Form of certificate for exemption from retailers excise taxes for use by a school operated as an activity of a church or other organization described in section 501(c)(3) that in itself is not an educational organization described in section 170(b)(1)(A)(ii) of the Code: Exemption Certificate (For use by or for a school operated as an activity of a church or other organization described in section 501(c)(3) of the Internal Revenue Code of 1954, that is not, in itself, an educational organization described in section 170(b)(1)(A)(ii), purchasing articles subject to retailers excise tax for the exclusive use of the school) — ____________________, 19____ (Date) I hereby certify that I am __________ (Title) of __________ (School, church, parish, etc.); that I am authorized to execute this certificate; and that the articles specified in the accompanying order or on the reverse side hereof are purchased by such institution exclusively for use in its educational activities. I understand that this exemption certificate is for use only by a school operated as an activity of a church or other organization described in section 501(c)(3) of the Internal Revenue Code of 1954, in the tax-free purchase for its exclusive use of articles subject to the retailers excise tax; or by a church, or other organization in the tax-free purchase of any such article for the exclusive use of its school which qualifies for the exemption; and it is agreed that if any article purchased tax free under this exemption certificate is used otherwise, such fact will be reported to the retailer from whom the tax-free purchase was made. The school operated as an activity of the church or other organization described in section 501(c)(3) of the Internal Revenue Code of 1954, normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. I understand that the fraudulent use of this certificate for the purpose of securing this exemption will subject me and all parties making such fraudulent use of this certificate to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. (Signature of authorized individual) (Address) (e) Frequency of certificates. (f) Prima facie evidence of exempt use. (g) Exemption certificate not obtained prior to filing of retailer's excise tax return. [T.D. 7536, 43 FR 13516, Mar. 31, 1978. Redesignated by T.D. 8066, 51 FR 14, Jan. 2, 1986] § 48.4041-18 [Reserved] § 48.4041-19 Exemption for qualified methanol and ethanol fuel. (a) In general. (b) Qualified methanol or ethanol fuel defined. (c) Mixtures which do not qualify as qualified methanol or ethanol fuel. (d) Refunds relating to fuels used to produce qualified fuels. (e) Later blending. (f) Effective date. [T.D. 8152, 52 FR 31617, Aug. 21, 1987] § 48.4041-20 Partially exempt methanol and ethanol fuel. (a) In general. 1/2 (b) Partially exempt methanol or ethanol fuel defined. (c) Mixtures which do not qualify as partially exempt methanol or ethanol fuel. (d) Refunds relating to fuels. (e) Later blending. (f) Records required to be furnished by the taxpayer. (g) Effective date. [T.D. 8152, 52 FR 31617, Aug. 21, 1987] § 48.4041-21 Compressed natural gas (CNG). (a) Delivery of CNG into the fuel supply tank of a motor vehicle or motorboat Imposition of tax. (2) Liability for tax. (b) Bulk sales of CNG In general. (i) The buyer has given the seller a written statement stating that the entire quantity of the CNG covered by the statement is for use by the buyer for a taxable use as a fuel in a motor vehicle or motorboat; and (ii) The seller has given the buyer a written acknowledgement of receipt of the statement described in paragraph (b)(1)(i) of this section. (2) Liability for tax. (c) Exemptions In general. (2) Certificate; in general. (i) The date one year after the effective date of the certificate (which may be no earlier than the date it is signed). (ii) The date a new certificate is provided to the seller. (iii) The date the seller is notified by the Internal Revenue Service or the buyer that the buyer's right to provide a certificate has been withdrawn. (3) Withdrawal of the right to provide a certificate. (4) Model certificate. Certificate of Person Buying Compressed Natural Gas (CNG) for a Nontaxable Use (To support tax-free sales of CNG under section 4041 of the Internal Revenue Code.) Name, address, and employer identification number of seller ____________________ (“Buyer”) certifies the following under penalties of perjury: The CNG to which this certificate relates will be used in a nontaxable use. This certificate applies to the following (complete as applicable): If this is a single purchase certificate, check here ______ and enter: 1. Invoice or delivery ticket number ________________ 2. ________ (number of MCFs) ________ If this is a certificate covering all purchases under a specified account or order number, check here ______ and enter: 1. Effective date ________________ 2. Expiration date ________________ (period not to exceed 1 year after the effective date) 3. Buyer account or order number ________________ Buyer will not claim a credit or refund under section 6427 of the Internal Revenue Code for any CNG to which this certificate relates. Buyer will provide a new certificate to the seller if any information in this certificate changes. Buyer understands that if Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer's right to provide a certificate. Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. In addition, the Internal Revenue Service has not notified Buyer that the right to provide a certificate has been withdrawn from a purchaser to which Buyer sells CNG tax free. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution. Printed or typed name of person signing Title of person signing Employer identification number Address of Buyer Signature and date signed (d) Rate of tax. (e) Effective date. [T.D. 8609, 60 FR 40082, Aug. 7, 1995; 60 FR 50245, Sept. 28, 1995; T.D. 8659, 61 FR 10453, Mar. 14, 1996; T.D. 8879, 65 FR 17155, Mar. 31, 2000; T.D. 9051, 69 FR 15941, Apr. 2, 2003] Subpart G—Fuel Used on Inland Waterways Source: T.D. 7536, 43 FR 13516, Mar. 31, 1978, unless otherwise noted. § 48.4042-1 Tax on fuel used in commercial waterway transportation. (a) In general. see (b) Amount of tax. (c) Person liable for tax. (d) Time of use. (e) Liquid fuel. (f) Commercial waterway transportation In general. (i) Use of the vessel is in the business of transporting property for compensation or hire, or (ii) Use of the vessel is in transporting property in the business of the owner, lessee, or operator of the vessel (whether or not a fee is charged). Except for the operation of certain fishing vessels, the operation of all vessels satisfying the requirements of paragraph (f)(1)(i) or (1)(ii) of this section will be deemed “commercial waterway transportation,” regardless of whether the vessel is actually engaged in the transportation of property on a particular voyage. Thus, “commercial waterway transportation” includes the operation of vessels while moving empty of cargo, while awaiting passage through locks, while dislodging vessels grounded on a sandbar, while moving to or from a repair facility, while maneuvering around loading and unloading docks, and while fleeting barges into a single tow. (2) Fishing vessels exception. (g) Specified waterways. (1) Alabama-Coosa Rivers. (2) Allegheny River. (3) Apalachicola-Chattachoochee and Flint Rivers. (4) Arkansas River (McClellan-Kerr Arkansas River Navigation System). (5) Atchafalaya River. (6) Atlantic Intracoastal Waterway (A.I.W.W.). (7) Black Warrior-Tombigbee-Mobile Rivers. (8) Columbia River (Columbia-Snake Rivers Inland Waterways). (9) Cumberland River: Junction with Ohio River at RM 0 to head of navigation, upstream to Carthage, Tennessee, at RM 313.5. (10) Green and Barren Rivers. (11) Gulf Intracoastal Waterway (G.I.W.W.) (12) Illinois Waterway. (13) Kanawha River. (14) Kaskaskia River. (15) Kentucky River. (16) Lower Mississippi River. (17) Upper Mississippi River (18) Missouri River. (19) Monongahela River. Ohio River. (21) Ouachita-Black Rivers. (22) Pearl River. (23) Red River. (24) Tennessee River. (25) Tennessee-Tombigbee Waterway. (26) White River. (27) Willamette River. [T.D. 7727, 45 FR 70861, Oct. 27, 1980, as amended by T.D. 8659, 61 FR 10453, Mar. 14, 1996] § 48.4042-2 Special rules. (a) Dual use of liquid fuels Dual use by the propulsion engine. (2) Common tank. (b) Voyages crossing boundaries of the specified waterways. (1) Better evidence of fuel consumed ( e.g., (2) The existence of factors causing a substantial discrepancy between the rate of fuel consumption on the specified and nonspecified waterways. (c) Records required. (i) Quantity of fuel and date of acquisition of all liquid fuels acquired for both taxable and nontaxable purposes, whether delivered to storage tanks or tanks on a vessel; (ii) Date and quantity of fuel pumped into tanks on each vessel; (iii) Identification number or name of each vessel using fuel; and (iv) Departure time, departure point, route traveled, destination, and arrival time for each vessel. (2) Vessel operators seeking a tax exemption provided by section 4042(c) must maintain records which will support any exemption claimed. Where applicable, the records shall contain: (i) The draft of the vessel on each voyage (for exemption under section 4042(c)(1)); (ii) The type of vessel in which fuel is consumed and the type of vessel in which cargo is transported (for exemption under section 4042(c) (1), (2) or (4); and (iii) The ultimate use of cargo transported (for exemption under section 4042(c)(3)). [T.D. 7727, 45 FR 70862, Oct. 27, 1980, as amended by T.D. 8442, 57 FR 48186, Oct. 22, 1992] § 48.4042-3 Certain types of commercial waterway transportation excluded. (a) Deep draft ocean-going vessels In general. (i) The vessel was designed primarily for use on the high seas; and (ii) The vessel has a draft of more than 12 feet on the voyage for which the fuel tax exclusion is sought ( e.g. (2) Meaning of “designed primarily for use on the high seas.” (3) Meaning of “high seas.” (4) Twelve foot draft Definition. (ii) Example. Example. A ship with a design draft of 20 feet (maximum certified draft when fully loaded) travels into a taxable waterway with only a partial load, such that the draft is 12 feet. The ship unloads and departs the waterway empty. The portion of the fuel consumed for propulsion of the vessel on the specified waterway is taxable because only vessels with a draft greater than 12 feet are eligible for the section 4042(c)(1) exemption from tax. (b) Commercial passenger vessels. (c) Exemption for State or local governments In general. (i) The vessel is being used by a State or local government; and (ii) The vessel is being used in transporting property in the State or local government's business. (2) State or local government. (3) Government business. (d) Ocean-going barges. (1) One or more of the barges in the tow is not a LASH barge, SEABEE barge, or other ocean-going barge carried aboard on ocean-going vessel; or (2) One or more of the barges in the tow is not on an international voyage; or (3) Part of the cargo in the tow is not being transported internationally. [T.D. 7727, 45 FR 70862, Oct. 27, 1980] Subpart H—Motor Vehicles, Tires, Tubes, Tread Rubber, and Taxable Fuel Source: T.D. 6648, 28 FR 3633, Apr. 13, 1963, unless otherwise noted. Automotive and Related Items motor vehicles § 48.4052-1 Heavy trucks and trailers; certification requirement. (a) In general. (b) References to § 145.4052-1(a)(2) of this chapter. (c) Effective date. [T.D. 8879, 65 FR 17155, Mar. 31, 2000] § 48.4061(a) [Reserved] § 48.4061(a)-1 Imposition of tax; exclusion for light-duty trucks, etc. (a) Imposition of tax In general. (i) Automobile truck and bus chassis and bodies; (ii) Truck and bus trailer and semitrailer chassis and bodies; and (iii) Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. For purposes of this section, a sale of an automobile truck or bus, or a truck or bus trailer or semitrailer, shall be considered to be a sale of a chassis and of a body enumerated in this paragraph (a)(1). (2) Special rule applicable to chassis and bodies. (3) Equipment installed on chassis or bodies. (ii) Amounts charged for machinery or equipment that is installed on a taxable chassis or body are not part of the taxable sale price of the chassis or body if (A) such machinery or equipment does not contribute toward the highway transportation function of the chassis or body and (B) the reasonableness of the charge for the machinery or equipment is supportable by adequate records. Examples of such machinery or equipment are the following: equipment designed to spread materials on the highway; machinery or equipment used solely in the operation of mobile amusement rides; television equipment mounted in a mobile television studio; machine shop equipment mounted in a mobile machine shop; and car crushing equipment mounted on the chassis of a mobile car crusher. (4) Passenger automobile chassis and bodies, motorcycles, etc. (5) Cross references. (b) Rate and computation of tax In general. Percent (i) For articles sold during the period beginning on January 1, 1959, and ending on September 30, 1979 10 (ii) For articles sold on or after October 1, 1979 5 (2) Determination of price subject to tax. (3) Tax on trailers sold before December 11, 1971. (4) Passenger automobile chassis and bodies and related articles sold before December 11, 1971. (c) Liability for tax. (d) Highway vehicle Definition. (2) Exceptions Certain specially designed mobile machinery for nontransportation functions. (ii) Certain vehicles specially designed for offhighway transportation. (iii) Certain trailers and semi-trailers specially designed to perform non-transportation functions off the public highways. (3) Optional application. (4) Highway vehicles not subject to section 4061 tax. (e) Sale of a chassis or body for use as a component of a vehicle other than a highway vehicle In general. (2) Exceptions based on unitary concept Completed vehicles not qualifying as highway vehicles. (ii) Tax-free sales of chassis and bodies. (iii) Requirements to be met. (A) Retain in his possession the statement required to be furnished by the purchaser and such other evidence as may be furnished by the purchaser to support the tax-free sale. Such evidence shall be retained for at least 3 years from the due date of the tax that would be due if the transaction in question had been a taxable sale; and (B) Indicate on the invoice with respect to the sale of the chassis or body that the sale of such article is made free of tax under paragraph (e)(2)(ii) of this section. (iv) Form of statement. __________________________, 19____ Under the penalty of perjury, the undersigned certifies that he, or the ____________________________, (Name of purchaser if other than the undersigned) of which he is __________________ (Title), is in the business of ______________________ (State nature of business), and that the chassis and/or bodies covered by the accompanying order or contract for purchase from ____________________ (Name and address of seller) are purchased for (check One) ____ ☐ use, or for ☐ resale for use, as components of the following type or types of nonhighway vehicles: 1. 2. 3. The undersigned understands that he must be prepared to establish by satisfactory evidence the actual use or disposition of such chassis or bodies and that, upon their use or disposition other than use as components of a nonhighway vehicle, he consents to be treated as the manufacturer of any such chassis or body purchased by him free of the tax imposed by section 4061(a). The undersigned also understands that he and all guilty parties will, for use of this statement to willfully attempt to evade or defeat the tax imposed under section 4061, be subject, under section 7201, to a fine of not more than $10,000, or imprisonment for not more than 5 years, or both, together with the costs of prosecution. The undersigned agrees to retain in his possession a copy of this statement for at least 3 years from its date. (Signature) (Address) (v) Refund or credit of overpayment. (vi) Cross reference. (f) Exclusion of light-duty trucks, buses, and related articles from tax In general. (A) Automobile truck and bus chassis and bodies, and (B) Truck trailer and semitrailer chassis and bodies, suitable for use with a trailer or semitrailer having a gross vehicle weight of 10,000 pounds or less (as so determined). (ii) For purposes of this part, a chassis or body is suitable for use with a vehicle having a gross vehicle weight of 10,000 pounds or less (hereafter referred to in this paragraph (f) as a “light-duty vehicle”) if such chassis or body is commonly used with such a vehicle or possesses actual, practical, and commercial fitness for such use. A truck or bus chassis, sold after December 10, 1971, which is suitable for use with a light-duty vehicle, is not subject to the tax imposed by section 4061(a)(1) regardless of the body actually mounted thereon. Similarly, a truck trailer or semitrailer chassis sold after such date, suitable for use with a trailer or semitrailer having a gross vehicle weight of 10,000 pounds or less, which trailer or semitrailer is suitable for use in connection with a light-duty towing vehicle, is not subject to such tax regardless of the body actually mounted thereon. A truck or bus body, sold after such date, which is suitable for use with a light-duty vehicle, is not subject to such tax even though it may also be suitable for use with (and is actually a component of) a vehicle having a gross vehicle weight in excess of 10,000 pounds. Similarly, a truck trailer or semitrailer body sold after such date, suitable for use with a trailer or semitrailer having a gross vehicle weight of 10,000 pounds or less, which trailer or semitrailer is suitable for use with a light-duty towing vehicle, is not subject to such tax even though it may also be suitable for use with (and is actually a component of) a trailer or semitrailer having a gross vehicle weight of more than 10,000 pounds, or is used in connection with a vehicle having a gross vehicle weight of more than 10,000 pounds. (iii) Where an exempt body is mounted on a taxable chassis, or a taxable body is mounted on an exempt chassis, the taxable chassis or taxable body, as the case may be, nevertheless remains subject to such tax, if the resulting vehicle is a highway vehicle as defined in paragraph (d) of this section. (iv) Where the modification of an article, exempt from tax when sold by the original manufacturer, constitutes further manufacture after the original manufacturer's sale, a tax may be imposed on the subsequent manufacturer's sale or use of the modified article. (2) Parts and accessories. (A) It is sold by the manufacturer on or in connection therewith, or with the sale of, a vehicle enumerated in paragraph (f)(1)(i) of this section which is not subject to such tax, and (B) It is not a replacement part (as defined in paragraph (f)(2)(ii) of this section). (ii) For purposes of this paragraph (f)(2), a part or accessory is considered sold with a vehicle if, as of the time the article is sold by the manufacturer, the part or accessory has been ordered from such manufacturer for use with the vehicle. Thus, for example, original equipment sold after December 10, 1971, with a light-duty vehicle, consisting of parts and accessories which are ordered from the manufacturer of the vehicle not later than the time at which such vehicle is sold by him (whether or not installed as of such time) are not subject to such tax. For purposes of this paragraph (f)(2), a part is a replacement part, regardless of when ordered,if its use with a vehicle is as a replacement for a part of such vehicle. Therefore, spare parts or accessories sold separately or ordered with a light-duty truck are subject to the tax imposed on sales of parts or accessories by section 4061(b)(1), unless they are excluded from tax as articles used interchangeably between truck and passenger vehicles under the provisions of section 4061(b)(2). (3) Gross vehicle weight. (ii) A manufacturer must specify or establish a weight rating for each chassis, body, or vehicle sold by him after September 22, 1971, if such article requires no additional manufacture other than (A) the addition of readily attachable articles, such as tire or rim assemblies or minor accessories, (B) the performance of minor finishing operations, such as painting, or (C) in the case of a chassis, the addition of a body. If an article is specially manufactured to the purchaser's specifications, such specifications may be used to establish the gross vehicle weight of the article. (iii) A manufacturer shall maintian a record of the gross vehicle weight rating of each truck, bus, trailer, and semitrailer sold by him and excluded from the tax imposed by section 4061(a)(1) by reason of section 4061(a)(2) and this paragraph (f). For this purpose, a record of the serial number of each such article shall be treated as a record of the gross vehicle weight rating of the article if such rating is indicated by the serial number. (iv) If (A) the manufacturer's rating indicated in a label or identifying device affixed to an article, (B) the rating set forth in his sales invoice or warranty agreement, and (C) his advertised rating for that article (or two or more identical articles) are inconsistent, the highest of such ratings will be considered to be the manufacturer's gross vehicle weight rating specified or established for purposes of the tax imposed by section 4061(a)(1). (v) With respect to articles sold after January 31, 1972, the manufacturer's gross vehicle weight rating must take into account the strength of the chassis frame, the axle capacity and placement, and the spring, brake, rim, and tire capacities. The component with the lowest weight rating ordinarily shall be considered determinative of the gross vehicle weight. If the capacity of any of the readily attachable components (springs, brakes, rims, or tires) would otherwise be determinative of a gross vehicle weight rating of 10,000 pounds or less, no readily attachable component will be taken into account in determining such rating unless the rating determined solely on the basis of the chassis frame or the total of the axle ratings is 12,000 pounds or less. (vi) For purposes of paragraph (f)(3)(v) of ths section, the term “total of the axle ratings” means the sum of the maximum load carrying capability (capacity and placement) of the axles (without regard to springs, brakes, rims, and tires) and, in the case of a trailer or semitrailer, the weight, if any, that is to be borne by a vehicle used in combination with the trailer or semitrailer for which gross vehicle weight is determined. [T.D. 7461, 42 FR 2672, Jan. 13, 1977, as amended by T.D. 7461, 42 FR 5695, Jan. 31, 1977; T.D. 7566, 43 FR 41389, Sept. 18, 1978] § 48.4061(a)-2 Bonding of importers. (a) Authority for requiring bond. Sec. 623. Bonds and other security. (b) Whenever a bond is required or authorized by a law, regulation, or instruction which the Secretary of the Treasury or the Customs Service is authorized to enforce, the Secretary of the Treasury may— (1) Except as otherwise specifically provided by law, prescribe the conditions and form of such bond, and fix the amount of penalty thereof, whether for the payment of liquidated damages or of a penal sum: Provided, (2) Provide for the approval of the sureties on such bond, without regard to any general provision of law. (3) Authorize the execution of a term bond the conditions of which shall extend to and cover similar cases of importations over such period of time, not to exceed one year, or such longer period as he may fix when in his opinion special circumstances existing in a particular instance require such longer period. (4) Authorize, to the extent that he may deem necessary, the taking of a consolidated bond (single entry on term), in lieu of separate bonds to assure compliance with two or more provisions of law, regulations, or instructions which the Secretary of the Treasury or the Customs Service is authorized to enforce. A consolidated bond taken pursuant to the authority contained in this subsection shall have the same force and effect in respect of every provision of law, regulation, or instruction for the purposes for which it is required as though separate bonds had been taken to assure compliance with each such provision. (c) The Secretary of the Treasury may authorize the cancellation of any bond provided for in this section, or of any charge that may have been made against such bond, in the event of a breach of any condition of the bond, upon the payment of such lesser amount or penalty or upon such other terms and conditions as he may deem sufficient. (d) No condition in any bond taken to assure compliance with any law, regulation, or instruction which the Secretary of the Treasury or the Customs Service is authorized to enforce shall be held invalid on the ground that such condition is not specified in the law, regulation, or instruction authorizing or requiring the taking of such bond. (e) The Secretary of the Treasury is authorized to permit the deposit of money or obligations of the United States, in such amount and upon such conditions as he may by regulation prescribe, in lieu of sureties on any bond required or authorized by a law, regulation, or instruction which the Secretary of the Treasury or the Customs Service is authorized to enforce. (b) Application for determination whether bond required Requirement of application In general. (ii) Form of application. ( a ( b ( c ( d ( e (2) Exceptions. (i) Incidentally imported by an individual for his personal use. (ii) Brought into the United States for export to a foreign country or possession of the United States. (iii) Admitted to the United States free of duty as an instrument of international traffic. (iv) Admitted to the United States free of duty as a temporary importation under bond. (v) Returned to the United States after having been sold in the United States and exported. (c) Requirement of bond In general. (2) Execution of bond In general. (ii) Cancellation clause. ( a ( b ( c (iii) Changes in bond. (3) Satisfactory surety Approved surety company or bonds or notes of the United States. ( a ( b (ii) Other surety acceptable in discretion of district director. ( a ( b ( c ( d ( e ( f (iii) Conditions to be met by individual sureties. ( a ( b ( c ( d ( e Partners may not act as sureties upon bonds of their partnership. Stockholders of a corporate principal may be accepted as sureties provided their qualifications as such are independent of their holdings of the stock of the corporation. (iv) Adequacy of surety. (4) New or additional bond. (d) Termination of requirement Application for relief from requirement. (2) Relief from requirement. (e) Evidence required for release of imported articles from customs custody In general. Federal Register, (2) Form of evidence. (i) Bond required. ( a ( b ( c ( d ( e A statement under this subdivision shall be furnished to the importer by the district director, upon request of the importer, in every case where such importer furnishes the district director with information which establishes to the satisfaction of the district director that the importer has given bond in an amount sufficient to protect the interests of the United States with respect to any tax under section 4061(a) which may become due in respect of the articles to which the request relates, and with such other information as is required under this subdivision to be shown in the statement. Such request, together with such information, shall be submitted by the importer immediately upon receipt by him of notice that articles taxable under section 4061(a) have been exported to his order. A separate request shall be made in respect of each shipment. Each statement given under this subdivision shall be executed in duplicate. The original of such statement shall be furnished by the district director to the importer and the copy shall be retained by the district director. (ii) No bond required. ( a ( b A statement under this subdivision shall be furnished to the importer by the district director on the date on which the district director determines that the importer is not required to give a bond under this section. Such statement shall be executed in triplicate. The original of such statement and one signed copy shall be furnished by the district director to the importer, and one copy shall be retained by the district director. Additional signed copies of such statement will be furnished by the district director to the importer upon request of the importer. However, once such statement, or a signed copy thereof, has been furnished by the importer to a collector of customs, the requirements imposed by subparagraph (1) of this paragraph are deemed to be satisfied in respect of all articles taxable under section 4061(a) which thereafter arrive in the United States for release to or for the importer in a port under the jurisdiction of such collector of customs, until such time, if any, as such collector of customs receives written notification from the district director or the Commissioner of Customs that such statement has been withdrawn. (46 Stat. 759; 19 U.S.C. 1623) [T.D. 6499, 25 FR 10347, Oct. 28, 1960, as amended by T.D. 7517, 42 FR 58935, Nov. 14, 1977] § 48.4061(a)-3 Definitions. For purposes of the tax imposed by section 4061, unless otherwise expressly indicated: (a) Automobile truck. (b) Other automobile. (c) Tractor. § 48.4061(a)-4 Parts or accessories sold on or in connection with chasis, bodies, etc. (a) In general. (b) Essential equipment. § 48.4061(a)-5 Sale of automobile truck bodies and chassis. (a) Sale of completed vehicle. (b) Cross references. [T.D. 7461, 42 FR 2675, Jan. 13, 1977] § 48.4061(b) [Reserved] § 48.4061(b)-1 Imposition of tax. (a) In general. (b) Rates of tax. Percent (1) Parts or accessories sold during the period January 1, 1959, to June 30, 1965, inclusive 8 (2) Parts or accessories sold on or after July 1, 1965 5 The tax is computed by applying to the price for which the part or accessory is sold the rate in effect at the time of the sale. For definition of the term “price” see section 4216 and the regulations thereunder contained in Subpart M of this part. (c) Liability for tax. [T.D. 6648, 28 FR 3633, Apr. 13, 1963, as amended by T.D. 6753, 29 FR 12717, Sept. 9, 1964] § 48.4061(b)-2 Definition of parts or accessories. (a) In general. (b) Articles of a general use. (c) Materials of a general use General rule. (2) Articles made for immediate installation or repair. (d) Examples of articles taxable as parts or accessories. (e) Effective date. (f) Cross references. (1) Tires and inner tubes, see section 4071 and the regulations thereunder contained in subpart H of this part; (2) Automobile radio and television receiving sets, see section 4141 and the regulations thereunder contained in subpart J of this part; and (3) Fare registers and fare boxes for use on buses and automobiles, see section 4191 and the regulations thereunder contained in subpart L of this part. [T.D. 6648, 28 FR 3633, Apr. 13, 1963, as amended by T.D. 6655, 28 FR 5235, May 25, 1963] § 48.4061(b)-3 Rebuilt, reconditioned, or repaired parts or accessories. (a) Rebuilt parts or accessories. (b) Reconditioned parts or accessories. (c) Repaired parts or accessories. § 48.4061-1 Temporary regulations with respect to floor stock refunds or credits on cement mixers. (a) In general Refund or credit. (i) A manufacturer, producer, or importer paid the tax imposed by section 4061 (relating to imposition of tax on motor vehicles) on the sale of a cement mixer after June 30, 1968, and before January 1, 1970, and (ii) Such cement mixer was held by a dealer on January 1, 1970, for purposes of resale and was not used, the manufacturer, producer, or importer is entitled to a credit or refund (without interest) of the amount of tax he paid on his sale of such cement mixer. (2) Time for filing claim. (3) Other provisions applicable. (b) Definitions. (1) Cement mixer. (i) Any article designed to be placed or mounted on an automobile truck chassis or truck trailer or semitrailer chassis and to be used to process or prepare concrete, and (ii) Parts or accessories designed primarily for use on or in connection with an article described in subdivision (i) of this subparagraph. (2) Dealer. (3) Held by a dealer. (c) Other requirements. [T.D. 7090, 36 FR 3893, Mar. 2, 1971] § 48.4062(a) [Reserved] § 48.4062(a)-1 Specific parts or accessories. Spark plugs, storage batteries, leaf springs, coils, timers, and tire chains, which are suitable for use on or in connection with, or as component parts of, automobile trucks, other automobiles, tractors, or other vehicles enumerated in section 4061(a), are considered parts of, or accessories for, such articles whether or not primarily designed or adapted for such use. § 48.4062(b) [Reserved] § 48.4062(b)-1 Rebuilt parts or accessories sold on an exchange basis. The sale price of a rebuilt part or accessory on which the tax is to be computed shall not include the value of a like part or accessory accepted in exchange. The total amount charged in excess of the amount allowed for a like article accepted in an exchange will be the basis for tax. For example, if a rebuilt automobile engine is sold for $100, plus another automobile engine, the tax on the rebuilt engine will be computed on the basis of $100. § 48.4063-1 Tax-free sales of bodies to chassis manufacturers. Under the provisions of section 4063(b), the tax imposed by section 4061(a) shall not apply to bodies sold by the manufacturer thereof to a manufacturer (but not an importer) of automobile trucks (as defined by § 48.4061(a)-3(a)) to be sold by the purchaser. Thus, a manufacturer of automobile truck bodies is permitted to sell such bodies tax free to manufacturers of automobile truck chassis. This section does not apply with respect to the sale of an automobile truck chassis to manufacturers of automobile truck bodies. However, see § 48.4061(a)-1(e) with respect to the sale of an automobile truck chassis for use in the manufacture or assembly of a nonhighway vehicle (within the meaning of § 48.4061(a)-1(d)). In order to effect a tax-free sale of a body as provided in this section, both the seller and purchaser must comply with the registration and other requirements of section 4222 and the regulations thereunder. A chassis manufacturer who purchases a body tax free as provided in this section shall, for purposes of application of the tax imposed by section 4061(a), be considered the manufacturer of such body. [T.D. 7461, 42 FR 2675, Jan. 13, 1977] § 48.4063-2 Tax-free sales of parts or accessories sold for resale on or in connection with the first retail sale of a light-duty truck. (a) In general. (b) Evidence required for tax-free sales of light-duty truck parts and accessories In general. (2) Revocation or suspension of registration or right to use exemption certificate. (3) Exemption certificate. (ii) Where only occasional sales are made, a separate exemption certificate shall be furnished for each order. However, where sales are regularly or frequently made to a purchaser for such exempt use, a certificate covering all sales for a specified period not to exceed 12 calendar quarters will be acceptable. Such certificates and proper records of invoices, orders, etc. relative to tax-free sales must be kept for inspection by the district director as provided in section 6001 and the regulations thereunder. (iii) The following form of exemption certificate will be acceptable for purposes of this section and must be adhered to in substance. Exemption Certificate (For use by ultimate purchaser who purchase parts or accessories from a manufacturer, producer, importer, first or second purchaser for use on or in connection with the first retail sale of a light-duty truck. (Section 4063 of the Internal Revenue Code.)) (Date) ______________________ 19____. 1. I, the undersigned, certify that I am, or the (Name of company __________________ of which I am (Position held __________, is purchasing from the manufacturer, producer, importer, first or second purchaser the parts or accessories specified in section 2 below (or in the purchase order or invoice attached hereto) for use on or in connection with a substantially contemporaneous purchase of a new light-duty truck specified in section 3 below. I also certify that (check applicable type of certificate) ______ the article or articles specified in the accompanying order, as described below, or __________ all orders placed by the purchaser for the period commencing (Date) ______ and ending (Date) ______ (period not to exceed 12 calendar quarters), will be used only for the above stated tax-exempt purposes and will not be used as a replacement part. I understand that the willful use of this exemption certificate to evade or defeat the manufacturers excise tax otherwise applicable to these parts or accessories will subject me to a fine of not more than $10,000 or imprisonment for not more than 5 years, or both, together with cost of prosecution. (Signature) ____________________. (Address) ____________________. 2. Description of parts and accessories Type Quantity Price Total 3. Description of new light-duty truck (a) Type: (b) Quantity, (c) Serial Number. (d) GVWR: (e) Date of Sale, (f) Invoice Number. (g) Name and Address of Vendor of Vehicle. (c) Information; records Information to be furnished to vendee. (2) Records of vendor. (3) Records of vendee. (d) Duty of selling manufacturer to ascertain validity of tax-free sale. (e) Cross reference. (f) Effective date. [T.D. 7834, 47 FR 42344, Sept. 27, 1982] § 48.4063-3 Other tax-free sales. For provisions relating to tax-free sales of articles referred to in section 4061, see: (a) Section 4221, relating to certain tax-free sales; (b) Section 4222, relating to registration; and (c) Section 4223, relating to special rules pertaining to further manufacture; and the regulations thereunder contained in Subpart N of this part. [T.D. 7727, 28 FR 3633, Apr. 13, 1963. Redesignated by T.D. 7834, 47 FR 42344, Sept. 27, 1982] § 48.4064-1 Gas guzzler tax. (a) General rule In general. (2) Tables. If the fuel economy of the model type in which the automobile falls is: The tax is— Miles per gallon: At least 15 0 At least 14 but less than 15 $200 At least 13 but less than 14 300 Less than 13 550 (ii) In the case of a 1981 model year automobile: If the fuel economy of the model type in which the automobile falls is: The tax is— Miles per gallon: At least 17 0 At least 16 but less than 17 $200 At least 15 but less than 16 350 At least 14 but less than 15 450 At least 13 but less than 14 550 Less than 13 650 (iii) In the case of a 1982 model year automobile: If the fuel economy of the model type in which the automobile falls is: The tax is— Miles per gallon: At least 18.5 0 At least 17.5 but less than 18.5 $200 At least 16.5 but less than 17.5 350 At least 15.5 but less than 16.5 450 At least 14.5 but less than 15.5 600 At least 13.5 but less than 14.5 750 At least 12.5 but less than 13.5 950 Less than 12.5 1,200 (iv) In the case of a 1983 model year automobile: If the fuel economy of the model type in which the automobile falls is: The tax is— Miles per gallon: At least 19 0 At least 18 but less than 19 $350 At least 17 but less than 18 500 At least 16 but less than 17 650 At least 15 but less than 16 800 At least 14 but less than 15 1,000 At least 13 but less than 14 1,250 Less than 13 1,550 (v) In the case of a 1984 model year automobile: If the fuel economy of the model type in which the automobile falls is: The tax is— Miles per gallon: At least 19.5 0 At least 18.5 but less than 19.5 $450 At least 17.5 but less than 18.5 600 At least 16.5 but less than 17.5 750 At least 15.5 but less than 16.5 950 At least 14.5 but less than 15.5 1,150 At least 13.5 but less than 14.5 1,450 At least 12.5 but less than 13.5 1,750 Less than 12.5. 2,150 (vi) In the case of a 1985 model year automobile: If the fuel economy of the model type in which the automobile falls is: The tax is— Miles per gallon: At least 21 0 At least 20 but less than 21 $500 At least 19 but less than 20 600 At least 18 but less than 19 800 At least 17 but less than 18 1,000 At least 16 but less than 17 1,200 At least 15 but less than 16 1,500 At least 14 but less than 15 1,800 At least 13 but less than 14 2,200 Less than 13 2,650 (vii) In the case of a 1986 or later model year automobile: If the fuel economy of the model type in which the automobile falls is: The tax is— Miles per gallon: At least 22.5 0 At least 21.5 but less than 22.5 $500 At least 20.5 but less than 21.5 650 At least 19.5 but less than 20.5 850 At least 18.5 but less than 19.5 1,050 At least 17.5 but less than 18.5 1,300 At least 16.5 but less than 17.5 1,500 At least 15.5 but less than 16.5 1,850 At least 14.5 but less than 15.5 2,250 At least 13.5 but less than 14.5 2,700 At least 12.5 but less than 13.5 3,200 Less than 12.5 3,850 (3) Liability for tax. (b) Definitions Sale. (2) Manufacturer. (3) Automobile. (i) Propelled by an engine powered by fuel; (ii) Manufactured primarily for use on public streets, roads, and highways (except any vehicle operated exclusively on a rail or rails); (iii) Rated at 6,000 pounds gross vehicle weight or less; and (iv) Requiring no further manufacturing operations to perform its intended function, other than the addition of readily attachable components, such as mirrors or tire and rim assemblies, or minor finishing operations, such as painting. For this purpose, gross vehicle weight means the value specified by the manufacturer as the maximum design loaded weight of a single vehicle. An automobile does not include a nonpassenger automobile as defined in regulations in effect on November 9, 1978 (49 CFR 523.5 (1978)), which were prescribed by the Secretary of Transportation for section 501 of the Motor Vehicle Information and Cost Savings Act (15 U.S.C. 2001). In addition, an automobile does not include the following: any vehicle sold for use and used primarily as an ambulance or combination ambulance-hearse; any vehicle sold for use and used by the United States or by a State or local government primarily for police or other law enforcement purposes; or any vehicle sold for use and used primarily for firefighting purposes. (4) Model year. (5) Model type. (6) Fuel economy. (7) Fuel. (c) Determination of fuel economy. (d) Special rule for small manufacturers In general. (2) Definitions Small manufacturer. (ii) Manufacturer. (iii) Members of a controlled group. (3) Basis for determination Maximum feasible fuel economy level. (ii) Decision to grant alternate rate schedule. e.g., (iii) Alternate rate schedule and tax. Example. Manufacturer X, a small manufacturer of automobiles specifically designed to accommodate disabled passengers, applied for a determination that it is not feasible for X to meet the statutory tax-free fuel economy level for a particular model type of X's 1982 model year automobiles. It was determined that the maximum feasible fuel economy level for that model type was 15 miles per gallon. The Secretary decided to grant X an alternate rate schedule. The alternate rate schedule for the model type would be as follows: If the fuel economy of the automobile is: The tax is— Miles per gallon: At least 15 0 At least 14 but less than 15 $200 At least 13 but less than 14 350 At least 12 but less than 13 450 At least 11 but less than 12 600 At least 10 but less than 11 750 At least 9 but less than 10 950 Less than 9 1,200 Thus, if X's 1982 automobiles of that model year and type attain only 12 miles per gallon (because X fails to modify them to reach the maximum feasible fuel economy level before they are sold), the tax imposed upon the sale of each automobile is $450 (instead of the $1,200 tax (see the applicable statutory tax table set forth in section 4064(a)(3)), which would have been imposed had no alternate rate schedule been prescribed). (4) Duration of determination. (5) Requirements for application. (i) Identify the model year or years, and particular model type or types for which a determination is requested; (ii) (A) In the case of an application for model year 1980, be submitted not later than May 8, 1980; (B) In case of an application for model year 1981, be submitted not later than 9 months before the beginning of that model year or March 10, 1980, whichever is later; (C) In the case of an application for model year 1982 or any subsequent model year, be submitted not later than 9 months before that model year; (iii) Be submitted in three copies to: Commissioner of Internal Revenue, Attention: Associate Chief Counsel (Technical), 1111 Constitution Avenue, NW., Washington, DC 20224; (iv) Be written in the English language; (v) Set forth the full name, address, and title of the official responsible for preparing the application; (vi) State whether the applicant is a member of a controlled group of corporations (as defined in paragraph (d) (2) (iii) of this section); (vii) State the total number of automobiles manufactured (whether or not in the United States) by the applicant (or the controlled group of corporations in the case where the applicant is a member of the group) in the second model year immediately preceding each affected model year and the total number of automobiles likely to be manufactured in the affected model year; (viii) Set forth the same information required by an application pursuant to section 502 (c) of the Motor Vehicle Information and Cost Savings Act (as amended) and the regulations thereunder (see 49 CFR part 525 (1978)) and state whether or not the applicant under this paragraph has also made an application pursuant to such Act; and (ix) Set forth the reasons why an alternate rate schedule should be granted under paragraph (d) (3) (ii) of this section. (6) Update of application. (7) Processing of applications. (e) Tax-free sales of emergency vehicles In general. (2) Credit or refund. [T.D. 8036, 50 FR 29960, July 23, 1985, as amended by T.D. 8659, 61 FR 10453, Mar. 14, 1996] Tires, Tubes, and Tread Rubber § 48.4071-1 Imposition and rates of tax. (a) Imposition of tax Imposition of tax before January 1, 1984. (2) Imposition of tax after December 31, 1983. (3) Definitions. (b) Rates and computation of tax Rates of tax before January 1, 1984 Tires: (A) Of the type used on highway vehicles: ( 1 ( 2 (B) Of the type used on other than highway vehicles: ( 1 ( 2 (C) Laminated tires for the period July 1, 1965 to December 31, 1983, inclusive—1 cent per pound. (ii) Inner tubes: For the period July 1, 1965 to December 31, 1983, inclusive—10 cents per pound. (iii) Tread Rubber: For the period July 1, 1965 to December 31, 1983, inclusive—5 cents per pound. (2) Rates of tax on or after January 1, 1984. (i) Tires weighing not more than 40 pounds—0 cents. (ii) Tires weighing more than 40 pounds but not more than 70 pounds—15 cents for each pound in excess of 40 pounds. (iii) Tires weighing more than 70 pounds but not more than 90 pounds—$4.50 plus 30 cents for each pound in excess of 70 pounds. (iv) Tires weighing more than 90 pounds—$10.50 plus 50 cents for each pound in excess of 90 pounds. (3) Computation of tax. (c) Liability for tax. (d) Recapped or retreaded tires. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6005, Feb. 10, 1982, as amended by T.D. 8057, 50 FR 41491, Oct. 11, 1985; T.D. 8152, 52 FR 31618, Aug. 21, 1987] § 48.4071-2 Determination of weight. (a) In general Tires. (ii) When tires are sold with metal rims or rim bases attached, the manufacturer must maintain records that will establish what portion of the total weight of the finished product represents the tire exclusive of the metal rim or rim base. (2) Inner tubes. (b) Alternative method of determining weight of tires after December 31, 1983. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6005, Feb. 10, 1982, as amended by T.D. 8152, 52 FR 31618, Aug. 21, 1987] § 48.4071-3 Imposition of tax on tires and tubes delivered to manufacturer's retail outlet. (a) General rule. (b) Definition of retail outlet. (c) Delivery In general. (i) Delivery of tires or inner tubes to a common carrier (or, where the tires or tubes are transported by the manufacturer, the placing of the tires or tubes into the manufacturer's over-the-road vehicle) for shipment from the plant in which the tires or tubes are manufactured, or from a regional distribution center of tires and inner tubes, to a retail outlet or to a location in the immediate vicinity of a retail outlet primarily for future delivery to the retail outlet. (ii) Arrival of the tires or tubes at the retail outlet, or, where shipment is to a location in the immediate vicinity of a retail outlet primarily for future delivery to the retail outlet, the arrival of the tires or tubes at such location. In its excise tax return for the first return period beginning after September 30, 1966, a manufacturer of tires or inner tubes must elect to determine the date of delivery to retail outlets in accordance with one of the two subdivisions of this paragraph (c)(1) and must determine the dates of all deliveries made to all retail outlets in accordance with the subdivision which the manufacturer has elected to apply. The election may be made in a statement attached to the return for such period. Having elected to treat one of the events listed in subdivision (i) or (ii) of this paragraph (c)(1) as constituting delivery to a retail outlet for purposes of its return for the first return period after September 30, 1966, the manufacturer may not use a different criterion for a subsequent return period unless permission of the district director is obtained in advance. (2) Deliveries made in the immediate vicinity of a retail outlet primarily for future delivery to the retail outlet. (ii) The provisions of this paragraph (c)(2) may be illustrated by the following examples. Example. A manufacturer of tires and tubes whose plant is located in City X operates two facilities in City Y; Warehouse A and Store Q. Store Q is a retail outlet within the meaning of paragraph (b) of this section, and Warehouse A is in the immediate vicinity of Store Q. During the 12-month period ending September 30, 1966, 60 percent of the tires and inner tubes removed from Warehouse A were delivered to Store Q. All tires or inner tubes delivered by the manufacturer to Warehouse A are subject to a tax under section 4071(b) and this section (unless, before such delivery, tax was imposed on the same tires and tubes). (3) Retail outlet maintained as adjunct of production or distribution facility. (i) The date when a tire or inner tube is removed from the general storage facilities in the facility which is not a retail outlet for transfer to the premises of the retail outlet, or (ii) The date when a tire or inner tube is designated to be sold by or at the retail outlet. (d) Special rules Retail outlets which also sell at wholesale. (2) Sales by manufacturer at facilities other than retail outlets. (3) Deliveries of tires or tubes on which tax has been previously imposed. (ii) The provisions of this paragraph (d)(3) may be illustrated by the following example: Example. A manufacturer has two selling facilities, Store No. 1 and Store No. 2. Only retail sales are made at Store No. 2, which obtains its merchandise from Store No. 1. Assume that, although wholesaling and distribution activities are conducted at Store No. 1, the sale of tires and tubes at retail is conducted at Store No. 1 to the extent that Store No. 1 is a retail outlet within the meaning of paragraph (b) of this section, with the result that tax is imposed on deliveries by the manufacturer of tires and tubes to Store No. 1. Tax is not imposed on a delivery of tires or inner tubes from Store No. 1 to Store No. 2. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6005, Feb. 10, 1982] § 48.4071-4 Original equipment tires on imported articles. The tax imposed by section 4071(a) applies with respect to tires and inner tubes (other than bicycle tires and inner tubes) that are original equipment for an imported article upon which no tax is imposed under section 4061 if the article is sold on or after December 11, 1971. In such a case, the importer of the article is treated as the manufacturer and vendor of the tires and inner tubes with which the article is equipped. However, the tax imposed by section 4071(a) is not imposed with respect to tires and inner tubes if the imported article is an automobile bus chassis or an automobile bus body. Solely for purposes of this section, the provisions of section 4218 (relating to use by a manufacturer or importer considered a sale) do not apply in cases where an individual imports an article having original equipment tires and tubes and on which article no tax is imposed under section 4061 if the article is imported solely for the individual's personal use and is so used. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6006, Feb. 10, 1982] § 48.4072-1 Definitions. For purposes of the regulations in this part, unless otherwise expressly indicated: (a) Rubber. (b) Tread rubber. (c) Tires of the type used on highway vehicles. (i) Motor vehicles that are highway vehicles (within the meaning of § 48.4061(a)-1(d)), or (ii) Vehicles of the type used in connection with motor vehicles that are highway vehicles (within the meaning of § 48.4061(a)-1(d)). The term “tires of the type used on highway vehicles” does not include bicycle tires. Bicycle tires, however, are included in the term “other tires” as used in section 4071(a)(2). (2) For purposes of paragraph (c)(1)(i) of this section, tires of the type used on motor vehicles that are highway vehicles include tires used on motor trucks, buses, passenger automobiles, motor homes, highway tractors, trolley buses or coaches, and motorcycles. (3) For purposes of paragraph (c)(1)(ii) of this section, tires of the type used on vehicles of the type used in connection with motor vehicles that are highway vehicles include tires used on truck or bus trailers, truck semitrailers, mobile homes, housetrailers, or utility trailers. (d) Inner tubes. (e) Tires. (f) Laminated tires. (g) Manufacturer. (h) Cross references. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6007, Feb. 10, 1982] § 48.4073 [Reserved] § 48.4073-1 Exemption of tires of certain sizes. The tax does not apply to sales of tires of all-rubber construction (whether hollow center or solid) if they have no fabric or metal reinforcement and do not exceed either of these measurements: (a) 20 inches in diameter measured to the outside circumferences, and (b) 1 3/4 (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6007, Feb. 10, 1982] § 48.4073-2 Exemption of tires with internal wire fastening. The tax does not apply to sales of tires of any size or dimension manufactured from extruded tiring that is fastened or held together by means of internal wire or other metallic material. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6007, Feb. 10, 1982] § 48.4073-3 Exemption of tread rubber used for recapping nonhighway tires. (a) Sold direct by manufacturer for nontaxable use. (b) Sales for resale for nontaxable use. (c) Evidence required to establish exemption. (2) Where only occasional sales of tread rubber for exempt use are made to a purchaser, a separate exemption certificate should be furnished for each order. However, where sales are regularly and frequently made to a purchaser for exempt use, a certificate covering all purchases during the period not to exceed 12 calendar quarters is acceptable. The certificates and proper records of invoices, orders, etc., relative to tax-free sales must be kept for inspection by the district director as provided in section 6001 and the regulations in subpart Q. (d) Acceptable form of exemption certificate. Exemption Certificate (For use by persons who purchase tread rubber from the manufacturer, producer, or importer thereof for use otherwise than in recapping or retreading tires of the type used on highway vehicles (section 4073(c) of the Internal Revenue Code).) (Date) ________________________, 19____ I, the undersigned, certify that I am the purchaser, or the (Title) ______ of (Name of purchaser if other than the undersigned) __________ who is the purchaser of: ____ The tread rubber specified in the accompanying order or contract, or ____ All tread rubber specified in contracts or orders entered into or placed with (Name of seller) ______ for the period commencing ______ and ending ______ (period not to exceed 12 calendar quarters), and that such tread rubber will not be used in the recapping or retreading of tires of the type used on highway vehicles, but will be used for the following purposes: The undersigned understands that if the tread rubber is used for the recapping or retreading of tires of the type used on highway vehicles, or is sold or otherwise disposed of, such fact must be promptly reported to the manufacturer. The undersigned also understands that the fraudulent use of this certificate for the purpose of securing this exemption will subject the undersigned or any other party making such fraudulent use to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. The purchaser also understands that the purchaser must be prepared to establish by satisfactory evidence the purpose for which the tread rubber was used. (Signature) (Address) (e) Exemption certificate not obtained prior to filing of manufacturer's excise tax return. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805)) [T.D. 7809, 47 FR 6007, Feb. 10, 1982] § 48.4073-4 Other tax-free sales. (a) Cross references. (1) Section 4221, relating to certain tax-free sales, and the regulations thereunder in subpart H; (2) Section 4222, relating to registration, and the regulations thereunder in subpart H; (3) Section 4223, relating to special rules pertaining to further manufacture, and the regulations thereunder in subpart H; and (4) 28 FR 348, January 12, 1963, relating to the authorization of an exemption from the tax imposed by section 4071 by the Secretary of the Treasury under section 4293 for sales of certain tires and inner tubes sold to the American Red Cross on or after March 1, 1963. (Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 1954; 80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 7805) [T.D. 7809, 47 FR 6008, Feb. 10, 1982] Taxable Fuel Source: T.D. 8421, 57 FR 32424, July 22, 1992, unless otherwise noted. § 48.4081-1 Taxable fuel; definitions. (a) Overview. (b) Definitions. Approved terminal or refinery Aviation gasoline Blender Bulk transfer Bulk transfer/terminal system Bus Diesel-powered bus Diesel-powered highway vehicle Diesel-powered train Enterer (1) If the importer of record is a customs broker engaged by the owner of the taxable fuel, the person for whom the broker is acting is the enterer; and (2) If there is no importer of record for taxable fuel entered into the United States, the owner of the taxable fuel at the time it is brought into the United States is the enterer. Entry (1) The taxable fuel is brought into the United States and applicable customs law requires that the taxable fuel be entered into the United States for consumption, use, or warehousing; or (2) The taxable fuel is brought into the United States from Puerto Rico and applicable customs law would require that the taxable fuel be entered into the United States for consumption, use, or warehousing if the taxable fuel were brought into the United States from somewhere other than Puerto Rico. Excluded liquid (1) Contains less than four percent normal paraffins; or (2) Has a— (i) Distillation range of 125 °F. or less; (ii) Sulfur content of 10 ppm or less; and (iii) Minimum color of + 27 Saybolt. Finished gasoline Gasoline Industrial user Kerosene excluded liquid. Position holder Rack Refiner Refinery Removal Sale (1) The transfer of title to, or substantial incidents of ownership in, taxable fuel (other than taxable fuel in a terminal) to the buyer for a consideration, which may consist of money, services, or other property; or (2) The transfer of the inventory position in the taxable fuel in a terminal if the transferee becomes the position holder with respect to the taxable fuel. State Taxable fuel Taxable fuel registrant Terminal Terminal operator Throughputter (1) Owns taxable fuel within the bulk transfer/terminal system (other than in a terminal); or (2) Is a position holder. Vessel (c) Blended taxable fuel, diesel fuel, and gasoline blendstocks; definitions Blended taxable fuel In general. blended taxable fuel (A) Taxable fuel with respect to which tax has been imposed under section 4041(a)(1) or 4081(a) (other than taxable fuel for which a credit or payment has been allowed); and (B) Any other liquid on which tax has not been imposed under section 4081. (ii) Exclusion; minor blending. (iii) Exclusion; gasohol. (A) Tax was imposed under section 4081(a) at a rate described in § 48.4081-6(e) (relating to the gasohol production tax rate and the gasohol tax rate); or (B) A valid claim is made under section 6427(f). (2) Diesel fuel In general. diesel fuel (ii) Exclusion. Diesel fuel (3) Gasoline blendstocks In general. gasoline blendstocks (A) Alkylate; (B) Butane; (C) Butene; (D) Catalytically cracked gasoline; (E) Coker gasoline; (F) Ethyl tertiary butyl ether (ETBE); (G) Hexane; (H) Hydrocrackate; (I) Isomerate; (J) Methyl tertiary butyl ether (MTBE); (K) Mixed xylene (not including any separated isomer of xylene); (L) Natural gasoline; (M) Pentane; (N) Pentane mixture; (O) Polymer gasoline; (P) Raffinate; (Q) Reformate; (R) Straight-run gasoline; (S) Straight-run naphtha; (T) Tertiary amyl methyl ether (TAME); (U) Tertiary butyl alcohol (gasoline grade) (TBA); (V) Thermally cracked gasoline; (W) Toluene; and (X) Transmix containing gasoline. (ii) Exclusion. Gasoline blendstocks (d) ASTM and military specifications. (e) Other definitions. (f) Effective date. (2) In paragraph (b) of this section the definition of aviation gasoline terminal kerosene excluded liquid taxable fuel enterer [T.D. 8659, 61 FR 10453, Mar. 14, 1996, as amended by T.D. 8748, 63 FR 25, Jan. 2, 1998; T.D. 8879, 65 FR 17155, Mar. 31, 2000; T.D. 9051, 68 FR 15940, Apr. 2, 2003; T.D. 9145, 69 FR 45588, July 30, 2004; T.D. 9346, 72 FR 41223, July 27, 2007] § 48.4081-2 Taxable fuel; tax on removal at a terminal rack. (a) Overview. (b) Imposition of tax. (c) Liability for tax In general. (2) Joint and several liability of terminal operator; unregistered position holder In general. (A) The position holder with respect to the taxable fuel is a person other than the terminal operator and is not a taxable fuel registrant; and (B) The terminal operator has not met the conditions of paragraph (c)(2)(ii) of this section. (ii) Conditions for avoidance of liability. (A) Is a taxable fuel registrant; (B) Has an unexpired notification certificate (as described in § 48.4081-5) from the position holder; and (C) Has no reason to believe that any information in the notification certificate is false. (3) Joint and several liability of terminal operator; incorrect information provided. (4) Example. Example. (i) TO is a terminal operator and PH is the position holder with respect to, and owner of, 8,000 gallons of diesel fuel stored in TO's terminal. TO and PH are taxable fuel registrants. When the fuel is removed from the terminal at the rack, the fuel is not dyed and marked in accordance with § 48.4082-1, and TO does not provide any person with any paperwork indicating that the fuel is dyed and marked. After the removal from the terminal, PH sells the fuel to individuals for use as heating oil, a nontaxable use. (ii) Because PH is the position holder of the fuel at the time of the removal from the terminal, PH is liable for the tax imposed by section 4081. The removal is subject to tax because the fuel is not dyed and marked in accordance with § 48.4082-1, and later use of the fuel in a nontaxable use does not make the removal from the terminal exempt from tax. (iii) Because PH is a taxable fuel registrant and TO did not provide any person with any paperwork indicating that the fuel is dyed and marked, TO is not jointly and severally liable for tax under paragraph (c) (2) or (3) of this section. (d) Rate of tax. (e) Exemptions. (f) Effective date. [T.D. 8659, 61 FR 10455, Mar. 14, 1996, as amended by T.D. 8879, 65 FR 17156, Mar. 31, 2000] § 48.4081-3 Taxable fuel; taxable events other than removal at the terminal rack. (a) Overview. (b) Tax on removal from a refinery Imposition of tax. (i) A removal of taxable fuel by bulk transfer if the refiner or the owner of the taxable fuel immediately before the removal is not a taxable fuel registrant. (ii) A removal of taxable fuel at the rack. (iii) After September 30, 1995, a removal of a batch of gasohol from an approved refinery by bulk transfer if the refiner treats itself with respect to the removal as a person that is not registered under section 4101. See § 48.4101-1(a). For the rule providing that no deposit is required in the case of the tax imposed under this paragraph (b)(1)(iii), see § 40.6302(c)-1(f)(4) of this chapter. For the rule allowing inspections of facilities where gasohol is produced, see section 4083. (2) Exception for certain refineries. (i) The taxable fuel is removed from an approved refinery that is not served by pipeline (other than a pipeline for the receipt of crude oil) or vessel; (ii) The taxable fuel is received at a facility that is operated by a taxable fuel registrant and is located within the bulk transfer/terminal system; (iii) The removal from the refinery is by— (A) Rail car; or (B) In the case of diesel fuel, a trailer or semi-trailer that is used exclusively for the transport service described in paragraphs (b)(2)(i) and (b)(2)(ii) of this section; (iv) In the case of taxable fuel removed by rail car, the facility at which the fuel is received is operated by the same person that operates the refinery from which the fuel was removed; and (v) In the case of diesel fuel removed by a trailer or semi-trailer, the facility at which the fuel is received is less than 20 miles from the refinery from which the diesel fuel was removed. (3) Liability for tax. (c) Tax on entry into the United States Imposition of tax. (i) The entry is by bulk transfer and the enterer is not a taxable fuel registrant; or (ii) The entry is not by bulk transfer. (2) Liability for tax In general. (ii) Joint and several liability of the importer of record. (A) The importer of record is not the enterer of the taxable fuel; and (B) The enterer is not a taxable fuel registrant. (iii) Conditions for avoidance of liability. (A) Has an unexpired notification certificate (as described in § 48.4081-5) from the enterer; and (B) Has no reason to believe that any information in the notification certificate is false. (iv) Customs bond. (A) Has an unexpired notification certificate (as described in § 48.4081-5) from the enterer; and (B) Has no reason to believe that any information in the notification certificate is false. (d) Tax on bulk transfers from a terminal by an unregistered position holder Imposition of tax. (2) Liability for tax In general. (ii) Joint and several liability of terminal operator. (A) The position holder with respect to the taxable fuel is a person other than the terminal operator; and (B) The terminal operator has not met the conditions of paragraph (d)(2)(iii) of this section. (iii) Conditions for avoidance of liability. (A) Is a taxable fuel registrant; (B) Has an unexpired notification certificate (described in § 48.4081-5) from the position holder; and (C) Has no reason to believe that any information in the notification certificate is false. (e) Tax on bulk transfers not received at an approved terminal or refinery Imposition of tax. (i) Taxable fuel is removed by bulk transfer from a refinery or terminal, or entered by bulk transfer into the United States; (ii) No tax was imposed on such removal or entry under paragraph (b), (c), or (d) of this section; and (iii) Upon removal from the pipeline or vessel, the taxable fuel is not received at an approved terminal or refinery (or at another pipeline or vessel). (2) Liability for tax In general. (ii) Conditions for avoidance of liability. (A) Is a taxable fuel registrant; (B) Has an unexpired notification certificate (described in § 48.4081-5) from the operator of the terminal or refinery where the taxable fuel is received; and (C) Has no reason to believe that any information in the notification certificate is false. (iii) Liability of the operator of the facility where the taxable fuel is received. (f) Tax on sales within the bulk transfer/terminal system Imposition of tax. (2) Exception for certain sales of taxable fuel for export. (i) The buyer's principal place of business is not within the United States; (ii) The sale of the fuel occurs as the fuel is delivered into a transport vessel; (iii) The vessel has a capacity of at least 20,000 barrels of fuel; (iv) The seller is a taxable fuel registrant and the exporter of record of the fuel; and (v) The fuel was exported in due course. (3) Liability for tax In general. (ii) Conditions for avoidance of liability. (A) Is a taxable fuel registrant; (B) Has an unexpired notification certificate (described in § 48.4081-5) from the buyer; and (C) Has no reason to believe that any information in the certificate is false. (iii) Liability of the buyer. (4) Example. sale Example. PH owns one million gallons of untaxed gasoline that is stored in TO's terminal. PH also is the position holder with respect to the gasoline. While the gasoline remains stored in the terminal, PH transfers title to 200,000 gallons of the gasoline to A, a person that is not a taxable fuel registrant. PH continues to hold the inventory position on TO's records with respect to the one million gallons. Because PH continues as the position holder with respect to the gasoline, the transfer of title to the gasoline from PH to A is not a sale of gasoline. Because this transfer of title from PH to A is not a sale of gasoline, the tax imposed under paragraph (f) of this section does not apply to the transfer. (g) Tax on removal or sale of blended taxable fuel by the blender Imposition of tax. (2) Liability for tax Liability of the blender. (ii) Liability of seller of untaxed liquid. (A) Is described in § 48.4081-1(c)(1)(i)(B) (relating to liquids on which tax has not been imposed under section 4081); and (B) Is sold by that person as gasoline, diesel fuel, or kerosene that has been taxed under section 4081. (3) Examples. blended taxable fuel diesel fuel Example 1. (i) Facts. (ii) Analysis Production of blended taxable fuel. (B) Imposition of tax. (C) Liability for tax. Example 2. (i) Facts. (ii) Analysis Production of blended taxable fuel. (B) Imposition of tax. (C) Liability for tax. (h) Rate of tax. (i) Exemptions. (j) Effective/applicability date: [T.D. 8659, 61 FR 10455, Mar. 14, 1996, as amended by T.D. 8879, 65 FR 17156, Mar. 31, 2000; T.D. 9051, 68 FR 15941, Apr. 2, 2003; T.D. 9145, 69 FR 45588, July 30, 2004; T.D. 9346, 72 FR 41223, July 27, 2007] § 48.4081-4 Gasoline; special rules for gasoline blendstocks. (a) Overview. (b) Nonbulk removals and entries of gasoline blendstocks not used to produce gasoline Removals and entries not in connection with sales. (i) The person otherwise liable for tax under § 48.4081-2(c)(1) (the position holder), § 48.4081-3(b)(3) (the refiner), or § 48.4081-3(c)(2) (the enterer) is a taxable fuel registrant; and (ii) Such person does not use the gasoline blendstocks to produce finished gasoline. (2) Removals and entries in connection with sales. (i) The person otherwise liable for tax under § 48.4081-2(c)(1) (the position holder), § 48.4081-3(b)(3) (the refiner), or § 48.4081-3(c)(2) (the enterer) is a taxable fuel registrant; and (ii) At the time of the sale, such person has an unexpired certificate (described in paragraph (e) of this section) from the buyer and has no reason to believe any information in the certificate is false. (3) Tax on sales after certain nonbulk removals or entries In general. (A) Has an unexpired certificate (described in paragraph (e) of this section) from its buyer; and (B) Has no reason to believe any information in the certificate is false. (ii) Liability for tax. (iii) Rate of tax. (c) Nonbulk removals and entries of gasoline blendstocks received at an approved terminal or refinery. (1) Is a taxable fuel registrant; (2) Has an unexpired notification certificate (described in § 48.4081-5) from the operator of the terminal or refinery where the gasoline blendstocks are received; and (3) Has no reason to believe that any information in the certificate is false. (d) Bulk transfer to a registered industrial user. (e) Certificate In general. (i) The date one year after the effective date of the certificate (which may be no earlier than the date it is signed). (ii) The date a new certificate is provided to the seller. (iii) The date the seller is notified by the Internal Revenue Service or the buyer that the buyer's right to provide a certificate has been withdrawn. (2) Withdrawal of right to provide certificate. (3) Model certificate. Certificate of Person Buying Gasoline Blendstocks for use Other Than in the Production of Finished Gasoline (To support tax-free sales under section 4081 of the Internal Revenue Code) Name, address, and employer identification number of seller The undersigned buyer (“Buyer”) hereby certifies the following under penalties of perjury: The gasoline blendstocks to which this certificate relates will not be used to produce finished gasoline. This certificate applies to the following (complete as applicable): If this is a single purchase certificate, check here ______ and enter: 1. Invoice or delivery ticket number ______ 2. ______ (number of gallons) of ______ (type of gasoline blendstocks) If this is a certificate covering all purchases under a specified account or order number, check here ______ and enter: 1. Effective date ______ 2. Expiration date ______ (period not to exceed 1 year after the effective date) 3. Type (or types) of gasoline blendstocks ______ 4. Buyer account or order number ______ Buyer will not claim a credit or refund under section 6427(h) of the Internal Revenue Code for any gasoline blendstocks covered by this certificate. Buyer will provide a new certificate to the seller if any information in this certificate changes. If Buyer resells the gasoline blendstocks to which this certificate relates, Buyer will be liable for tax unless Buyer obtains a certificate from the purchaser stating that the gasoline blendstocks will not be used to produce finished gasoline and otherwise complies with the conditions of § 48.4081-4(b)(3) of the Manufacturers and Retailers Excise Tax Regulations. Buyer understands that if Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer's right to provide a certificate. Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. In addition, the Internal Revenue Service has not notified Buyer that the right to provide a certificate has been withdrawn from a purchaser to which Buyer sells gasoline blendstocks tax free. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution. Signature and date signed Printed or typed name of person signing Title of person signing Name of Buyer Employer identification number Address of Buyer (f) Effective date. [T.D. 8421, 57 FR 32424, July 22, 1992; 57 FR 39421, Aug. 31, 1992, as amended by T.D. 8659, 61 FR 10457, Mar. 14, 1996] § 48.4081-5 Taxable fuel; notification certificate of taxable fuel registrant. (a) Overview. (b) Certificate In general. (i) The date the registrant provides a new certificate. (ii) The date the recipient of the certificate is notified by either the Internal Revenue Service or the registrant that the registrant's registration has been revoked or suspended. (2) Model certificate. Notification Certificate of Taxable Fuel Registrant Name, address, and employer identification number of person receiving certificate The undersigned taxable fuel registrant (“Registrant”) hereby certifies under penalties of perjury that Registrant is registered by the Internal Revenue Service with registration number ______ and that Registrant's registration has not been revoked or suspended by the Internal Revenue Service. Registrant understands that the fraudulent use of this certificate may subject Registrant and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the cost of prosecution. Signature and date signed Printed or typed name of person signing Title of person signing Name of registrant Employer identification number Address of registrant (3) Use of Form 637 or letter of registration as a notification certificate prohibited. (c) Effective date. [T.D. 8421, 57 FR 32424, July 22, 1992; 57 FR 39422, Aug. 31, 1992, as amended by T.D. 8659, 61 FR 10457, Mar. 14, 1996; T.D. 9145, 69 FR 45588, July 30, 2004; T.D. 9346, 72 FR 41224, July 27, 2007] § 48.4081-6 Gasoline; gasohol. (a) Overview. (b) Explanation of terms Alcohol In general; source of the alcohol. (ii) Proof and denaturants. (A) The volume of alcohol in the mixture includes the volume of any impurities (other than added denaturants and any fuel with which the alcohol is mixed) that reduce the purity of the added alcohol to not less than 190 proof (determined without regard to added denaturants). (B) The volume of alcohol in the mixture includes the volume of any approved denaturants that reduce the purity of the added alcohol, but only to the extent that the volume of the approved denaturants does not exceed five percent of the volume of the added alcohol (including the approved denaturants). If the volume of the approved denaturants exceeds five percent of the volume of the added alcohol, the excess over five percent is considered part of the nonalcohol content of the mixture. (C) For purposes of this paragraph (b)(1)(ii), approved denaturants are any denaturants (including gasoline and nonalcohol fuel denaturants) that reduce the purity of the added alcohol and are added to such alcohol under a formula approved by the Secretary. (iii) Products derived from alcohol. (2) Gasohol In general (B) If a particular mixture is produced within the bulk transfer/terminal system (for example, at a refinery), the determination of whether the mixture is gasohol is made at the time of the taxable removal or entry of the mixture. (C) If a particular mixture is produced outside of the bulk transfer/terminal system (for example, by splash blending after the gasoline has been removed from the terminal at the rack), the determination of whether the mixture is gasohol is made immediately after the mixture is produced. In such a case, the contents of the batch typically correspond to a gasoline meter delivery ticket and an alcohol meter delivery ticket, each of which shows the number of gallons of liquid delivered into the mixture. The volume of each component in a batch (without adjustment for temperature) ordinarily is determined by the number of metered gallons shown on the delivery tickets for the gasoline and alcohol delivered. However, if metered gallons of gasoline and alcohol are added to a tank already containing more than a minor amount of liquid, the determination of whether a batch satisfies the alcohol-content requirement will be made by taking into account the amount of alcohol and non-alcohol fuel contained in the liquid already in the tank. Ordinarily, any amount in excess of 0.5 percent of the capacity of the tank will not be considered minor. (ii) 10 percent gasohol In general. (B) Batches containing less than 10 percent but at least 9.8 percent alcohol. (iii) 7.7 percent gasohol In general. (B) Batches containing less than 7.7 percent but at least 7.55 percent alcohol. (iv) 5.7 percent gasohol In general. (B) Batches containing less than 5.7 percent but at least 5.59 percent alcohol. (v) Tax on excess liquid. (vi) Examples. Example 1. Mixtures containing exactly 10 percent alcohol. The applicable delivery tickets show that the mixture is made with 7200 metered gallons of gasoline and 800 metered gallons of alcohol. Accordingly, the mixture contains 10 percent alcohol (as determined based on the delivery tickets provided to the blender) and qualifies as 10 percent gasohol. Example 2. Mixtures containing less than 10 percent alcohol but at least 9.8 percent alcohol. The applicable delivery tickets show that the mixture is made with 7205 metered gallons of gasoline and 795 metered gallons of alcohol. Because the mixture contains less than 10 percent alcohol, but more than 9.8 percent alcohol (as determined based on the delivery tickets provided to the blender), 7950 gallons of the mixture qualify as 10 percent gasohol. If tax was imposed on the gasoline in the mixture at the gasohol production rate applicable to 10 percent gasohol, the remaining 50 gallons of the mixture (the excess liquid) are treated as gasoline with respect to which there was a failure to blend into gasohol for purposes of paragraph (f) of this section. If tax was imposed on the gasoline in the mixture at the rate of tax described in section 4081(a), a credit or refund under section 6427(f) is allowed only with respect to 7155 gallons of gasoline. Example 3. Mixtures containing less than 5.59 percent alcohol. The applicable delivery tickets show that the mixture is made with 7568 metered gallons of gasoline and 436 metered gallons of alcohol. Because the mixture contains only 5.45 percent alcohol (as determined based on the delivery tickets provided to the blender), the mixture does not qualify as gasohol. (3) Gasohol blender. (4) Registered gasohol blender. Registered gasohol blender (c) Rate of tax on gasoline removed or entered for gasohol production In general. (i) The person liable for tax under § 48.4081-2(c)(1) (the position holder), § 48.4081-3(b)(3) (the refiner), or § 48.4081-3(c)(2) (the enterer) is a taxable fuel registrant and a registered gasohol blender, and such person produces gasohol with the gasoline within 24 hours after removing or entering the gasoline; or (ii) The gasoline is sold in connection with the removal or entry, the person liable for tax under § 48.4081-2(c)(1) (the position holder), § 48.4081-3(b)(3) (the refiner), or § 48.4081-3(c)(2) (the enterer) is a taxable fuel registrant and the person, at the time of the sale,— (A) Has an unexpired certificate (as described in paragraph (c)(2) of this section) from the buyer; and (B) Has no reason to believe that any information in the certificate is false. (2) Certificate In general. (A) The date one year after the effective date of the certificate (which may be no earlier than the date it is signed). (B) The date the registered gasohol blender provides a new certificate to the seller. (C) The date the seller is notified by the Internal Revenue Service or the gasohol blender that the gasohol blender's registration has been revoked or suspended. (ii) Model certificate. Certificate of Registered Gasohol Blender (To support sales of gasoline at the gasohol production tax rate under section 4081(c) of the Internal Revenue Code) Name, address, and employer identification number of seller ____________________ (Buyer) certifies the following under penalties of perjury: Buyer is registered as a gasohol blender with registration number ________________. Buyer's registration has not been suspended or revoked by the Internal Revenue Service. The gasoline bought under this certificate will be used by Buyer to produce gasohol (as defined in § 48.4081-6(b) of the Manufacturers and Retailers Excise Tax Regulations) within 24 hours after buying the gasoline. Type of gasohol Buyer will produce (check one only): ______ 10% gasohol ______ 7.7% gasohol ______ 5.7% gasohol If the gasohol the Buyer will produce will contain ethanol, check here: ______ This certificate applies to the following (complete as applicable): If this is a single purchase certificate, check here ______ and enter: 1. Account number ________________ 2. Number of gallons ________________ If this is a certificate covering all purchases under a specified account or order number, check here ______ and enter: 1. Effective date ________________ 2. Expiration date ________________ (period not to exceed 1 year after the effective date) 3. Buyer account or order number ________________ Buyer will not claim a credit or refund under section 6427(f) of the Internal Revenue Code for any gasoline covered by this certificate. Buyer agrees to provide seller with a new certificate if any information on this certificate changes. Buyer understands that Buyer's registration may be revoked if the gasoline covered by this certificate is resold or is used other than in Buyer's production of the type of gasohol identified above. Buyer will reduce any alcohol mixture credit under section 40(b) by an amount equal to the benefit of the gasohol production tax rate under section 4081(c) for the gasohol to which this certificate relates. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution. Printed or typed name of person signing Title of person signing Employer identification number Address of Buyer Signature and date signed (iii) Use of Form 637 or letter of registration as a gasohol blender's certificate prohibited. (d) Rate of tax on gasohol removed or entered. (e) Tax rates Gasohol production tax rate. (2) Gasohol tax rate. (f) Later separation and failure to blend Later separation Imposition of tax. (ii) Liability for tax. (iii) Rate of tax. (2) Failure to blend Imposition of tax. (A) The gasoline was not blended into gasohol; or (B) The gasoline was blended into gasohol but the gasohol production tax rate applicable to the type of gasohol produced is greater than the rate of tax originally imposed on the gasoline. (ii) Liability for tax. (B) In the case of gasoline with respect to which tax was imposed at the gasohol production tax rate under paragraph (c)(1)(ii) of this section, the person that bought the gasoline in connection with the entry or removal is liable for the tax imposed under paragraph (f)(2)(i) of this section. (iii) Rate of tax. (iv) Example. Example. (i) A registered gasohol blender bought gasoline in connection with a removal described in paragraph (c)(1)(ii) of this section. Based on the blender's certification (described in paragraph (c)(2) of this section) that the blender would produce 10 percent gasohol with the gasoline, tax at the gasohol production tax rate applicable to 10 percent gasohol was imposed on the removal. (ii) The blender then produced a mixture by splash blending in a tank holding approximately 8000 gallons of mixture. The applicable delivery tickets show that the mixture was blended by first pumping 7220 metered gallons of gasoline into the empty tank, and then pumping 780 metered gallons of alcohol into the tank. Because the mixture contains 9.75 percent alcohol (as determined based on the delivery tickets provided to the blender) the entire mixture qualifies as 7.7 percent gasohol, rather than 10 percent gasohol. (iii) Because the 7220 gallons of gasoline were taxed at the gasohol production tax rate applicable to 10 percent gasohol but the gasoline was blended into 7.7 percent gasohol, a failure to blend has occurred with respect to the gasoline. As the person that bought the gasoline in connection with the taxable removal, the blender is liable for the tax imposed under paragraph (f)(2)(i) of this section. The amount of tax imposed is the difference between— (A) 7220 gallons times the gasohol production tax rate applicable to 7.7 percent gasohol; and (B) 7220 gallons times the gasohol production tax rate applicable to 10 percent gasohol. (iv) Because the gasohol does not contain exactly 7.7 percent alcohol, the benefit of the gasohol production tax rate with respect to the alcohol is less than the amount of the alcohol mixture credit under section 40(b) (determined before the application of section 40(c)). Accordingly, the blender may be entitled to claim an alcohol mixture credit for the alcohol used in the gasohol. Under section 40(c), however, the amount of the alcohol mixture credit must be reduced to take into account the benefit provided with respect to the alcohol by the gasohol production tax rate. (g) Effective date. [T.D. 8609, 60 FR 40082, Aug. 7, 1995, as amended by T.D. 8659, 61 FR 10457, Mar. 14, 1996; T.D. 8879, 65 FR 17157, Mar. 31, 2000] § 48.4081-7 Taxable fuel; conditions for refunds of taxable fuel tax under section 4081(e). (a) Overview. (b) Conditions to allowance of refund. (1) A tax imposed by section 4081 with respect to the taxable fuel was paid to the government and not credited or refunded (the “first tax”); (2) After imposition of the first tax, another tax was imposed by section 4081 with respect to the same taxable fuel and was also paid to the government (the “second tax”); (3) The person that paid the second tax to the government has filed a timely claim for refund that contains the information required under paragraph (d) of this section; and (4) The person that paid the first tax to the government has met the reporting requirements of paragraph (c) of this section. (c) Reporting requirements Reporting by persons paying the first tax. (2) Model first taxpayer's report. First Taxpayer's Report 1. First Taxpayer's name, address, and employer identification number 2. Name, address, and employer identification number of the buyer of the taxable fuel subject to tax 3. Date and location of removal, entry, or sale 4. Volume and type of taxable fuel removed, entered, or sold 5. Check type of taxable event: __________ Removal from refinery __________ Entry into United States __________ Bulk transfer from terminal by unregistered position holder __________ Bulk transfer not received at an approved terminal __________ Sale within the bulk transfer/terminal system __________ Removal at the terminal rack __________ Removal or sale by the blender 6. Amount of Federal excise tax paid on account of the removal, entry, or sale The undersigned taxpayer (the “Taxpayer”) has not received, and will not claim, a credit with respect to, or a refund of, the tax on the taxable fuel to which this form relates. Under penalties of perjury, the Taxpayer declares that Taxpayer has examined this statement, including any accompanying schedules and statements, and, to the best of Taxpayer's knowledge and belief, they are true, correct and complete. Signature and date signed Printed or typed name of person signing this report Title (3) Optional reporting for certain taxable events. (4) Information provided to subsequent owners, etc. By person required to file first taxpayer's report. (A) The person to whom the first taxpayer sells (within the meaning of § 48.4081-1)) the taxable fuel within the bulk transfer/terminal system; or (B) The owner of the taxable fuel immediately before the imposition of the first tax, if the first taxpayer is not the owner at that time. (ii) By person filing optional first taxpayer's report. (A) The person to whom the first taxpayer sells the taxable fuel; or (B) The owner of the taxable fuel immediately before the imposition of the first tax, if the first taxpayer is not the owner at that time. (iii) By person receiving first taxpayer's report. (iv) Form of statement In general. (B) Model statement describing subsequent sale. Statement of Subsequent Seller 1. Name, address, and employer identification number of seller in subsequent sale 2. Name, address, and employer identification number of buyer in subsequent sale 3. Date and location of subsequent sale 4. Volume and type of taxable fuel sold The undersigned seller (the “Seller”) has received the copy of the first taxpayer's report provided with this statement in connection with Seller's purchase of the taxable fuel described in this statement. Under penalties of perjury, Seller declares that Seller has examined this statement, including any accompanying schedules and statements, and, to the best of Seller's knowledge and belief, they are true, correct and complete. Signature and date signed Printed or typed name of person signing this statement Title (v) Sale to multiple buyers. (d) Form and content of claim In general. (i) The claim must be made by the person that paid the second tax to the government and must include all the information described in paragraph (d)(2) of this section. (ii) The claim must be made on Form 8849 (or such other form as the Commissioner may designate) in accordance with the instructions on the form. The form should be marked Section 4081(e) Claim (2) Information to be included in the claim. (i) Volume and type of taxable fuel. (ii) Date on which the claimant incurred the tax liability to which this claim relates (the second tax). (iii) Amount of second tax that claimant paid to the government and a statement that claimant has not included the amount of this tax in the sales price of the taxable fuel to which this claim relates and has not collected that amount from the person that bought the taxable fuel from claimant. (iv) Name, address, and employer identification number of the person that paid the first tax to the government. (v) A copy of the first taxpayer's report that relates to the taxable fuel covered by the claim. (vi) If the taxable fuel covered by the claim was bought other than from the first taxpayer, a copy of the statement of subsequent seller that the claimant received with respect to that taxable fuel. (e) Time for filing claim. (f) Examples. Example 1. (i) A is a taxable fuel registrant that owns 10,000 gallons of gasoline, and on April 5, 1996, is transporting the gasoline by barge on a waterway in the United States. That day, A sells the gasoline to B, a person that is not a taxable fuel registrant. A is liable for tax on the sale under § 48.4081-3(f). A pays this tax to the government and attaches to its return of the gasoline tax for the 2nd quarter of 1996 the first taxpayer's report described in paragraph (c) of this section. A also gives a copy of this report to B. (ii) On April 9, 1996, B sells the gasoline to C, a taxable fuel registrant. B also gives C a copy of the first taxpayer's report and the statement of subsequent seller (required under paragraph (c)(4) of this section). On April 14, 1996, the gasoline is removed from a terminal at the rack. C is the position holder of the gasoline at the time of the removal and thus is liable for tax on the removal under § 48.4081-2(c)(1). C pays this tax to the government. (iii) After C has filed a return of the second tax and before the end of the period prescribed by section 6511 for filing a claim for a refund, C files a claim for a refund of the second tax. The claim is in the form prescribed in paragraph (d)(2) of this section. C includes with its claim a copy of the first taxpayer's report and statement of subsequent seller. Because the conditions to allowance of a refund under paragraph (b) of this section have been met, C is allowed a refund of the second tax. Example 2. The facts are the same as in Example 1 (g) Effective date. [T.D. 8421, 57 FR 32424, July 22, 1992, as amended by T.D. 8609, 60 FR 40086, Aug. 7, 1995; T.D. 8659, 61 FR 10457, Mar. 14, 1996; T.D. 8879, 65 FR 17157, Mar. 31, 2000] § 48.4081-8 Taxable fuel; measurement. (a) In general. (b) Effective date. [66 FR 27597, May 18, 2001] § 48.4082-1 Diesel fuel and kerosene; exemption for dyed fuel. (a) Exemption. (1) The person otherwise liable for tax is a taxable fuel registrant; (2) In the case of a removal from a terminal, the terminal is an approved terminal; and (3) The diesel fuel or kerosene satisfies the dyeing and marking requirements of paragraphs (b), (c), and (d) of this section. (b) Dyeing requirements. (1) The dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3.9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of diesel fuel or kerosene; or (2) Any dye of a type and in a concentration that has been approved by the Commissioner. (c) Marking requirements. (d) [Reserved]. For further guidance, see § 48.4082-1T(d). (e) Effective date (2) [Reserved] For further guidance, see § 48.4082-1T(e)(2). [T.D. 8659, 61 FR 10457, Mar. 14, 1996, as amended by T.D. 8879, 65 FR 17157, Mar. 31, 2000; T.D. 9199, 70 FR 21333, Apr. 26, 2005] § 48.4082-1T Diesel fuel and kerosene; exemption for dyed fuel (temporary). (a) through (c) [Reserved]. For further guidance, see § 48.4082-1(a) through (c). (d) Time and method for adding dye In general. (2) Mechanical injection system; requirements. (i) The system has features that automatically inject an amount of dye that satisfies the concentration requirements of § 48.4082-1(b) into diesel fuel or kerosene as the diesel fuel or kerosene is delivered from the bulk transfer/terminal system into the transport compartment of a truck, trailer, railroad car, or other means of nonbulk transfer; (ii) The system has calibrated devices that accurately measure and record the amount of dye and the amount of diesel fuel and kerosene that is dispensed for each removal; (iii) The system has automatic shut-off devices that prevent the removal of more than 100 gallons of undyed diesel fuel or kerosene in the case of a system malfunction; (iv) The system is secured by either— (A) Unbroken seals that are issued, installed, and maintained by the terminal operator and secure the measurement devices, shut-off devices, and other access points to the injection system; or (B) A secured container that controls access to the measurement devices, shut-off devices, and other access points and is secured by an unbroken seal issued, installed, and maintained by the terminal operator; (v) Each seal securing the system bears a unique identifying number or code and is produced in a manner that provides adequate assurance against duplication; and (vi) The operator of the facility has written procedures in place for complying with its duty, described in paragraph (d)(4) of this section, to maintain the system's security standards. (3) Mechanical injection system; basis for approval. (4) Mechanical injection system; duty of the operator of a mechanical injection system to maintain the system's security standards. (i) Maintain a record for each seal, including its identifying number or code, the location of the seal, the date(s) on which the seal was issued and installed, and the reason for the installation; (ii) Visually inspect each installed seal not less than once during every 24 hour period to ascertain that each seal and lock mechanism, if applicable, has not been physically altered; (iii) Check the identifying number or code for each seal against the records maintained by the terminal operator no less frequently than once during each seven day period and record each inspection and verification; (iv) Promptly notify the Commissioner if inspection of a seal reveals any inconsistency in the records pertaining to that seal, or if the seal has been damaged or removed (other than a removal authorized by the operator for testing or maintenance); (v) Maintain a record of each seal that has been replaced to include the seal number or code, the date the seal was issued, the location of the seal, the date the seal was replaced, and the reason the seal was replaced; (vi) Promptly destroy and replace seals that have been removed from the system; (vii) Restrict access to unused seal inventory to individuals specifically designated by the operator and maintain a record of such individuals; (viii) Maintain a record of each installation, inspection, and destruction described in this paragraph (d)(4), including the name of the individual who conducts the installation, inspection, or destruction; (ix) Make available for the Commissioner's immediate inspection the seals and records described in this paragraph (d)(4); and (x) Promptly notify the Commissioner if, and when, the dye injection system is placed out of service. (5) Mechanical injection system; revocation or suspension of approval. (6) Sales and entries. (7) Cross reference. (e) and (e)(1) [Reserved]. For further guidance, see § 48.4082-1(e) and (e)(1). (2) This section is applicable on October 24, 2005. [T.D. 9199, 70 FR 21333, Apr. 26, 2005] § 48.4082-2 Diesel fuel and kerosene; notice required for dyed fuel. (a) In general. “DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” “DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” (b) Cross reference; terminal operators. (c) Effective date. [T.D. 8879, 65 FR 17157, Mar. 31, 2000] § 48.4082-3 Diesel fuel and kerosene; visual inspection devices. [Reserved] § 48.4082-4 Diesel fuel and kerosene; back-up tax. (a) Imposition of tax In general. (i) Any diesel fuel or kerosene on which tax has not been imposed by section 4081; (ii) Any diesel fuel or kerosene for which a credit or payment has been allowed under section 6427; or (iii) Any liquid (other than taxable fuel) for use as fuel. (2) Liability for tax In general. (ii) Joint and several liability of the seller. (3) Rate of tax. (b) Tax on diesel fuel and kerosene; buses and trains In general. (i) Any diesel fuel or kerosene on which tax has not been imposed by section 4081; (ii) Any diesel fuel or kerosene for which a credit or payment has been allowed under section 6427; or (iii) Any liquid (other than taxable fuel) for use as fuel. (2) Liability for tax In general. (ii) Special rule for certain train operators. (A) The deliverer of the fuel and the operator of the train are both registered as train operators under § 48.4101-1; and (B) A written agreement between the deliverer of the fuel and the operator requires the deliverer to pay the tax imposed under paragraph (b)(1) of this section. (3) Rate of tax Buses In general. (B) Other uses. (ii) Trains. (4) Cross reference. (c) Exemptions. (1) Use on a farm for farming purposes as that term and related terms are defined in § 48.6420-4 (a) through (g); (2) The exclusive use of a State; (3) Use described in section 4041(h) (relating to use in a vehicle owned by an aircraft museum); (4) Use in a bus while the bus is engaged in the transportation of students and employees of schools (as defined in the last sentence of section 4221(d)(7)(C)); (5) Use in a qualified local bus (as defined in section 6427(b)(2)(D)) while the bus is engaged in furnishing (for compensation) intracity passenger land transportation that is available to the general public and is scheduled and along regular routes; (6) Use in a highway vehicle that— (i) Is not registered (and is not required to be registered) for highway use under the laws of any State or foreign country; and (ii) Is used in the operator's trade or business or in an activity of the operator described in section 212 (relating to the production of income); (7) The exclusive use of a nonprofit educational organization, as defined in § 48.4221-6(b); or (8) Use in a highway vehicle that is owned by the United States and is not used on the highway. (d) Effective date. [T.D. 8659, 61 FR 10458, Mar. 14, 1996, as amended by T.D. 8879, 65 FR 17157, Mar. 31, 2000] § 48.4082-5 Diesel fuel and kerosene; Alaska. (a) Application. (b) Definitions. Exempt area of Alaska Nontaxable use Qualified dealer (1) Determines that the person, in the course of its trade or business, regularly sells diesel fuel or kerosene for use by its buyer in a nontaxable use; and (2) Is satisfied with the filing, deposit, payment, and claim history for all federal taxes of the person and any related person. (c) Tax-free removals and entries. (1) The person that would be liable for tax under § 48.4081-2 or 48.4081-3 is a taxable fuel registrant and satisfies the requirements of paragraph (e) of this section; (2) In the case of a removal from a terminal, the terminal is an approved terminal; and (3) The owner of the diesel fuel or kerosene immediately after the removal or entry holds the fuel for its own use in a nontaxable use or is a qualified dealer. (d) Sales after removals and entries In general. (i) The fuel is sold in an exempt area of Alaska; (ii) The buyer purchases the fuel for its own use in a nontaxable use or is a qualified dealer; and (iii) The seller satisfies the requirements of paragraph (e) of this section. (2) Tax imposed at time of sale; liability for tax. (3) Rate of tax. (e) Evidence of tax-free transactions. (f) Registration. (g) Cross reference. (h) Effective date. [T.D. 8693, 61 FR 66216, Dec. 17, 1996. Redesignated and amended by T.D. 8748, 63 FR 25, Jan. 2, 1998; T.D. 8879, 65 FR 17157, Mar. 31, 2000] § 48.4082-6 Kerosene; exemption for aviation-grade kerosene. (a) Overview. (b) Definition. aviation-grade kerosene (c) Exemption for certain removals and entries. (1) The person otherwise liable for tax is a taxable fuel registrant; (2) In the case of a removal from a terminal, the terminal is an approved terminal; and (3)(i) The person otherwise liable for tax delivers the kerosene into the fuel supply tank of an aircraft and this delivery is not in connection with a sale; or (ii) The kerosene is sold for use as a fuel in an aircraft and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described in paragraph (e) of this section) from the buyer and has no reason to believe any information in the certificate is false. (d) Certain later sales In general. (i) By a person that, at the time of the sale, has an unexpired certificate (described in paragraph (e) of this section) from the buyer and has no reason to believe that any information in the certificate is false; or (ii) In connection with the delivery of the kerosene into the fuel supply tank of an aircraft. (2) Imposition of tax; liability for tax. (3) Rate of tax. (e) Certificate In general. (i) The date one year after the effective date of the certificate (which may be no earlier than the date it is signed). (ii) The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. (iii) The date the Internal Revenue Service or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. (2) Withdrawal of the right to provide a certificate. (3) Model certificate. CERTIFICATE OF PERSON BUYING AVIATION-GRADE KEROSENE FOR USE AS A FUEL IN AN AIRCRAFT (To support tax-free removals and entries of aviation-grade kerosene under section 4082 of the Internal Revenue Code.) ______________________________________(Buyer) certifies the following Name of Buyer under penalties of perjury: The aviation-grade kerosene to which this certificate applies will be used by Buyer as a fuel in an aircraft or resold by Buyer for that use. This certificate applies to ________ percent of Buyer's purchases from ________________________ (name, address, and employer identification number of seller) as follows (complete as applicable): 1. A single purchase on invoice or delivery ticket number ____________. 2. All purchases between ____________ (effective date) and ____________ (expiration date) (period not to exceed one year after the effective date) under account or order number(s) ____________. If this certificate applies only to Buyer's purchases for certain locations, check here ________ and list the locations. Buyer is buying the kerosene for (check either or both as applicable): ____ Buyer's use as a fuel in an aircraft. ____ Resale for use as a fuel in an aircraft. Buyer will provide a new certificate to the seller if any information in this certificate changes. If Buyer sells the aviation-grade kerosene to which this certificate relates and does not deliver it into the fuel supply tank of an aircraft, Buyer will be liable for tax unless Buyer obtains a certificate from its buyer stating that the aviation-grade kerosene will be used as a fuel in an aircraft. If Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer's right to provide a certificate. Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. The fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution. Printed or typed name of person signing Title of person signing Employer identification number Address of Buyer Signature and date signed (f) Effective date. [T.D. 8879, 65 FR 17158, Mar. 31, 2000] § 48.4082-7 Kerosene; exemption for feedstock purposes. (a) Overview. (b) Definitions. Feedstock purpose Feedstock user Registered feedstock user (1) Registered under section 4101 as a feedstock user; or (2) With respect to removals and entries before October 1, 2000, a taxable fuel registrant. (c) Exemption for removals and entries. (1) The person otherwise liable for tax is a taxable fuel registrant; (2) In the case of a removal from a terminal, the terminal is an approved terminal; and (3)(i) The person otherwise liable for tax uses the kerosene for a feedstock purpose; or (ii) The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described in paragraph (e) of this section) from the buyer and has no reason to believe any information in the certificate is false. (d) Later sale In general. (2) Imposition of tax; liability for tax. (3) Rate of tax. (e) Certificate In general. (i) The date one year after the effective date of the certificate (which may be no earlier than the date it is signed). (ii) The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. (iii) The date the seller is notified by the Internal Revenue Service or the buyer that the buyer's registration has been revoked or suspended. (2) Model certificate. CERTIFICATE OF REGISTERED FEEDSTOCK USER (To support tax-free removals and entries of kerosene under section 4082 of the Internal Revenue Code.) ______________________________________(Buyer) certifies the following Name of Buyer under penalties of perjury: Buyer is a registered feedstock user with registration number ________. Buyer's registration has not been revoked or suspended. The kerosene to which this certificate applies will be used by Buyer for a feedstock purpose. This certificate applies to ________ percent of Buyer's purchases from ________________________ (name, address, and employer identification number of seller as follows (complete as applicable): 1. A single purchase on invoice or delivery ticket number ____________. 2. All purchases between ____________ (effective date) and ____________ (expiration date) (period not to exceed one year after the effective date) under account or order number(s) ____________. If this certificate applies only to Buyer's purchases for certain locations, check here ________ and list the locations. If Buyer sells the kerosene to which this certificate relates, Buyer will be liable for tax on that sale. Buyer will provide a new certificate to the seller if any information in this certificate changes. If Buyer violates the terms of this certificate, the Internal Revenue Service may revoke Buyer's registration. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution. Printed or typed name of person signing Title of person signing Employer identification number Address of Buyer Signature and date signed (f) Effective date. [T.D. 8879, 65 FR 17158, Mar. 31, 2000] § 48.4083-1 Taxable fuel; administrative authority. (a) In general Authority to inspect. (2) Reasonableness. (b) Place of inspection In general. (i) Any terminal; (ii) Any fuel storage facility that is not a terminal; (iii) Any retail fuel facility; or (iv) Any designated inspection site. (2) Designated inspection sites. (c) Scope of inspection Inspection. (2) Detainment. (3) Removal of samples. (d) Refusal to submit to inspection. (e) Effective date. [T.D. 8659, 61 FR 10458, Mar. 14, 1996, as amended by T.D. 8685, 61 FR 58007, Nov. 12, 1996; T.D. 8879, 65 FR 17159, Mar. 31, 2000] § 48.4091-3 [Reserved] § 48.4101-1 Taxable fuel; registration. (a) In general. (2) A person is registered under section 4101 only if the district director has issued a registration letter to the person and the registration has not been revoked or suspended. However, the United States is treated as registered under section 4101. (3) A refiner that is registered under section 4101 may, with respect to the bulk removal of any batch of gasohol from its refinery, treat itself as a person that is not registered. See § 48.4081-3(b)(1)(iii). (4) Each business unit that has, or is required to have, a separate employer identification number is treated as a separate person. Thus, two business units (for example, a parent corporation and a subsidiary corporation, or a proprietorship and a related partnership), each of which has a different employer identification number, are two persons. (5) A registration in effect on December 31, 1993, with respect to the tax on gasoline or diesel fuel is subject to the district director's review, and to revocation or suspension, under the standards set forth in this section, but remains in effect until the earlier of— (i) The effective date of a registration issued under paragraph (g)(3) of this section; or (ii) The effective date of the revocation or suspension of the registration under paragraph (i) of this section. (6)(i) A person is treated as a taxable fuel registrant if on June 30, 1998, the person— (A) Is an enterer, refiner, terminal operator, or throughputter with respect to kerosene and is registered under section 4101 as a producer or importer of aviation fuel; (B) Operates one or more terminals that store kerosene (and no other type of taxable fuel); or (C) Is a commercial airline, an operator of aircraft in noncommercial aviation, or a fixed base operator and is also a position holder with respect to kerosene. (ii) A person treated as registered under paragraph (a)(6)(i) of this section is treated as registered from July 1, 1998, until the earlier of— (A) The date of a subsequent denial of an application for registration under paragraph (g)(2) of this section; (B) The effective date of a subsequent registration issued under paragraph (g)(3) of this section; (C) The effective date of a subsequent revocation or suspension of registration under paragraph (i) of this section; or (D) July 1, 1999. (b) Definitions Applicant. applicant (2) Bonded registrant. bonded registrant (3) Gasohol bonding amount. gasohol bonding amount (i) The rate of tax applicable to later separation, as described in § 48.4081-6(f)(1)(iii); and (ii) The total number of gallons of gasoline expected to be bought at the gasohol production tax rate by the gasohol blender during a representative 6-month period (as determined by the district director). (4) Penalized for a wrongful act. penalized for a wrongful act (i) Been assessed any penalty under chapter 68 of the Internal Revenue Code (or similar provision of the law of any State) for fraudulently failing to file any return or pay any tax, and the penalty has not been wholly abated, refunded, or credited; (ii) Been assessed any penalty under chapter 68 of the Internal Revenue Code, such penalty has not been wholly abated, refunded, or credited, and the district director determines that the conduct resulting in the penalty is part of a consistent pattern of failing to deposit, pay, or pay over a substantial amount of tax; (iii) Been convicted of a crime under chapter 75 of the Internal Revenue Code (or similar provision of the law of any State), or of conspiracy to commit such a crime, and the conviction has not been wholly reversed by a court of competent jurisdiction; (iv) Been convicted, under the laws of the United States or any State, of a felony for which an element of the offense is theft, fraud, or the making of false statements, and the conviction has not been wholly reversed by a court of competent jurisdiction; (v) Been assessed any tax under section 4103 and the tax has not been wholly abated, refunded, or credited; or (vi) Had its registration under section 4101 or 4222 revoked. (5) Related person. related person (i) Directly or indirectly exercises control over an activity of the applicant if the activity is described in paragraph (c)(1) or (d) of this section; (ii) Owns, directly or indirectly, five percent or more of the applicant; (iii) Is under a duty to assure the payment of a tax for which the applicant is responsible; (iv) Is a member, with the applicant, of a group of organizations (as defined in § 1.52-1(b) of this chapter) that would be treated as a group of trades or businesses under common control for purposes of § 1.52-1 of this chapter; or (v) Distributed or transferred assets to the applicant in a transaction in which the applicant's basis in the assets is determined by reference to the basis of the assets in the hands of the distributor or transferor. (6) Registrant. registrant (7) Pipeline operator. pipeline operator (8) Vessel operator. vessel operator vessel (9) Other definitions. (c) Persons required to be registered In general. (i) A blender; (ii) An enterer; (iii) A pipeline operator; (iv) A position holder; (v) A refiner; (vi) A terminal operator; or (vii) A vessel operator. (2) Bus and train operators. (3) Consequences of failing to register. (d) Persons that may, but are not required to, be registered. (1) A feedstock user; (2) A gasohol blender; (3) An industrial user; (4) A throughputter that is not a position holder; (5) An ultimate vendor; or (6) An ultimate vendor (blocked pump). (e) Application instructions. (f) Registration tests In general Persons other than ultimate vendors, pipeline operators, and vessel operators. (A) The activity test of paragraph (f)(2) of this section. (B) The acceptable risk test of paragraph (f)(3) of this section. (C) The adequate security test of paragraph (f)(4) of this section. (ii) Ultimate vendors, pipeline operators, and vessel operators. (A) Determines that the applicant meets the activity test of paragraph (f)(2) of this section; and (B) Is satisfied with the filing, deposit, payment, and claim history for all federal taxes of the applicant and any related person. (2) The activity test. (i) Is, in the course of its trade or business, regularly engaged as an operator of a bus or train or in the characteristic activity of a person described in paragraph (c)(1) or (d) of this section; or (ii) Is likely to be (because of such factors as the applicant's business experience, financial standing, or trade connections), in the course of its trade or business, regularly engaged as an operator of a bus or train or in the characteristic activity of a person described in paragraph (c)(1) or (d) of this section within a reasonable time after becoming registered under section 4101. (3) Acceptable risk test In general. (A) Neither the applicant nor a related person has been penalized for a wrongful act; or (B) Even though the applicant or a related person has been penalized for a wrongful act, the district director determines, after review of evidence offered by the applicant, that the registration of the applicant does not create a significant risk of nonpayment or late payment of the tax imposed by sections 4041(a)(1) and 4081. (ii) Significant risk of nonpayment or late payment of tax. (A) The time elapsed since the applicant or related person was penalized for a wrongful act. (B) The present relationship between the applicant and any related person that was penalized for any wrongful act. (C) The degree of rehabilitation of the person penalized for any wrongful act. (D) The amount of bond given by the applicant. In this regard, the district director may accept a bond under paragraph (j) of this section, without regard to the limits on the amount of the bond set by paragraph (j)(2) of this section. (4) Adequate security test In general. (ii) Adequate financial resources In general. ( 1 ( 2 ( 3 (B) Basis for determination. (iii) Satisfactory tax history. (g) Action on the application by the district director Review of application. (2) Denial. (3) Approval. (h) Terms and conditions of registration Affirmative duties. (i) Make deposits, file returns, and pay taxes required by the Internal Revenue Code and the regulations; (ii) Keep records sufficient to show the registrant's tax liability under sections 4041(a)(1) and 4081 and payments or deposits of such liability; (iii) Make all information reports required under section 4101(d); (iv) Make available for inspection on demand by the Internal Revenue Service during normal business hours records relevant to a determination of tax liability under sections 4041(a)(1) and 4081; and (v) Notify the district director of any change (such as a change in ownership) in the information the registrant submitted in connection with its application for registration, or previously submitted under this paragraph (h)(1)(v), within 10 days after the change occurs. (2) Prohibited actions. (i) Sell, lease or otherwise allow another person to use its registration; (ii) Make any false statement to the district director in connection with a submission under paragraph (h)(1) or (h)(3) of this section; (iii) Make any false statement on, or violate the terms of, any certificate given to another person to support an exemption from, or a reduced rate of, the tax imposed by section 4081; or (iv) In the case of an ultimate vendor (blocked pump), deliver kerosene (or allow kerosene to be delivered) into the fuel supply tank of a diesel-powered highway vehicle or diesel-powered train from a blocked pump. (3) Additional terms and conditions for terminal operators Notice required with respect to dyed diesel fuel and dyed kerosene. DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE (ii) Records to be maintained relating to removals of diesel fuel or kerosene. (A) The bill of lading or other shipping document. (B) The record of whether the fuel was dyed and marked in accordance with § 48.4082-1. (C) The volume and date of the removal. (D) The identity of the person, such as a common carrier, that physically received the fuel. (E) Any other information required by the Commissioner. (iii) Records to be maintained relating to dye. (iv) [Reserved]. For further guidance, see § 48.4101-1T(h)(3)(iv). (v) Prohibition on providing incorrect information. (i) Adverse actions by the district director against a registrant Mandatory revocation or suspension. (i) Does not meet one or more of the applicable registration tests under paragraph (f) of this section and has not corrected the deficiency within a reasonable period of time after notification by the district director; (ii) Has used its registration to evade, or attempt to evade, the payment of any tax imposed by section 4041(a)(1) or 4081, or to postpone or in any manner to interfere with the collection of any such tax, or to make a fraudulent claim for a credit or payment; (iii) Has aided or abetted another person in evading, or attempting to evade, payment of any tax imposed by section 4041(a)(1) or 4081, or in making a fraudulent claim for a credit or payment; or (iv) Has sold, leased, or otherwise allowed another person to use its registration. (2) Remedial action permitted in other cases. (i) Revoke or suspend the registrant's registration; (ii) In the case of a registrant other than an ultimate vendor or an ultimate vendor (blocked pump), require the registrant to give a bond under the provisions of paragraph (j) of this section as a condition of retaining its registration; and (iii) In the case of a registrant other than an ultimate vendor or an ultimate vendor (blocked pump), require the registrant to file monthly or semimonthly returns under § 40.6011(a)-1(b) of this chapter as a condition of retaining its registration. (3) Action by the district director to revoke or suspend a registration. (j) Bonds Form. (i) A public debt obligation of the United States Government; (ii) An obligation the principal and interest of which are unconditionally guaranteed by the United States Government; (iii) A bond executed by a surety company listed in Department of the Treasury Circular 570 as an acceptable surety or reinsurer of federal bonds (a surety bond); or (iv) Any other bond with security (including liens under section 4101(b)(1)(B)) considered acceptable by the district director. (2) Amount of bond. (i) The applicant's expected tax liability under sections 4041(a)(1) and 4081 for a representative 6-month period (as determined by the district director); (ii) In the case of a terminal operator, the expected tax liability of persons other than the terminal operator under section 4081 with respect to taxable fuel removed at the racks of its terminals (determined as if all removals of taxable fuel were taxable) during a representative 1-month period (as determined by the district director); and (iii) In the case of a gasohol blender, the gasohol bonding amount. (3) Collection of taxes from a bond. (4) Termination of bonds Surety bonds. (ii) Other bonds. (A) The district director's determination that the bonded registrant has paid all taxes that the bonded registrant incurred under sections 4041(a)(1) and 4081 during the period covered by the bond and any penalties and interest with respect to the taxes; (B) The expiration of the period for assessment of the taxes that the bonded registrant incurred under sections 4041(a)(1) and 4081 taxes during the period covered by the bond, as determined under the provisions of subchapter A of chapter 66 of the Internal Revenue Code; or (C) The date that the district director receives from the registrant a substitute bond given under this paragraph (j). (5) Determination that bond is no longer required. (k) Cross references. (l) Effective dates. (2) Paragraph (c)(1) of this section (relating to persons required to be registered) is applicable as of January 1, 1995, except that paragraphs (c)(1)(iii) and (c)(1)(vii) of this section are applicable after March 31, 2001. (3) Paragraph (h)(3)(iii) of this section (relating to certain recordkeeping requirements) is applicable as of July 1, 1996. (4) References in this section to kerosene are applicable after June 30, 1998. (5) Applicability date. [T.D. 8659, 61 FR 10459, Mar. 14, 1996; 61 FR 28053, June 4, 1996, as amended by T.D. 8879, 65 FR 17159, Mar. 31, 2000; 65 FR 26488, May 8, 2000; T.D. 9199, 70 FR 21334, Apr. 26, 2005; T.D. 9533, 76 FR 39283, July 6, 2011; 78 FR 9637, 78 FR 54761, Sept. 6, 2013] § 48.4101-2 Information reporting. (a) In general. (1) Made in the form required by the Commissioner; (2) Made for a period of one calendar month; and (3) Filed by the last day of the first month following the month for which the report is made, except that a report relating to any month during 2000 must be filed by February 28, 2001. (b) Effective date. [T.D. 8879, 65 FR 17160, Mar. 31, 2000] § 48.4102-1 Inspection of records by State or local tax officers. (a) Inspection of records maintained by taxpayer. (b) Inspection of records maintained by Internal Revenue Service In general. (2) Requests for inspection. (3) Time and place for inspection. [T.D. 7908, 48 FR 40222, Sept. 6, 1983, as amended by T.D. 8659, 61 FR 10462, Mar. 14, 1996] Subpart I—Coal § 48.4121-1 Imposition and rate of tax on coal. (a) Imposition of tax In general. (2) Examples. Example (1). A, a limited partnership, is the owner of land on which a coal mine is located. A contracts with XYZ Company to extract the coal for a set price per ton. XYZ Company is an independent contractor and has no ownership interest in the coal mined. Under state law, A is the owner of the coal immediately after severance. After XYZ extracts the coal from the mine, A sells the coal. A is the producer of the coal and is responsible for the payment of the excise tax. Example (2). A, a limited partnership, is the owner of land on which a coal mine is located. A leases the land to XYZ Company, and XYZ Company extracts coal from the mine and sells it. Under state law, XYZ is the owner of the coal immediately after the coal is severed from the ground. XYZ Company is the producer and must pay the excise tax. This is true even though the lease agreement requires XYZ to pay a royalty to A. Example (3). XYZ Company purchases a coal waste refuse pile from B and extracts the coal from the waste refuse pile and sells the coal. XYZ is the producer and must pay the excise tax. Example (4). XYZ Company is a producer of coal and operates its own cleaning plant. After wet washing the coal, it sells the coal and the silt waste product. The sale of the coal is subject to the excise tax whereas the sale of the silt is not. Example (5). Assume the same facts as in example (4) except that before selling the silt waste product XYZ Company extracts a small quantity of finely sized coal from the silt waste product and then sells both the finely sized coal and the silt waste product. The sale of the finely sized coal is subject to the excise tax whereas the sale of the silt is not. (b) Rate of tax Underground mines; surface mines. (2) Combination. (c) Exemptions Lignite or imported coal. (2) Other exemptions not applicable. (d) Definitions and special rules Coal produced from surface mine. (2) Coal produced from underground mine. (3) Coal used by the producer. (4) Tonnage sold and sales price. (5) Constructive sale price. [T.D. 7726, 45 FR 66453, Oct. 7, 1980; 45 FR 69214, Oct. 20, 1980; T.D. 8448, 57 FR 48186, Oct. 22, 1992] Subpart J [Reserved] Subpart K—Sporting Goods Source: Sections 48.4161(a)-1 through 48.4161(b)-5 contained in T.D. 7328, 39 FR 36586, Oct. 11, 1974, unless otherwise noted. Sections 48.4181-1 through 48.4182-2 contained in T.D. 6454, 25 FR 1774, Mar. 1, 1960. § 48.4161(a) [Reserved] § 48.4161(a)-1 Imposition and rate of tax; fishing equipment. (a) Imposition of tax. (1) Fishing rods; (2) Fishing creels; (3) Fishing reels; and (4) Artificial lures, baits, and flies. The tax applies only to those items of fishing equipment specified in section 4161(a) and this paragraph. Therefore, other items of fishing equipment, such as fishing nets, lines, hooks, sinkers, gaffs, etc., are not subject to the tax. Furthermore, the tax applies only to those specified articles of fishing equipment that are designed or constructed for use in the sport of fishing. Accordingly, the tax does not apply to those articles which, although nominally articles that are specified in section 4161(a), are in the nature of toys or novelties that merely simulate articles of a type referred to in section 4161(a), and are not designed or constructed for practical use in the sport of fishing. (b) Rate of tax. (c) Liability for tax. [T.D. 7328, 39 FR 36586, Oct. 11, 1974, as amended by T.D. 8043, 50 FR 32014, Aug. 8, 1985] § 48.4161(a)-2 Meaning of terms. (a) Fishing rods. (b) Fishing creels. (c) Fishing reels. (d) Artificial lures, baits, and flies. [T.D. 7328, 39 FR 36586, Oct. 11, 1974, as amended by T.D. 8043, 50 FR 32014, Aug. 8, 1985] § 48.4161(a)-3 Parts and accessories. (a) In general. (b) Essential equipment. [T.D. 7328, 39 FR 36586, Oct. 11, 1974, as amended by T.D. 8043, 50 FR 32014, Aug. 8, 1985] § 48.4161(a)-4 Use considered sale. For provisions relating to the tax on use of taxable articles by the manufacturer, producer, or importer thereof, see section 4218 relating to use by a manufacturer being considered a sale, and the regulations thereunder. § 48.4161(a)-5 Tax-free sales. For provisions relating to the tax-free sales of articles referred to in section 4161(a) see: (a) Section 4221, relating to certain tax-free sales; (b) Section 4222, relating to registration; (c) Section 4223, pertaining to special rules relating to further manufacture; and (d) Section 4225, relating to exemption of articles manufactured or produced by Indians; and the regulations thereunder. § 48.4161(b) [Reserved] § 48.4161(b)-1 Imposition and rates of tax; bows and arrows. (a) Imposition of tax. (1) Any bow that has a draw weight of 10 pounds or more; (2) Any arrow that measures 18 inches overall or more in length; (3) Any part or accessory (other than a fishing reel) suitable for inclusion in or attachment to a bow or arrow described in subparagraph (1) or (2) of this paragraph; and (4) Any quiver suitable for use with arrows described in subparagraph (2) of this paragraph. (b) Rate of tax. (c) Liability for tax. [T.D. 7328, 39 FR 36586, Oct. 11, 1974, as amended by T.D. 8043, 50 FR 32014, Aug. 8, 1985] § 48.4161(b)-2 Meaning of terms. (a) For purposes of the tax imposed by section 4161(b), and unless otherwise expressly indicated: (1) Bows. (2) Arrows. (b) Parts and accessories In general. (2) General purpose materials and articles. (c) Quivers. § 48.4161(b)-3 Use considered sale. For provisions relating to the tax on use of taxable articles by the manufacturer, producer, or importer thereof, see section 4218 relating to use by a manufacturer considered a sale, and the regulations thereunder. § 48.4161(b)-4 Tax-free sales. For provisions relating to tax-free sales of articles referred to in section 4161(b) see: (a) Section 4221, relating to certain tax-free sales; (b) Section 4222, relating to registration; (c) Section 4223, pertaining to special rules relating to further manufacture; and (d) Section 4225, relating to exemption of articles manufactured or produced by Indians; and the regulations thereunder. § 48.4161(b)-5 Effective date. The taxes imposed by section 4161(b) are effective with respect to sales made on and after January 1, 1975. Subpart L—Taxable Medical Devices § 48.4191-1 Imposition and rate of tax. (a) Imposition of tax. taxable medical device, (b) Rate of tax. price, (c) Liability for tax. sale, (d) Procedural rules. (e) Tax-free sales for further manufacture or export. (f) Payments made on or after January 1, 2013, pursuant to lease, installment sale, or sale on credit contracts. (g) Effective/applicability date. [T.D. 9604, 77 FR 72934, Dec. 7, 2012] § 48.4191-2 Taxable medical device. (a) Taxable medical device In general. (2) Devices that should have been listed with the FDA. (b) Exemptions Specific exemptions. taxable medical device (2) Retail exemption. taxable medical device (i) Regularly available for purchase and use by individual consumers. (A) Whether consumers who are not medical professionals can purchase the device in person, over the telephone, or over the Internet, through retail businesses such as drug stores, supermarkets, or medical supply stores and retailers that primarily sell devices (for example, specialty medical stores, durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers and similar vendors); (B) Whether consumers who are not medical professionals can use the device safely and effectively for its intended medical purpose with minimal or no training from a medical professional; and (C) Whether the device is classified by the FDA under Subpart D of 21 CFR part 890 (Physical Medicine Devices). (ii) Primarily for use in a medical institution or office or by a medical professional. (A) Whether the device generally must be implanted, inserted, operated, or otherwise administered by a medical professional; (B) Whether the cost to acquire, maintain, and/or use the device requires a large initial investment and/or ongoing expenditure that is not affordable for the average individual consumer; (C) Whether the device is a Class III device under the FDA system of classification; (D) Whether the device is classified by the FDA under— ( 1 ( 2 ( 3 ( 4 (E) Whether the device qualifies as durable medical equipment, prosthetics, orthotics, and supplies for which payment is available exclusively on a rental basis under the Medicare Part B payment rules, and is an “item requiring frequent and substantial servicing” as defined in 42 CFR 414.222. (iii) Safe Harbor. (A) Devices that are included in the FDA's online IVD Home Use Lab Tests (Over-the-Counter Tests) database, available at http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfIVD/Search.cfm. (B) Devices that are described as “OTC” or “over the counter” devices in the relevant FDA classification regulation heading. (C) Devices that are described as “OTC” or “over the counter” devices in the FDA's product code name, the FDA's device classification name, or the “classification name” field in the FDA's device registration and listing database, available at http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfrl/rl.cfm. (D) Devices that qualify as durable medical equipment, prosthetics, orthotics, and supplies, as described in Subpart C of 42 CFR part 414 (Parenteral and Enteral Nutrition) and Subpart D of 42 CFR part 414 (Durable Medical Equipment and Prosthetic and Orthotic Devices), for which payment is available on a purchase basis under Medicare Part B payment rules, and are— ( 1 ( 2 ( 3 ( 4 ( 5 (iv) Examples. Example 1. X manufactures non-sterile absorbent tipped applicators. X sells the applicators to distributors Y and Z, which, in turn, sell the applicators to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of non-sterile absorbent tipped applicators to list the applicators as a device with the FDA. The applicators are classified by the FDA under 21 CFR part 880 (General Hospital and Personal Use Devices) and product code KXF. Absorbent tipped applicators do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the absorbent tipped applicators are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the absorbent tipped applicators at drug stores, supermarkets, cosmetic supply stores or other similar businesses, and can use the applicators safely and effectively for their intended medical purpose without training from a medical professional. Further, the absorbent tipped applicators do not need to be implanted, inserted, operated, or otherwise administered by a medical professional, do not require a large investment and/or ongoing expenditure, are not a Class III device, are not classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222. Thus, the applicators have multiple factors under paragraph (b)(2)(i) of this section that tend to show they are regularly available for purchase and use by individual consumers and none of the factors under paragraph (b)(2)(ii) of this section tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the applicators are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 2. X manufactures adhesive bandages. X sells the adhesive bandages to distributors Y and Z, which, in turn, sell the bandages to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of adhesive bandages to list the bandages as a device with the FDA. The adhesive bandages are classified by the FDA under 21 CFR part 880 (General Hospital and Personal Use Devices) and product code KGX. Adhesive bandages do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the adhesive bandages are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the adhesive bandages at drug stores, supermarkets, or other similar businesses, and can use the adhesive bandages safely and effectively for their intended medical purpose without training from a medical professional. Further, the adhesive bandages do not need to be implanted, inserted, operated, or otherwise administered by a medical professional, do not require a large investment and/or ongoing expenditure, are not Class III devices, are not classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222. Thus, the adhesive bandages have multiple factors under paragraph (b)(2)(i) of this section that tend to show they are regularly available for purchase and use by individual consumers and none of the factors under paragraph (b)(2)(ii) of this section tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the adhesive bandages are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 3. X manufactures snake bite suction kits. X sells the snake bite suction kits to distributors Y and Z, which, in turn, sell the kits to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of snake bite suction kits to list the kits as a device with the FDA. The FDA classifies the snake bit suction kits under 21 CFR part 880 (General Hospital and Personal Use Devices) and product code KYP. Snake bite suction kits do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the snake bite suction kits are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the snake bite suction kits at sporting goods stores, camping stores, or other similar retail businesses, and can use the kits safely and effectively for their intended medical purpose without training from a medical professional. Further, the snake bite suction kits do not need to be implanted, inserted, operated, or otherwise administered by a medical professional, do not require a large investment and/or ongoing expenditure, are not Class III devices, are not classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222. Thus, the snake bite suction kits have multiple factors under paragraph (b)(2)(i) of this section that tend to show they are regularly available for purchase and use by individual consumers and none of the factors under paragraph (b)(2)(ii) of this section tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the snake bite suction kits are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 4. X manufactures denture adhesives. X sells the denture adhesives to distributors Y and Z, which, in turn, sell the adhesives to dental offices and retail businesses. The FDA requires manufacturers of denture adhesives to list the adhesive as a device with the FDA. The FDA classifies the denture adhesives under 21 CFR part 872 (Dental Devices) and product code KXX. The denture adhesives do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the denture adhesives are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the denture adhesives at drug stores, supermarkets, or other similar businesses, and can use the adhesives safely and effectively for their intended medical purpose with minimal or no training from a medical professional. Further, the denture adhesives do not need to be implanted, inserted, operated, or otherwise administered by a medical professional, do not require a large investment and/or ongoing expenditure, are not Class III devices, are not classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222. Thus, the denture adhesives have multiple factors under paragraph (b)(2)(i) of this section that tend to show they are regularly available for purchase and use by individual consumers and none of the factors under paragraph (b)(2)(ii) of this section tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the denture adhesives are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 5. X manufactures mobile x-ray systems. X sells the x-ray systems to distributors Y and Z, which, in turn, sell the systems generally to medical institutions and offices, as well as medical professionals. The FDA requires manufacturers of mobile x-ray systems to list the systems as a device with the FDA. The FDA classifies the mobile x-ray systems under 21 CFR part 892 (Radiology Devices) and product code IZL. Mobile x-ray systems do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the mobile x-ray systems are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the mobile x-ray systems over the Internet. However, individual consumers cannot use the x-ray systems safely and effectively for their intended medical purpose without training from a medical professional. Although the mobile x-ray systems are not Class III devices and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222, they need to be operated by a medical professional, may require a large investment and/or ongoing expenditure, and are classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section (21 CFR part 892 (Radiology Devices). Thus, with regard to the factors under paragraph (b)(2)(i) of this section, the mobile x-ray systems have one factor that tends to show they are regularly available for purchase and use by individual consumers and one factor that tends to show that they are not regularly available for purchase and use by individual consumers. With regard to the factors under paragraph (b)(2)(ii) of this section, the mobile x-ray systems have multiple factors that tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the mobile x-ray systems are not devices that are of a type that are generally purchased by the general public at retail for individual use. Example 6. X manufactures pregnancy test kits. X sells the kits to distributors Y and Z, which, in turn, sell the pregnancy test kits to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of pregnancy test kits to list the kits as a device with the FDA. The FDA classifies the kits under 21 CFR part 862 (Clinical Chemistry and Clinical Toxicology Devices) and product code LCX. The pregnancy test kits are included in the FDA's online IVD Home Use Lab Tests (Over-the-Counter Tests) database. Therefore, the over the counter pregnancy test kits fall within the safe harbor set forth in paragraph (b)(2)(iii)(A) of this section. Further, the FDA product code name for LCX is “Kit, Test, Pregnancy, HCG, Over The Counter.” Therefore, the pregnancy test kits also fall within the safe harbor set forth in paragraph (b)(2)(iii)(C) of this section. Accordingly, the pregnancy test kits are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 7. X manufactures blood glucose monitors, blood glucose test strips, and lancets. X sells the blood glucose monitors, test strips, and lancets to distributors Y and Z, which, in turn, sell the monitors, test strips, and lancets to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of blood glucose monitors, test strips, and lancets to list the items as devices with the FDA. The FDA classifies the blood glucose monitors under 21 CFR part 862 (Clinical Chemistry and Clinical Toxicology Devices) and product code NBW. The FDA classifies the test strips under 21 CFR part 862 (Clinical Chemistry and Clinical Toxicology Devices) and product code NBW. The FDA classifies the lancets under 21 CFR part 878 (General and Plastic Surgery Devices) and product code FMK. The blood glucose monitors and test strips are included in the FDA's online IVD Home Use Lab Tests (Over-the-Counter Tests) database. Therefore, the blood glucose monitors and test strips fall within the safe harbor set forth in paragraph (b)(2)(iii)(A) of this section. Further, the FDA product code name for NBW is “System, Test, Blood Glucose, Over the Counter.” Therefore, the blood glucose monitors and test strips also fall within the safe harbor set forth in paragraph (b)(2)(iii)(C) of this section. In addition, the lancets are supplies necessary for the effective use of DME as described in section 110.3 of chapter 15 of the Medicare Policy Benefit Manual. Therefore, the lancets fall within the safe harbor set forth in paragraph (b)(2)(iii)(D)( 5 Accordingly, the blood glucose monitors, test strips, and lancets are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 8. X manufactures single axis endoskeletal knee shin systems, which are used in the manufacture of prosthetic legs. X sells the knee shin systems to Y, a business that makes prosthetic legs. The FDA requires manufacturers of knee shin systems and prosthetic legs to list the items as devices with the FDA. The FDA classifies prosthetic leg components, including knee shin systems, as external limb prosthetic components under Subpart D of 21 CFR part 890.3420 and product code ISH. The FDA classifies prosthetic legs as an external assembled lower limb prosthesis under 21 CFR part 890.3500 and product code ISW/KFX. In addition, the Centers for Medicare and Medicaid Services have assigned the knee shin systems Healthcare Procedure Coding System code L5810. Prosthetic legs and certain prosthetic leg components, including single axis endoskeletal knee shin systems, fall within the safe harbor for prosthetic and orthotic devices that do not require implantation or insertion by a medical profession that is set forth in paragraph (b)(2)(iii)(D)( 1 Example 9. X manufactures mechanical and powered wheelchairs. X sells the wheelchairs to distributors Y and Z, which, in turn, sell the wheelchairs to medical institutions and offices, medical professionals, nursing homes, and retail businesses. The FDA requires manufacturers of manual and powered wheelchairs to list the items as devices with the FDA. The FDA classifies the manual and powered wheelchairs under Subpart D of 21 CFR part 890 (Physical Medicine Devices). The FDA classifies mechanical wheelchairs under product code IOR. The FDA classifies powered wheelchairs under product code product code ITI. Mechanical and powered wheelchairs do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the mechanical and powered wheelchairs are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the wheelchairs in drug stores, medical specialty stores, or DME suppliers, as well as over the Internet. In addition, individual consumers can use the wheelchairs safely and effectively for their intended medical purpose with minimal or no training from a medical professional, and the wheelchairs are classified by the FDA under Subpart D of 21 CFR part 890 (Physical Medicine Devices). Further, although the wheelchairs may require a large initial investment and/or ongoing expenditure, they do not need to be implanted, inserted, operated, or otherwise administered by a medical professional, are not Class III devices, are not classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222. Thus, the wheelchairs have multiple factors under paragraph (b)(2)(i) of this section that tend to show they are regularly available for purchase and use by individual consumers and, at most, only one factor under paragraph (b)(2)(ii) of this section tends to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the mechanical and powered wheelchairs are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 10. X manufactures portable oxygen concentrators. X sells the portable oxygen concentrators to distributors Y and Z, which, in turn, sell the portable oxygen concentrators to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of portable oxygen concentrators to list the items as devices with the FDA. The FDA classifies the oxygen regulators under 21 CFR part 868 (Anesthesiology Devices) and product code CAW. Portable oxygen concentrators do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the oxygen concentrators are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the portable oxygen concentrators in retail pharmacies, medical specialty stores, or DME suppliers, as well as over the Internet. In addition, individual consumers can use the portable oxygen concentrators safely and effectively for their intended medical purpose with minimal or no training from a medical professional. Further, although the portable oxygen concentrators are classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, they do not need to be implanted, inserted, operated, or otherwise administered by a medical professional, do not require a large investment and/or ongoing expenditure, are not Class III devices, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222. Thus, the portable oxygen concentrators have multiple factors under paragraph (b)(2)(i) of this section that tend to show they are regularly available for purchase and use by individual consumers and only one factor under paragraph (b)(2)(ii) of this section that tends to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the portable oxygen concentrators are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 11. X manufactures urinary ileostomy bags. X sells the urinary ileostomy bags to distributors Y and Z, which, in turn, sell the urinary ileostomy bags to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of urinary ileostomy bags to list the items as devices with the FDA. The FDA classifies the urinary ileostomy bags under 21 CFR part 876 (Gastroenterology—Urology Devices) and product code EXH. The urinary ileostomy bags are “Prosthetic and orthotic devices,” as defined in 42 CFR 414.202, that do not require implantation or insertion by a medical professional. Therefore, the urinary ileostomy bags fall within the safe harbor set forth in paragraph (b)(2)(iii)(D)( 1 Example 12. X manufactures nonabsorbable silk sutures. X sells the nonabsorbable silk sutures to distributors Y and Z, which, in turn, sell the nonabsorbable silk sutures to medical institutions and offices, medical professionals, and retail businesses. The FDA requires manufacturers of nonabsorbable silk sutures to list the items as devices with the FDA. The FDA classifies the nonabsorbable silk sutures under 21 CFR part 878 (General and Plastic Surgery Devices) and product code GAP. Nonabsorbable silk sutures do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the nonabsorbable silk sutures are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals can regularly purchase the nonabsorbable silk sutures over the Internet. However, individual consumers cannot use nonabsorbable silk sutures safely and effectively for their intended medical purpose with minimal or no training from a medical professional. Further, although the nonabsorbable silk sutures do not require a large investment and/or ongoing expenditure, are not Class III devices, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222, the nonabsorbable silk sutures are classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, and they need to be administered by a medical professional. Thus, with regard to the factors under paragraph (b)(2)(i) of this section, the nonabsorbable silk sutures have one factor that tends to show they are regularly available for purchase and use by individual consumers and one factor that tends to show that they are not regularly available for purchase and use by individual consumers. With regard to the factors under paragraph (b)(2)(ii) of this section, the nonabsorbable silk sutures have multiple factors that tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the nonabsorbable silk sutures are not devices that are of a type that are generally purchased by the general public at retail for individual use. Example 13. X manufactures nuclear magnetic resonance imaging (NMRI) systems (also known as magnetic resonance imaging (MRI) systems). X sells the NMRI systems to distributor Y, which, in turn, sells the systems to medical institutions. The FDA requires manufacturers of NMRI systems to list the systems as a device with the FDA. The FDA classifies the magnetic resonance diagnostic device under 21 CFR part 892 (Radiology Devices) and product code LNH. NMRI systems do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the NMRI systems are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals may be able to regularly purchase the NMRI systems over the Internet. However, individual consumers cannot use the NMRI systems safely and effectively for their intended medical purpose without training from a medical professional. Although the NMRI systems are not Class III devices and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222, they need to be operated by a medical professional, and are of a type classified by the FDA under 21 CFR part 892 (Radiology Devices). Further, the cost to acquire, maintain, and/or use the NMRI systems requires a large initial investment and/or ongoing expenditure that is not affordable for the average consumer. Thus, with regard to the factors under paragraph (b)(2)(i), the NMRI systems have, at most, one factor that tends to show that they are regularly available for purchase and use by individual consumers and at least one factor that tends to show that they are not regularly available for purchase and use by individual consumers. With regard to the factors under paragraph (b)(2)(ii), the NMRI systems have multiple factors that tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the NMRI systems are not devices that are of a type that are generally purchased by the general public at retail for individual use. Example 14. X manufactures therapeutic AC powered adjustable home use beds. X sells the beds to distributors Y and Z, which, in turn, sell the beds to retail businesses. The FDA requires manufacturers of therapeutic AC powered adjustable home use beds to list the items as devices with the FDA. The FDA classifies the therapeutic AC powered adjustable home use beds under 21 CFR part 880 (General Hospital Devices) and product code LLI. Therapeutic AC powered adjustable home use beds do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the beds are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Although the beds may require a large initial investment and/or ongoing expenditure, individual consumers who are not medical professionals can regularly purchase the beds in medical specialty stores or from DME suppliers, as well as over the Internet. In addition, individual consumers can use the beds safely and effectively for their intended medical purpose with minimal or no training from a medical professional. Further, the beds are not classified by the FDA under a category described in paragraph (b)(2)(ii)(D) of this section, do not need to be implanted, inserted, operated, or otherwise administered by a medical professional, are not Class III devices, and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222. Thus, the therapeutic AC powered adjustable home use beds have multiple factors under paragraph (b)(2)(i) of this section that tend to show they are regularly available for purchase and use by individual consumers and, at most, only one factor under paragraph (b)(2)(ii) of this section that tends to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the therapeutic AC powered adjustable home use beds are devices that are of a type that are generally purchased by the general public at retail for individual use. Example 15. X manufactures powered flotation therapy beds. X sells the beds to distributors Y and Z, which, in turn, sell the beds to medical institutions and offices, and medical professionals. The FDA requires manufacturers of powered flotation therapy beds to list the items as devices with the FDA. The FDA classifies the powered flotation therapy beds under 21 CFR part 890 (Physical Medicine Devices) and product code IOQ. Powered flotation therapy beds do not fall within a retail exemption safe harbor set forth in paragraph (b)(2)(iii) of this section. Therefore, the determination of whether the beds are devices of a type generally purchased by the general public at retail for individual use must be made on a facts and circumstances basis. Individual consumers who are not medical professionals may be able to regularly purchase the beds over the Internet. However, individual consumers cannot use the beds safely and effectively for their intended medical purpose with minimal or no training from a medical professional. Although the powered flotation therapy beds are not Class III devices and are not “items requiring frequent and substantial servicing” as defined in 42 CFR 414.222, they need to be operated or otherwise administered by a medical professional. Further, the cost to acquire, maintain, and/or use the powered flotation therapy beds requires a large initial investment and/or ongoing expenditure that is not affordable for the average consumer. Thus, with regard to the factors under paragraph (b)(2)(i) of this section, the powered flotation therapy beds have, at most, one factor that tends to show they are regularly available for purchase and use by individual consumers and at least one factor that tends to show they are not regularly available for purchase and use by individual consumers. With regard to the factors under paragraph (b)(2)(ii) of this section, the powered flotation therapy beds have multiple factors that tend to show they are designed primarily for use in a medical institution or office or by medical professionals. Based on the totality of the facts and circumstances, the powered flotation therapy beds are not devices that are of a type that are generally purchased by the general public at retail for individual use. (c) Effective/applicability date. [T.D. 9604, 77 FR 72934, Dec. 7, 2012; 78 FR 15878, Mar. 13, 2013] Subpart M—Special Provisions Applicable to Manufacturers Taxes § 48.4216(a)-1 Charges to be included in sale price. (a) In general. (b) Tools and dies. (c) Charges for warranty. (d) Charges for coverings, containers, and packing. (e) Taxable and nontaxable articles sold as a unit. [T.D. 7536, 43 FR 13517, Mar. 31, 1978] § 48.4216(a)-2 Exclusions from sale price. (a) Tax Tax not part of taxable sale price. (2) Computation of tax. Taxable sale price = sale price including tax/100 + rate of tax. Thus, if the tax rate is 10 percent and the sale price including tax is $100, the taxable sale price is $90.91 (that is, $100 divided by (100 + 10)), and the tax is 10 percent of $90.91, or $9.09. (b) Transportation, delivery, insurance, or installation charges Charges incurred pursuant to sale. (2) Only actual expenses to be excluded. (3) Transportation, delivery, or installation services performed by manufacturer. (4) Records in support of exclusion. (c) Other charges. [T.D. 7536, 43 FR 13518, Mar. 31, 1978; T.D. 7536, 43 FR 16974, Apr. 21, 1978] § 48.4216(a)-3 Other items relating to tax on sale price. (a) Exchanges. (b) Replacements under warranty. (c) Readjustments in sale price. [T.D. 7536, 43 FR 13519, Mar. 31, 1978] § 48.4216(b)-1 Constructive sale price; scope and application. (a) In general. (b) Specific applications. (i) Arm's-length sales at retail or on consignment, other than those sales at retail and to retailers to which section 4216(b)(2) and § 48.4216(b)-3 apply; and (ii) Sales otherwise than at arm's length, and at less than fair market price. (2) Section 4216(b)(2) applies generally to arm's-length sales of an article at retail or to retailers, or both, where the manufacturer also sells the same article to wholesale distributors. (3) Section 4216(b)(3) provides a formula for determining a constructive sale price for sales of taxable articles between members of an affiliated group of corporations (as “affiliated group” is defined in section 1504(a)) in those instances where the purchasing corporation regularly resells to retailers but does not regularly resell to wholesale distributors, and except for situations where section 4216(b) (4) or (5) applies. (4) Section 4216(b)(4) provides a special method for computing a constructive sale price for sales of taxable articles between affiliated corporations where the purchasing corporation sells only to retailers, and the normal method of selling within the industry is for manufacturers to sell to wholesale distributors. (5) Section 4216(b)(5) provides a special method for computing a constructive sale price for sales of articles subject to a tax imposed by section 4061(a) (trucks, buses, tractors, etc.) between affiliated corporations, where the purchasing corporation regularly sells such articles in arm's-length transactions to independent retailers. (c) Definitions. (1) Sale at retail. (2) Retail dealers. (3) Wholesale distributor. [T.D. 7613, 44 FR 23824, Apr. 23, 1979] § 48.4216(b)-2 Constructive sale price; basic rules. (a) In general. (b) Sales at retail. (c) Sales of articles taxable under section 4061(a). (d) Sales on consignment. (e) Sales not at arm's length. (1) One of the parties is controlled (in law or in fact) by the other, or there is common control, whether or not such control is actually exercised to influence the sale price, or (2) The sale is made pursuant to special arrangements between a manufacturer and a purchaser. In the case of an article sold otherwise than at arm's length, and at less than fair market price, the constructive sale price shall be the price for which such articles are sold, in the ordinary course of trade, by manufacturers or producers thereof, as determined by the Secretary. Once such a constructive sale price has been determined, no further adjustment of such price shall be made. See sections 4216(b) (3), (4), and (5), and § 48.4216 (b)-4, for specific methods for determining constructive sale prices for intercompany sales under certain defined conditions. [T.D. 7613, 44 FR 23825, Apr. 23, 1979; 44 FR 47767, Aug. 15, 1979] § 48.4216(b)-3 Constructive sale price; special rule for arm's-length sales. (a) In general. (1) The manufacturer regularly sells such articles at retail, or to retailers, or both, as the case may be, (2) The manufacturer also regularly sells such articles to one or more wholesale distributors in arm's-length transactions, and the manufacturer establishes that its prices in such cases are determined without regard to any benefit to be derived under section 4216(b)(2), (3) The transactions are arm's-length transactions, and (4) With respect to articles to which the tax imposed by section 4061(a) applies (relating to trucks, buses, tractors, etc.), the normal method of sales for such articles within the industry is not to sell such articles at retail or to retailers, or combinations thereof. A manufacturer meeting the foregoing requirements shall base its tax liability for sales at retail and sales to retailers on the lower of its actual sale price or the highest price for which it sells the same articles under the same conditions to wholesale distributors. (b) Definitions. (1) Actual sale price. (2) Highest price to wholesale distributors. (3) Regular sales. (4) Normal method of sales in industry. (5) Industry. (i) Taxable automobile trucks (consisting of automobile truck bodies and chassis); (ii) Taxable automobile buses (consisting of automobile bus bodies and chassis); (iii) Taxable truck and bus trailers and semitrailers (consisting of chassis and bodies of such trailers and semi-trailers); and (iv) Taxable tractors of the kind chiefly used for highway transportation in combination with a trailer or semi-trailer. (6) Application of section 4216(b)(2) to certain sales before June 22, 1965. [T.D. 7613, 44 FR 23825, Apr. 23, 1979] § 48.4216(b)-4 Constructive sale price; affiliated corporations. (a) In general. (b) Sales to which section 4216(b)(3) applies. (1) A manufacturer, producer or importer regularly sells a taxable article (other than an article subject to a tax imposed by section 4061(a) (trucks, buses, etc.)) to a wholesale distributor which is a member of the same affiliated group as the manufacturer, producer or importer, and (2) The wholesale distributor regularly sells such article to one or more independent retailers, but does not regularly sell to wholesale distributors. Under such circumstances the constructive sale price for the article shall be an amount equal to 90 percent of the lowest price for which the distributor regularly sells the article in arm's-length transactions to such independent retailers. Once the constructive sale price has been determined, no adjustment shall be made for sections 4216 (a) and (f) inclusions or exclusions or section 6416(b)(1) price readjustments. If both section 4216(b)(3) and section 4216(b)(4) apply with respect to the sale of an article, the constructive sale price for such article shall be the lower of the prices computed under section 4216(b)(3) and section 4216(b)(4). (c) Sales to which section 4216(b)(4) applies. (1) A manufacturer, producer, or importer regularly sells (except for tax-free sales) a taxable article only to a wholesale distributor which is a member of the same affiliated group as the manufacturer, producer, or importer, (2) The distributor regularly sells (except for tax-free sales) such article only to retail dealers, and (3) The normal method of sales for such articles within the industry is to sell such articles in arm's-length transactions to wholesale distributors. Section 4216(b)(4) applies with respect to articles taxable under section 4061(a) (relating to trucks, buses, etc.) only as to sales after December 31, 1969, and before January 1, 1971. Under section 4216(b)(4), the constructive sale price of such article shall be the median price at which the distributor, at the time of the sale by the manufacturer, resells the article to retail dealers, reduced by a percentage of such price equal to the percentage which: (i) The difference between the median price for which comparable articles are sold to wholesale distributors, in the ordinary course of trade, by manufacturers of producers thereof, and the median price at which such wholesale distributors in arm's-length transactions sell such comparable articles to retailers, is of (ii) The median price at which such wholesale distributors in arm's-length transactions sell such comparable articles to retailers. For purposes of this paragraph, the “median price” for which an article is sold at a particular level of distribution is the price midway between the highest and lowest prices charged vendees at the particular level of distribution. Where only one price is charged at a level of distribution, “median price” is equivalent to “actual price”. All sale prices referred to in paragraphs (b), (c), (d), and (e) of this section are prices that must reflect the inclusions and exclusions set forth in sections 4216(a) and (f). However, once a constructive sale price has been determined under these paragraphs, no further adjustment of such price is allowed. (d) Application of section 4216(b)(4). Example. M, a corporation engaged in the manufacture of article X, N, X N M. M X N. X N X X X (e) Sales to which section 4216(b)(5) applies. (1) A manufacturer, producer, or importer of an article subject to a tax imposed by section 4061(a) (trucks, buses, etc.) regularly sells such article to a wholesale distributor that is a member of the same affiliated group of corporations as the manufacturer, producer, or importer, and (2) Such distributor regularly sells such articles to independent retail dealers. Under such circumstances the constructive sale price of such articles shall be 98 1/2 (f) Determination of “lowest price”. (i) Without requiring that a given percentage of sales be made at that price (provided that the volume of sales made at that price is great enough to indicate that those sales have not been engaged in primarily to establish a lower tax base), and (ii) Without including any charge for a fixed amount that the purchaser has an unconditional right to recover on the basis of a contractual arrangement existing at the time of sale. (2) For purposes of applying section 4216(b)(1) and § 48.4216(b)-2, section 4216(b)(6) and this paragraph apply to articles sold after June 30, 1962. For purposes of applying section 4216(b)(3) and paragraph (b) of this section, section 4216(b)(6) and this paragraph apply to articles sold after December 31, 1969. For purposes of applying section 4216(b)(5) and paragraph (e) of this section, section 4216(b)(6) and this paragraph apply to articles sold after December 31, 1970. (g) Definitions. [T.D. 7613, 44 FR 23826, Apr. 23, 1979; 44 FR 47767, Aug. 15, 1979] § 48.4216(c)-1 Computation of tax on leases and installment sales. (a) Leases. (b) Installment sales. (c) Sales on credit. (d) Effective dates of paragraphs (a) and (b) of this section. (e) Contracts for the lease, installment sale, or sale on credit, of a taxable medical device General rule. (2) Exception for payments made on or after January 1, 2013, pursuant to written binding contracts entered into prior to March 30, 2010. (3) Effective/applicability date. [T.D. 7536, 43 FR 13519, Mar. 31, 1978, as amended by T.D. 9604, 77 FR 72938, Dec. 7, 2012; 78 FR 15878, Mar. 13, 2013] § 48.4216(d)-1 Sales of installment accounts. (a) In general. (1) To each installment due before the sale of the installment account, the rate of tax applicable at the time payment thereof was due, and (2) To each installment, the time for payment of which has not arrived, the rate of tax which, under the provisions of Chapter 32 as in effect on the date of the sale of the installment account, is (or is to be) in effect on the date such installment is due. However, see paragraph (b) of this section if the sale is made in a bankruptcy or insolvency proceeding. The tax due under this paragraph shall be included in the return for the period in which the account is sold. (b) Sale in bankruptcy or insolvency proceeding. (c) Collection of installment accounts on behalf of the manufacturer. (d) Returned installment accounts. (e) Limitation. (f) Applicability of paragraphs (a) and (b) of this section. [T.D. 7536, 43 FR 13520, Mar. 31, 1978] § 48.4216(e)-1 Exclusion of local advertising charges from sale price. (a) In general. (1) In the case of articles sold during the period January 1, 1961, through December 31, 1962, the advertising is broadcast over a radio or television station, or appears in a newspaper; and (2) In the case of articles sold on or after January 1, 1963, the advertising is broadcast over a radio or television station, appears in a newspaper or magazine, or is displayed by means of an outdoor advertising sign or poster. Section 4216(e) also provides an overall limitation in respect of the sum of the amount of the exclusions from price as charges for local advertising and the amount of the readjustments authorized under section 6416(b)(1) (relating to credits or refunds for price readjustments) in respect of reimbursements by a manufacture of expenditures for local advertising. See § 48.4216(e)-2. For provisions prohibiting exclusion from price or readjustment of price in respect of charges for, and reimbursements of expenditures for, advertising other than local advertising, see § 48.4216(e)-3. (b) Definition of local advertising In general. (i) Is initiated or obtained by the purchaser or any subsequent vendee, (ii) Names the article for which the price is determinable under section 4216 and states the location at which such article may be purchased at retail, and (iii)( a ( b (2) Initiating or obtaining advertising. (i) Takes an active part in the actual planning and development, or in the arrangements or negotiations leading to the development, of the form and content of the advertising, or (ii) Contracts for the placement of the advertising. The participation by the manufacturer of the article in the planning, development, or placement of the advertising is immaterial provided the advertising is in fact initiated or obtained by one or more persons in the chain of distribution of the article. Furthermore, it is immaterial whether or not the advertising is subject to the approval of the manufacturer of the article. However, if no person in the chain of distribution of the article takes an active part in the actual planning and development, or in the arrangements or negotiations leading to the development, of the form and content of the advertising, but, rather, all such planning, development, arrangements, and negotiations are accomplished by the manufacturer of the article, then such manufacturer is considered to have initiated the advertising, and if he also contracts for the placement of the advertising, such advertising does not qualify as “local advertising”. (3) Identification of article and sales location. (4) Determination of costs of local advertising. (5) Meaning of “newspaper”. (6) Meaning of “magazine”. (7) Meaning of “outdoor advertising sign or poster”. (c) Exclusion Conditions and limitations. (i) Such charge does not exceed 5 percent of the difference between ( a b (ii) Such charge is specifically shown as a separate charge for local advertising on the invoice or statement covering the sale of the article. (iii) Such charge is billed by the manufacturer with the intention on his part of repaying the amount of the charge to the person purchasing the article from him, or to any person who subsequently purchases the article for resale, in reimbursement of costs incurred or local advertising of such article or some other article or articles taxable at the same rate under the same section of the Code. In the absence of evidence to the contrary, the fact of such intention will be assumed in all cases where the manufacturer and his vendees are parties to an advertising plan which calls for such repayments, or the manufacturer can otherwise establish that the vendees to whom he bills such charges understand and expect that such repayments will be made. (2) When exclusion ceases to apply. (d) Examples. Example (1). During the first calendar quarter of 1961, a manufacturer sold refrigerators to one of his distributors at a total charge of $10,500, exclusive of tax, transportation charges, delivery charges, or other charges which are excludable in computing taxable price pursuant to section 4216(a). This total charge of $10,500 was billed as follows: Refrigerators $10,000 Local advertising charge 500 Total charge 10,500 At the time of the manufacturer's sales of the refrigerators, it was his intention, in accordance with the agreement between him and the distributor, to make repayment to the distributor of the local advertising charge, to the extent of expenditures by the distributor for radio, television, or newspaper advertising specifically naming refrigerators or other articles taxable at the same rate under section 4111 which were manufactured by the manufacturer, and giving the location of various retail stores within the distributor's territory where such articles may be purchased. Pursuant to such agreement, the selection of the advertising medium to be employed is to be made by the distributor, who is to plan the advertising subject to approval by the manufacturer, and contract for its placement. In this example, the advertising for which the charge is made qualifies as local advertising, the charge is billed to the manufacturer's vendee as a separate charge, the manufacturer intends to repay the charge to his vendee in reimbursement of costs incurred by the vendee for local advertising, and the charge does not exceed 5 percent of $10,000. Accordingly, the manufacturer's charge of $500 for local advertising is not includible in the taxable price of the refrigerators for purposes of computing and paying the tax imposed by section 4111. Example (2). Assume the same facts as those stated in Example (1), and assume further that prior to May 1, 1962, the manufacturer has repaid to the distributor, in reimbursement of local advertising expenses incurred by the distributor in connection with refrigerators or other articles taxable at the same rate under section 4111 sold to him by the manufacturer, $400 of the $500 billed as a local advertising charge by the manufacturer in connection with his sale of refrigerators to the distributor in the first quarter of 1961. The manufacturer is liable, as of May 1, 1962, for tax in respect of the $100 which has not been repaid to the distributor. The amount of the tax is determinable at the rate in effect under section 4111 on May 1, 1962, in respect of refrigerators and is includible in the manufacturer's return of tax under such section for the second quarter of 1962. Example (3). During the first calendar quarter of 1961, a manufacturer sold refrigerators to one of his distributors at a total charge of $11,000, exclusive of tax, transportation charges, delivery charges, or other charges which are excludable in computing taxable price under section 4216(a). This total charge of $11,000 was billed as follows: Refrigerators $10,000 Local advertising charge 1,000 Total charge 11,000 At the time of the manufacturer's sales of the refrigerators, it was his intention, in accordance with the terms of a cooperative advertising plan to which the manufacturer and the distributor were parties, to make repayment to the distributor of the local advertising charge. Pursuant to the plan, the repayment would be made to the extent of expenditures by the distributor for radio, television, or newspaper advertising, initiated or obtained by him, specifically naming refrigerators or other articles taxable at the same rate under section 4111 which were manufactured by the manufacturer, and giving the location of various retail stores within the distributor's territory where such articles may be purchased. In this example, only $500 of the manufacturer's charge of $1,000 for local advertising may be excluded in determining the taxable price of the refrigerators for purposes of reporting and paying the tax imposed by section 4111. The remaining $500 may not be excluded in computing the taxable price of the refrigerators since this is the amount by which the $1,000 local advertising charge exceeds 5 percent of $10,000. Thus, the taxable price of the refrigerators in this example is $10,500. Example (4). Assume the same facts as those stated in Example (1), except that, pursuant to the agreement between the manufacturer and the distributor, the manufacturer is to contract for the placement of the local advertising. Payment of the $500 local advertising charge is to be made by the manufacturer to the person with whom the advertising is placed in satisfaction of the manufacturer's contractual liability to such person. Under these circumstances, the manufacturer's payment of the $500 charge to the person with whom the advertising is placed does not constitute a refund to the purchaser in reimbursement of costs incurred for local advertising. [T.D. 6635, 28 FR 1201, Feb. 7, 1963, as amended by T.D. 6686, 28 FR 11410, Oct. 24, 1963. Redesignated and amended by T.D. 7536, 43 FR 13520, Mar. 31, 1978] § 48.4216(e)-2 Limitation on aggregate of exclusions and price readjustments. (a) In general. (b) Computation of over-all 5 percent limitation In general. (2) Alternative method of computation in certain cases. (3) Allocation of amounts paid in reimbursement of expenditures for local advertising. (c) Examples. Example (1). During the first and second calendar quarters of 1961, a manufacturer makes sales of articles taxable under section 4111 to his distributors. The total charges for such sales, exclusive of the tax, transportation charges, delivery charges, or other charges which are excludable, pursuant to section 4216(a), in computing taxable price, are as follows: First Quarter Articles taxable under section 4111 $100,000 Local advertising charges 3,000 Total charge $103,000 Second Quarter Articles taxable under section 4111 $150,000 Local advertising charges 4,000 Total charge $154,000 Assume further that the manufacturer contributes to the advertising plan and that the manufacturer pays $5,500 and $1,000 during the first and second calendar quarters of 1961, respectively, to his distributors in reimbursement of expenses incurred by them for local advertising of the articles purchased from the manufacturer. Computation as of close of first calendar quarter 1. Amount which would constitute total taxable price (computed at time of sale) if not part of any charge for local advertising were excludable in computing taxable price $103,000 2. Amounts billed as separate charges for local advertising 3,000 3. Difference $100,000 4. Over-all 5 percent limitation (5 percent of item 3) $5,000 5. Amount excluded in computing taxable price 3,000 6. Unused portion of limitation $2,000 7. Allocation, pursuant to agreement, or $5,500 paid to distributors: Charges for local advertising $3,000 Contributions by manufacturer 2,500 Readjustment may be claimed in respect of that portion of the total amount repaid to the distributors which is allocated to the manufacturer's contribution ($2,500) to the extent that such portion does not exceed the unused portion of the over-all 5 percent limitation ($2,000). Accordingly, as of the close of the first calendar quarter the manufacturer may claim credit or refund in respect of a readjustment or price in the amount of $2,000. Computation as of close of second calendar quarter 1. Amount which would constitute total taxable price (computed at time of sale) if not part of any charge for local advertising were excludable in computing taxable price $103,000 + $154,000) $257,000 2. Amounts billed as separate charges for local advertising ($3,000 + $4,000) 7,000 3. Difference $250,000 4. Over-all 5 percent limitation (5 percent of item 3) $12,500 5. Amount excluded in computing taxable price ($3,000 + $4,000) plus readjustment claimed at end of first calendar quarter ($2,000) 9,000 6. Unused portion of limitation $3,500 7. Allocation, pursuant to agreement, of $6,500 ($5,500 + $1,000) paid to distributors: Charges for local advertising $3,500 Contributions by manufacturer 3,000 Although the total reimbursements for local advertising expenses attributable to contributions by the manufacturer ($3,000) does not exceed the unused portion of the over-all 5 percent limitation ($3,500), the manufacturer having taken, at the close of the first calendar quarter, a price readjustment in the amount of $2,000 in respect of his contributions is entitled at the close of the second calendar quarter to claim credit or refund in respect of a price readjustment in the amount of $1,000 ($3,000−$2,000). Example (2). During the first calendar quarter of 1961, a manufacturer sold articles taxable under section 4111 to his distributors at a total charge of $106,000, exclusive of the tax, transportation charges, delivery charges, or other charges which are excludable, pursuant to section 4216(a), in computing taxable price. This total charge of $106,000 was billed as follows: Articles taxable under section 4111 $100,000 Local advertising charges 6,000 Total charge $106,000 Assume further that the manufacturer contributes to the advertising plan and that the manufacturer pays $3,000 during the first calendar quarter of 1961 to his distributors in reimbursement of expenses incurred by them for local advertising of the articles purchased from the manufacturer. Computation as of close of first calendar quarter 1. Amount which would constitute total taxable price (computed at time of sale) if not part of any charge for local advertising were excludable in computing taxable price $106,000 2. Amounts billed as separate charges for local advertising 6,000 3. Difference $100,000 4. Over-all 5 percent limitation (5 percent of item 3) $5,000 5. Amount excluded in computing taxable price (see paragraph (c) of § 48.4216(e)-1) 5,000 6. Unused portion of limitation $0 7. Allocation, pursuant to agreement, of $3,000 paid to distributors: Charges for local advertising $2,000 Contributions by manufacturer 1,000 Credit or refund may not be claimed in respect of that portion of the total amount repaid to the distributors ($3,000) which is allocated to the manufacturer's contribution ($1,000) since the amount excluded in computing taxable price is equal to the over-all 5 percent limitation. [T.D. 6635, 28 FR 1203, Feb. 7, 1963. Redesignated and amended by T.D. 7536, 43 FR 13520, Mar. 31, 1978] § 48.4216(e)-3 No exclusion or readjustment for other advertising charges or reimbursements. (a) Exclusions from price. (1) Is for advertising which does not qualify as local advertising within the meaning of section 4216(e)(4) and paragraphs (a) and (b) of § 48.4216(e)-1, or (2) Does not satisfy all of the conditions and limitations stated in section 4216(e)(1) and paragraph (c) of § 48.4216(e)-1. (b) Readjustments of price. (1) Is for advertising which does not qualify as local advertising within the meaning of section 4216(e)(4) and paragraph (b) of § 48.4216(e)-1, or (2) Is not within the limitation provided in section 4216(e)(2), as computed in accordance with § 48.4216(e)-2, as of the close of the calendar quarter in which the amount is so paid over or as of the close of any subsequent calendar quarter in the same calendar year. See, however, paragraph (c)(2)(ii) of § 48.6416(b)-1, relating to redetermination of price readjustments in cases where local advertising charges excluded from taxable price in one calendar year become taxable as of May 1 of the following calendar year. [T.D. 6686, 28 FR 11411, Oct. 24, 1963. Redesignated and amended by T.D. 7536, 43 FR 13521, Mar. 31, 1978] § 48.4216(f)-1 Value of used components excluded from price of certain trucks. For purposes of the tax imposed by section 4061(a)(1) (relating to trucks, buses, etc.), in determining the price for which an article is sold, the value of any previously used component of such article shall be excluded from the price if the person furnishing the component is the first user of the finished article. For example, where a manufacturer builds a truck for a customer who intends to use, rather than resell the truck, incorporating used parts furnished by the customer, the value of the previously used parts shall not be included in the price for which the truck is considered sold by the manufacturer. [T.D. 7536, 43 FR 13521, Mar. 31, 1978] § 48.4217-1 Lease considered as sale. For purposes of Chapter 32 of the Code, the lease of an article by a manufacturer, producer, or importer shall be considered a sale of the article. The term “lease” means a contract or agreement, written or verbal, which gives the lessee an exclusive, continuous right to the possession or use of a particular article for a period of time. The term includes any renewal or extension of a lease or any subsequent lease of the article. However, in the case of the lease of an automobile the sale of which by the manufacturer would be taxable under section 4064, the term includes only the first lease (excluding any renewal or extension of the lease) of such automobile by the manufacturer. [T.D. 7536, 43 FR 13521, Mar. 31, 1978, as amended by T.D. 8036, 50 FR 29963, July 23, 1985] § 48.4217-2 Limitation on amount of tax applicable to certain leases. (a) Conditions for eligibility. (b) Lessor engaged in business of selling. (c) Same type and model of article. (d) Basis for tax Tax payable until total tax is paid. (2) Changes in tax rates. (i) Section 701 (a) (3) of the Excise Tax Reduction Act of 1965 (79 Stat. 155) in the case of certain reductions in tax rates effective June 22, 1965, or January 1, 1966, and (ii) Section 401(h)(3) of the Revenue Act of 1971 (85 Stat. 534) in the case of certain reductions in tax rates effective December 11, 1971, if the rate of tax is increased or decreased during a lease period, the new rate shall apply to the lease payments made on and after the date of the change, but the amount of the total tax shall remain the same. (e) Total tax. (f) Sale of article before total tax becomes payable. (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 effect on the date of the sale, on the price for which the article is sold. For purposes of subparagraph (2) of this paragraph, the provisions of section 4216(b) for determining a constructive sale price shall not apply if the sale is at arm's length. If the sale is not at arm's length, the tax referred to in subparagraph (2) of this paragraph shall be computed on a constructive sale price as provided in § 48.4216(b)-2. (g) Sale of article after total tax has become payable. (h) Special rules applicable to certain leases entered into before January 1, 1959. (1) Such lease shall be considered to have been entered into on January 1, 1959. (2) The total tax shall be computed on the fair market value of the article on January 1, 1959. (3) The lease payments under such lease shall include only payents attributable to periods beginning after December 31, 1958. (i) Cross-reference. [T.D. 7536, 43 FR 13521, Mar. 31, 1978, as amended by T.D. 8036, 50 FR 29963, July 23, 1985] Use by Manufacturer or Importer Considered Sale § 48.4218-1 Tax on use by manufacturer, producer, or importer. (a) In general. (b) Taxable articles in general Application of tax. (2) Taxable use in manufacture of nontaxable articles In general. (ii) Types of use in manufacture of nontaxable articles. ( a ( b ( c If an automobile part or accessory, radio or television component, or camera lens is used as material in the manufacture or production of, or as a component part of, a taxable article to which subparagraph (1) of this paragraph has application and such article in turn is used in the manufacture or production of, or as a component part of, a nontaxable article, the part or accessory, component, or lens is considered to have been used in the manufacture of the taxable article, and not in the manufacture of the nontaxable article. For example, the use of taxable radio components in the production of a taxable radio receiving set is exempt from tax (see paragraph (d) of this section), but the use of the radio receiving set in the production of a nontaxable combination radio receiver-transmitter is subject to tax. See section 6416(b)(2) or 6416(b)(3) and the regulations thereunder contained in subpart O for credit or refund of tax paid in respect of such radio receiver if the combination radio receiver-transmitter is by any person exported, sold to a State or local government for its exclusive use, sold to a nonprofit educational organization for its exclusive use, or used or sold for use as supplies for vessels or aircraft. (3) Nontaxable use in manufacture of taxable articles. (4) Gasoline. (c) Tires, inner tubes, and automobile radio or television receiving sets. (d) Automobile parts or accessories, radio or television components, and camera lenses Application of tax. (2) Nontaxable use in manufacture of other articles. (e) Bicycle tires and inner tubes Application of tax. (2) Nontaxable use in manufacture of other articles. (3) Effective date. (f) Use after lease. (g) Time of application of tax. (h) Exemptions because of other statutory provisions. [T.D. 6687, 28 FR 11780, Nov. 5, 1963] § 48.4218-2 Business or personal use of articles. (a) Business use. (b) Personal use. [T.D. 6687, 28 FR 11781, Nov. 5, 1963] § 48.4218-3 Events subsequent to taxable use of article. Liability for tax incurred on the use of an article is not extinguished or reduced because of any subsequent sale or lease of the article even if such sale or lease would have been exempt if the article had been so sold or leased prior to use. If a manufacturer, producer, or importer of an article incurs liability for tax on his use thereof, and thereafter sells or leases the article in a transaction which otherwise would be subject to tax, liability for tax is not incurred on such sale or lease. [T.D. 6687, 28 FR 11781, Nov. 5, 1963] § 48.4218-4 Use in further manufacture. For purposes of section 4218 and § 48.4218-1, an article is used as material in the manufacture or production of, or as a component part of, another article, if it is incorporated in, or is a part or accessory of, the other article. Lubricating oil in the crankcase of a new truck is an example of a taxable article use as material in the manufacture or production of, or as a component part of, another article. In addition, an article (other than gasoline used as a fuel) is considered to be used as material in the manufacture of another article if it is partly or entirely consumed in testing such other article; for example, shells or cartridges used in testing new firearms. similarly, if an article is partly or wholly consumed in quality testing a production run of like articles (as, for example, an automotive part destroyed in stress testing) such article is also considered to have been used as material in the manufacture of another article. However, if a taxable article that has been used tax free and only partly consumed in testing is later sold, or put to a taxable use, by the manufacturer, tax attaches to such sale or use. An article that is consumed in the manufacturing process other than in testing, so that it is not a physical part of the manufactured article, is not used as material in the manufacture or production of, or as a component part of, such other article. Thus, lubricating oil consumed in operating plant machinery in the course of the manufacture of automobile truck chassis is not used as material in the manufacture or production of, or as a component part of, the truck chassis. [T.D. 6687, 28 FR 11781, Nov. 5, 1963, as amended by T.D. 7536, 43 FR 13521, Mar. 31, 1978] § 48.4218-5 Computation of tax. (a) Tax based on price. (b) Articles regularly sold by manufacturer. (c) Articles governed by section 4218(a) used in manufacture of nontaxable combination articles. Example. A manufacturer of a nontaxable washer-drier combination produces and uses an electric clothes drier taxable under section 4121 in the manufacture of the combination article. The lowest established wholesale price of the manufacturer for the washer-drier combination at the time of the taxable use is $150 with respect to identical combinations after including and excluding applicable charges and readjustments. The manufacturer does not regularly sell such drier separately. In the manufacture of the washer-drier the two units are integrated to the extent that certain component parts function both in the operation of the washer and of the drier. The parts used exclusively in the operation of the washer cost $30 and those used exclusively in the operation of the drier cost $20. The taxable cost ratio in this instance is 20/50, or 40 percent. Applying 40 percent to the manufacturer's lowest established wholesale price of $150 for the washer-drier results in $60 as the constructive price for the taxable article in the combination at the time tax liability is incurred. No additional charges or readjustments in connection with, or subsequent to, the sale of the washer-drier combination may affect the tax liability incurred at the time of use. (d) Tax based on weight or volume. (1) The weight of the article (such as a tire), or (2) The volume of the article (such as gasoline or lubricating oil), the tax due shall be computed on the basis which would be applicable if such article were sold. [T.D. 6687, 28 FR 11781, Nov. 5, 1963] Application of Tax in Case of Sales by Other Than Manufacturer or Importer § 48.4219-1 Sales of taxable articles by a person other than the manufacturer, producer, or importer. (a) General rule. (1) The surviving spouse, child or children, executors or administrators, or other legal representatives, as the case may be, of a deceased manufacturer, producer, or importer of taxable articles, incur liability for tax on all such articles sold by them. (2) A receiver or trustee in bankruptcy who under a court order conducts or liquidates the business of a manufacturer, producer, or importer of taxable articles, incurs liability for tax on all taxable articles sold by him, regardless of whether the articles were manufactured, produced, or imported before or after he took charge of the business. (3) An assignee for the benefit of creditors of a manufacturer, producer, or importer incurs liability for tax with respect to all taxable articles sold by him as such assignee. (4) If one or more members of a partnership withdraw, or if new partners are admitted, the new partnership so constituted incurs liability for tax on all taxable articles sold by it regardless of when such articles were manufactured, produced, or imported. (5) A person who acquires title to taxable articles as a result of default of the manufacturer, producer, or importer pursuant to an agreement under the terms of which the articles were pledged as collateral incurs liability for tax with respect to his sale of the articles so acquired. (6) A person who succeeds to the business of a manufacturer, producer, or importer of taxable articles, such as: (i) A corporation which results from a consolidation, merger, or reorganization; (ii) A corporation which acquires the business of an individual or partnership; or (iii) A stockholder in a corporation who, after its dissolution, continues the business; incurs liability for tax on all taxable articles sold by such person. However, where a manufacturer, producer, or importer sells only his assets, rather than ownership of his business, he incurs liability for tax on the sale of any taxable articles included in such assets. (b) Transfer of title to damaged articles. [T.D. 6687, 28 FR 11782, Nov. 5, 1963] Subpart N—Exemptions, Registration, Etc. Source: T.D. 7536, 43 FR 13522, Mar. 31, 1978, unless otherwise noted. § 48.4221-1 Tax-free sales; general rule. (a) Application of regulations under section 4221 In general. (2) Limitations. (i) The exemptions under section 4221 (a)(4) and (a)(5) do not apply to the tax imposed by section 4064 (gas guzzler tax). (ii) The exemptions under section 4221 do not apply to the tax imposed by section 4081 (taxable fuel tax). (iii) The exemptions under section 4221 do not apply to the tax imposed by section 4091 (aviation fuel tax). For rules relating to tax-free sales of aviation fuel, see section 4092 and the regulations thereunder. (iv) The exemptions under section 4221 do not apply to the tax imposed by section 4121 (coal tax). (v) The exemptions under section 4221 (a)(3) through (a)(5) do not apply to the tax imposed by section 4131 (vaccine tax). In addition, the exemption under section 4221(a)(2) applies to the vaccine tax only to the extent provided in § 48.4221-3(e) (relating to tax-free sales of vaccine for export). (vi) The exemptions under section 4221(a) apply only in those cases where the exportation or use referred to is to occur before any other use. (vii) The exemptions under section 4221(a)(3) through (a)(6) do not apply to the tax imposed by section 4191 (medical device tax). (b) Manufacturer relieved of liability in certain cases General rule. (2) The following are situations wherein section 4221(c) is applicable with respect to sales made tax free on the assumption that one of the following sections of the Code provides exemption for such sales: (i) Section 4221(a)(1), to the extent that it relates to sales for further manufacture by a first purchaser (see § 48.4221-2), (ii) Section 4221(a)(3), relating to supplies for vessels and aircraft (see § 48.4221-4), (iii) Section 4221(a)(4), relating to sales to State or local governments (see § 48.4221-5), (iv) Section 4221(a)(5), relating to sales to nonprofit educational organizations (see § 48.4221-6), and (v) Section 4221(e)(3) relating to the sale of tires used on intercity, local, or school buses (see § 48.4221-8). (3) Duty of seller to ascertain validity of tax-free sale. (4) Information to be furnished to purchaser. (i) The purchaser can compute and remit the tax due if an article sold tax free for further manufacture is diverted to a taxable use, (ii) The manufacturer can remit the tax due with respect to an article purchased tax free for resale for use in further manufacture or for export if, within the 6-month period described in § 48.4221-2(c) or § 48.4221-3(c), the manufacturer does not receive proof that the article has been exported or resold for use in further manufacture, or (iii) The purchaser can notify the manufacturer if an article otherwise purchased tax free is diverted to a taxable use. (c) Evidence required in support of tax-free sales Purchasers required to be registered. (2) Purchasers not required to be registered. [T.D. 6687, 28 FR 11782, Nov. 5, 1963, as amended by T.D. 7834, 47 FR 42345, Sept. 27, 1982; T.D. 8036, 50 FR 29963, July 23, 1985; T.D. 8659, 61 FR 10463, Mar. 14, 1996; T.D. 8879, 65 FR 17160, Mar. 31, 2000; T.D. 9604, 77 FR 72938, Dec. 7, 2012] § 48.4221-2 Tax-free sale of articles to be used for, or resold for, further manufacture. (a) Further manufacture In general. (2) Proof of resale for use in further manufacture. (b) Circumstances under which an article is considered to have been sold for use in further manufacture. (2) An article is used as material in the manufacture or production of, or as a component of, another article if it is incorporated in, or is a part or accessory of, the other article when the other article is sold by the manufacturer. In addition, an article is considered to be used as material in the manufacture of another article if it is consumed in whole or in part in testing such other article. However, an article that is consumed in the manufacturing process other than in testing, so that it is not a physical part of the manufactured article, is not considered to have been used as material in the manufacture of, or as a component part of, another article. (c) Proof of resale for further manufacture Cessation of exemption. (2) Proof of resale Certificate of purchaser. Statement of Manufacturer's Vendee (To support tax-free sales of taxable articles to a purchaser for resale to a second purchaser for use in further manufacture (section 4221(a)(1) of the Internal Revenue Code).) (Date) __________________________, 19____. The undersigned, or the ______________________________________ (Name of manufacturer's vendee if other than undersigned), of which I am __________ (Title), holds certificate of registry No. ____, issued by the District Director of Internal Revenue at __________________. The article or articles specified below or on the reverse side hereof were purchased tax free by me, or by ________________________________ (Name of manufacturer's vendee if other than undersigned), on __________ (Date) and were thereafter resold to a purchaser who holds certificate of registry No. ____, issued by the District Director of Internal Revenue at __________________, for use by it as material in the manufacture or production of, or as a component part or parts of, an article or articles taxable under chapter 32 of the Internal Revenue Code, or, if the article or articles are automobile parts or accessories (to which section 4061(b) applies) or gasoline, for use by it as material (for nonfuel uses in the case of gasoline) in the manufacture or production of, or as a component part or parts of, any article or articles. The undersigned, or __________________________________ (Name of manufacturer's vendee if other than undersigned), has in my/its possession proof of tax-free resale of such article or articles in the form of related purchase orders and sales invoices, and proof of tax-free resale will be retained by me or ____________________________________ (Name of manufacturer's vendee if other than undersigned), for at least 3 years from the date of this statement, and will be made readily available for inspection by Government officers during such 3-year period. I have not previously executed a statement in respect of such certificate of resale, and I understand that the fraudulent use of this statement may subject me and all parties making such fraudulent use of this statement to a fine of not more than $10,000, or imprisonment for not more than 5 years, or both, together with the costs of prosecution. (Signature) (Address) (ii) Period covered. (Sec. 4222 (72 Stat. 1284; 26 U.S.C. 422); secs. 4051, 4052, 4061 and 7805 of the Internal Revenue Code of 1954 (96 Stat. 2174, 2175 and 2173; 68A Stat. 917; 26 U.S.C. 4051, 4052, 4061, and 7805) and secs. 522 and 523 of the Highway Revenue Act of 1982 (Pub. L. 97-424, 96 Stat. 2185, 2186)) [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 7681, 45 FR 13728, Mar. 3, 1980; T.D. 7753, 46 FR 2999, Jan. 13, 1981; T.D. 7882, 48 FR 14362, Apr. 4, 1983; T.D. 8659, 61 FR 10463, Mar. 14, 1996] § 48.4221-3 Tax-free sale of articles for export, or for resale by the purchaser to a second purchaser for export. (a) In general. (2) If an article, otherwise taxable under Chapter 32 of the Code: (i) Is sold tax free by the manufacturer pursuant to section 4221(a)(2) and this section, and (ii) Is returned subsequently to the United States in an unused and undamaged condition, then the importer is liable for the tax imposed by Chapter 32 on the subsequent sale or use of the article in the United States. The provisions of this paragraph (a)(2) may be illustrated by the following examples: Example (1). Q, a U.S. motor vehicle manufacturer, previously sold a truck chassis to R, a company in Canada. The sale was tax free under section 4221(a)(2). R mounted a truck body on the truck chassis and sold the completed vehicle to S. Thereafter S sold the completed new vehicle to T who imported the vehicle into the United States and sold it. The sale of the completed truck subjects T to an excise tax liability under section 4061(a)(1) with respect to both the body and the chassis. Example (2). X, a U.S. manufacturer of trucks, sold a trash collection truck to Y, a company in France. The sale was tax free under section 4221(a)(2). The truck was sold by Y to the City of Nice, France. After initial use, the city determined that the truck was not suited for its needs and resold the truck to X. X returned the truck to the United States where it was resold. The resale of the truck by X does not subject X to an excise tax liability under section 4061(a)(1). (b) Sales or resales to a foreign purchaser for export. (1) A written order or contract of sale showing that the manufacturer is to ship the article to a foreign destination; or (2) Where delivery by the manufacturer is to be made within the United States, a statement from the purchaser showing: (i) That the article is purchased either to fill existing or future orders for delivery to a foreign destination or for resale to another person engaged in the business of exporting who will export the article, and (ii) That such article will be transported to its foreign destination in due course prior to use or further manufacture and prior to any resale except for export. See section 4221(b) and paragraphs (c) and (d) of this section for requirements as to timely proof of exportation and cessation of the exemption for export unless the evidence to show actual exportation has been received by the manufacturer. (c) Cessation of exemption. (d) Proof of exportation. (i) A copy of the export bill of lading issued by the delivering carrier, (ii) A certificate by the agent or representative of the export carrier showing actual exportation of the article, (iii) A certificate of landing signed by a customs officer of the foreign country to which the article is exported, (iv) Where the foreign country has no customs administration, a statement of the foreign consignee showing receipt of the article, or (v) Where a department or agency of the United States Government is unable to furnish any one of the foregoing four types of proof of exportation, a statement or certification on the department or agency stationery, executed by an authorized officer, that the listed or identified articles have, in fact, been exported. (2) In any case where the manufacturer is not the exporter, the manufacturer must have in its possession a statement from the vendee to whom the manufacturer sold the article stating that the article was in fact exported in due course by the vendee or was sold to another person who in due course exported the article. The statement must state what evidence is available to establish that the article was in fact exported in due course prior to use or further manufacture and prior to resale in the United States other than for export. Such evidence must be that described in paragraph (d)(1) of this section, and the statement must show where such evidence is readily available for inspection by Government officers, and should be in substantially the following form: Statement of Manufacturer's Vendee (To support tax-free sales of taxable articles to a purchaser for export or for resale to a second purchaser for export (section 4221(a)(2) of the Internal Revenue Code).) The undersigned, or the ______________________________ (Name of manufacturer's vendee if other than undersigned) of which I am __________ (Title) holds certificate of registry No. ____, issued by the District Director of Internal Revenue at __________________. The article or articles specified below or on the reverse side hereof were purchased tax free by me or by ____________________________ (Name of manufacturer's vendee if other than undersigned) on __________ (Date), and were thereafter exported. The undersigned or ____________________________ (Name of manufacturer's vendee if other than undersigned) has in my/its possession proof of exportation in respect of such article or articles. The evidence of export available is __________________ and is located at ______________________________ (If other than address below). Such proof of exportation will be retained by ______________________________ (Name of manufacturer's vendee) for at least 3 years from the date of this statement and will be made readily available for inspection by Government officers. I have not previously executed a statement in respect of the article or articles covered by this statement, and I understand that the fraudulent use of this statement will subject me and all parties making such fraudulent use of this statement to a fine of not more than $10,000, or imprisonment for not more than 5 years, or both, together with the costs of prosecution. (Signature) (Address) (Date) (3) The statement executed and signed by the manufacturer's vendee, as provided in paragraph (d)(2) of this section, may be executed with respect to any one or more articles purchased tax free from a manufacturer and exported within the 6-month period prescribed in section 4221(b)(2) and paragraph (c) of this section. Such statement shall be kept for inspection by the district director as provided in section 6001 and the regulations thereunder. (e) Vaccines. (1) The vaccine is sold by the manufacturer after August 10, 1993; and (2) In the case of vaccine sold to, or sold for resale to, the United States or any of its agencies or instrumentalities, the United States or such agency or instrumentality notifies the manufacturer that the vaccine is intended for uses other than the vaccination of persons described in 42 U.S.C. 300aa-11(c)(1)(B)(i)(II) (relating to certain U.S. citizens who are vaccinated outside the United States). [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 7729, 45 FR 72653, Nov. 3, 1980; T.D. 8561, 59 FR 43045, Aug. 22, 1994] § 48.4221-4 Tax-free sale of articles for use by the purchaser as supplies for vessels or aircraft. (a) Supplies for vessels or aircraft In general. (2) Civil aircraft of foreign registry. (b) Meaning of terms Supplies for vessels or aircraft. (2) Fuel supplies, ships' stores, and legitimate equipment. (3) Sea stores. (4) Vessels. (5) Vessels of war of the United States or of any foreign nation. (6) Vessels used in fisheries or whaling business. (7) Civil aircraft. (8) Trade. (c) Reciprocity required in the case of civil aircraft. (d) Evidence required to establish exemption In general. (2) Exemption certificates for use in support of tax-free sales of supplies for vessels and aircraft. (ii) Where only occasional sales of articles are made to a purchaser for use as supplies for vessels or aircraft, a separate exemption certificate shall be furnished for each order. However, where sales are regularly or frequently made to a purchaser for such exempt use, a certificate covering all orders for a specified period not to exceed 12 calendar quarters will be acceptable. Such certificates and proper records of invoices, orders, etc., relative to tax-free sales must be kept for inspection by the district director as provided in section 6001 and the regulations thereunder. (iii) Acceptable form of exemption certificate. Exemption Certificate (For use by purchasers of articles for use as fuel supplies, ships stores, sea stores, of legitimate equipment on certain vessels or aircraft (sections 4221 and 4222 of the Internal Revenue Code of 1954).) (Date) __________________________, 19____. I, the undersigned purchaser, hereby certify that I am the ________________ (Owner, charterer, or authorized agent) of __________ (Name of company and vessel) and that: (Check applicable type of certificate) ____ the article or articles specified in the accompanying order, or on the reverse side hereof, (or) ____ all orders placed by the purchaser for the period commencing (Date) ______ and ending (Date) ______ (period not to exceed 12 calendar quarters), will be used only for fuel supplies, ships' stores, sea stores, or legitimate equipment on a vessel belonging to one of the following classes of vessels to which section 4221 of the Internal Revenue Code applies: (Check class to which vessel belongs.) (1) Vessels engaged in foreign trade. (2) Vessels engaged in trade between the Atlantic and Pacific ports of the United States. (3) Vessels engaged in trade between the United States and any of its possessions. (4) Vessels employed in the fisheries or whaling business. (5) Vessels of war of the United States or a foreign nation. If the articles are purchased for use on civil aircraft engaged in trade as specified in (1) or (3) above, state the name of the country in which the aircraft is registered: I understand that if the articles are used for any purpose other than as stated in this certificate, or are resold or otherwise disposed of, I must report such fact to the manufacturer. I understand that this certificate may not be used in purchasing articles tax free for use as fuel supplies, etc., on pleasure vessels, or on any type of aircraft except that (i) civil aircraft employed in foreign trade or trade between the United States and any of its possessions, and (ii) aircraft owned by the United States or any foreign country and constituting a part of the armed forces thereof. I understand that the fraudulent use of this certificate to secure exemption will subject me and all parties making such fraudulent use of this certificate to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. I also understand that I must be prepared to establish by satisfactory evidence the purpose for which the article was used. (Signature) (Address) § 48.4221-5 Tax-free sale of articles to State and local governments for their exclusive use. (a) In general. (b) State or local government. (c) Evidence required in support of tax-free sales to States or local governments. Exemption Certificate (For use by States and local governments (section 4221(a)(4) of the Internal Revenue Code)) (Date) __________________________, 19____. I hereby certify that I am __________________ (Title of Officer) of __________________ (State or local government) that I am authorized to execute this certificate; and that: (Check applicable type of certificate) ____ the article or articles specified in the accompanying order, or on the reverse side hereof, (or) ____ all orders placed by the purchaser for the period commencing __________________ (Date) and ending __________________ (Date) (period not to exceed 12 calendar quarters), are, or will be, purchased from __________________ (Name of manufacturer) for the exclusive use of __________________ (Governmental unit) of __________________ (State or local government). I understand that the exemption from tax in the case of sales of articles under this exemption certificate to a State, etc., is limited to the sale of articles purchased for its exclusive use. I understand that the fraudulent use of this certificate for the purpose of securing this exemption will subject me and all parties making such fraudulent use of this certificate to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. (Signature) (Address) (2) A purchase order, provided that all of the information required by paragraph (c)(1) of this section is included therein, is acceptable in lieu of a separate exemption certificate. (d) Resale of articles purchased tax free by a State or local government. [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 8036, 50 FR 29963, July 23, 1985; T.D. 8659, 61 FR 10463, Mar. 14, 1996] § 48.4221-6 Tax-free sales of articles to nonprofit educational organizations. (a) In general. (b) Nonprofit educational organization. (c) Evidence required in support of tax-free sales to nonprofit educational organizations. (1) The exempt purpose for which the article or articles are being purchased, and (2) Its registration number, and the district director's office that issued the registration number. Such information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with each sale “except that a single notification containing the information described in this paragraph may cover all sales by the seller to the purchaser made during a designated period not to exceed 12 successive calendar quarters.”. See paragraph (c) of § 48.4221-1 for the evidence required to establish exemption. [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 7686, 45 FR 17574, Mar. 19, 1980; T.D. 8036, 50 FR 29963, July 23, 1985] § 48.4221-7 Tax-free sales of tires and tubes. (a) In general. (1) The tire or tube is sold for use by the purchaser for sale on or in connection with the sale of another article manufactured or produced by the purchaser; and (2) The other article is to be sold in a tax-free sale by the purchaser for export, for use as supplies for vessels or aircraft, to a State or local government for its exclusive use, or to a nonprofit educational organization for its exclusive use, or the other article is to be sold by the purchaser for any of such purposes in a sale which would be tax-free but for the fact that the other article is not subject to tax under Chapter 32 of the Code. See section 6416(b)(2)(F) and paragraph (b)(6) of § 48.6416(b)-2 for the circumstances under which credit or refund of tax is available for tax-paid tires or tubes that are resold for the purposes described in this paragraph (a). (b) Registration requirements. (c) Proof required in support of tax-free sales of tires and tubes Cessation of exemption. (2) Required information. Statement of Manufacturer's Vendee (To support tax-free sales of tires or inner tubes by the manufacturer thereof for use on or in connection with the sale of another article (section 4221(e)(2) of the Internal Revenue Code)) (Date) ____________________________, 19____. I certify that I, or the __________________, (Name of purchaser if other than undersigned) of which I am __________________ (Title) am/is in the business of selling __________________ (Products handled) and hold(s) certificate of registry No. ____ issued by the District Director of Internal Revenue at __________________; and that the tires or inner tubes which were purchased or shipped on ____________________, 19____, as specified on the back hereof, have been used on or in connection with the sale of __________________ (Products sold) by such undersigned. Check one ____ for export by __________________ (Name of carrier) to __________________ (Name of foreign country or U.S. possession) and was so exported on ____________________, 19____ (Date). (A copy of the bill of lading or other proof of exportation is attached.) ____ for use as supplies on __________________ (Name of vessel or aircraft) which is registered in __________________ (Name of country in which vessel or aircraft is registered). ____ to __________________ (Name of State or local government). ____ to __________________ (Name and address of the nonprofit educational organization). I understand that the fraudulent use of this certificate for the purpose of substantiating the tax-free sale will subject me and all parties making such fraudulent use of this certificate to revocation of the privilege of purchasing articles tax free and to a fine of not more than $10,000 or to imprisonment for not more than 5 years, or both, together with costs of prosecution. (Signature) (Address) § 48.4221-8 Tax-free sales of tires, tubes, and tread rubber used on intercity, local, and school buses. (a) In general. (b) Meaning of terms Qualified bus. (2) Intercity or local bus. (3) School bus. (b) Registration requirements for tires, tubes, and tread rubber; vendees purchasing tax free. (c) Cross reference. (d) Information; records Information to be furnished to purchaser. (2) Records of manufacturer. (3) Records of purchaser. (e) Duty of selling manufacturer to ascertain validity of tax-free sale. (f) Effective date. [T.D. 7834, 47 FR 42346, Sept. 27, 1982. Redesignated by T.D. 8659, 61 FR 10463, Mar. 14, 1996] § 48.4222(a)-1 Registration. (a) General rule. (b) Application instructions. (c) Evidence required in support of tax-free sales. (d) Failure to register. (e) Cross references. (2) For revocation or suspension of registration, see § 48.4222(c)-1. (3) For applicability of section 4222 and these regulations to exemptions provided by sections 4063(b), 4182(b), and 4293, see § 48.4222(d)-1 [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 8659, 61 FR 10463, Mar. 14, 1996] § 48.4222(b)-1 Exceptions to the requirement for registration. (a) State and local governments. (b) Sales or resales to foreign purchasers for export. (c) United States. (d) Supplies for vessels and aircraft. [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 8659, 61 FR 10463, Mar. 14, 1996; T.D. 8879, 65 FR 17160, Mar. 31, 2000] § 48.4222(c)-1 Revocation or suspension of registration. The district director or the Director of International Operations, as the case may be, is authorized to revoke or temporarily suspend, upon written notice, the registration of any person and the right of such person to sell or purchase articles tax free under section 4221 of the Code in any case in which he finds that (1) the registrant is not a bona fide manufacturer, or a purchaser reselling direct to manufacturers or exporters; (2) the registrant is for some other reason not eligible under these regulations to retain a Certificate of Registry; (3) the registrant has used his registration to avoid the payment of any tax imposed by Chapter 32 of the Code, or to postpone or interfere in any manner with the collection of such tax; (4) such revocation or suspension is necessary to protect the revenue; or (5) the registrant failed to comply with the requirements of paragraph (c) of § 48.4222 (a)-1, relating to the evidence required to support a tax-free sale. The revocation or suspension of registration is in addition to any other penalty that may apply under the law for any act or failure to act. (Secs. 4222 (72 Stat. 1284; 26 U.S.C. 4222) and 7805 (68A Stat. 917; 26 U.S.C. 7805) of the Internal Revenue Code of 1954); secs. 4051, 4052, 4061 and 7805 of the Internal Revenue Code of 1954 (96 Stat. 2174, 2175 and 2173; 68A Stat. 917; 26 U.S.C. 4051, 4052, 4061, and 7805) and secs. 522 and 523 of the Highway Revenue Act of 1982 (Pub. L. 97-424, 96 Stat. 2185, 2186)) [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 7753, 46 FR 2999, Jan. 13, 1981; T.D. 7882, 48 FR 14362, Apr. 4, 1983] § 48.4222(d)-1 Registration in the case of certain other exemptions. The registration procedure set forth in § 48.4222 (a)-1 also applies in the following cases: (a) Tax-free sales on or after March 10, 1980, under section 4064(b)(1)(C) (relating to emergency vehicles). Both the vendor and vendee (other than a State or local government) must be registered. (b) Tax-free sales under section 4293 to any corporation created by Act of Congress to act in matters of relief under the treaty of Geneva of August 22, 1864 (American Red Cross) for its exclusive use. Both the vendor and the vendee must be registered. [T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 7834, 47 FR 42347, Sept. 27, 1982; T.D. 8036, 50 FR 29963, July 23, 1985; T.D. 8659, 61 FR 10463, Mar. 14, 1996] § 48.4223-1 Special rules relating to further manufacture. (a) Purchasing manufacturer to be treated as the manufacturer. (b) Computation of tax. (c) Election. (2) The election under this paragraph shall be in the form of a statement attached to the return reporting the tax applicable to the sale or use of the article which gave rise to such tax liability. Such election, once made, may not be revoked. § 48.4225-1 Exemption of articles manufactured or produced by Indians. The exemption provided under section 4225 applies to articles taxable under Chapter 32 of the Code that are of native Indian handicraft and are manufactured or produced by Indians on Indian reservations or in Indian schools, or manufactured or produced by Indians who are under the jurisdiction of the United States Government in Alaska. For purposes of this section, Indians who reside on allotments of land adjacent to an Indian reservation and are subject to the supervision, control, and jurisdiction of the Bureau of Indian Affairs are considered to be “Indians on Indian reservations”. Subpart O—Refunds and Other Administrative Provisions of Special Application to Retailers and Manufacturers Taxes § 48.6412-1 Floor stocks credit or refund. (a) In general. (b) Computation of the amount of floor stocks credit or refund. (c) Limitation. (d) Relationship between credits or refunds for floor stocks and credits or refunds for price readjustments. (e) Participation of dealers Request by dealer. (2) Requirements for claim by manufacturer. (i) The claim for the amount is based upon a request submitted by the dealer to the claimant on or before the dealer request limitation date; (ii) The amount is paid by the claimant to the dealer, or the dealer's written consent to allowance of the credit or refund has been received by the claimant, on or before the claim limitation date; and (iii) The request by the dealer is supported by an inventory statement, made under the penalties of perjury and signed by the dealer or by the dealer's authorized representative, setting forth the following information: (A) The name and address of the dealer and of the applicable manufacturer, (if the name and address of the applicable manufacturer is unknown to the dealer, these items may be added by any person in the chain of distribution); (B) The identification number, if any, of the article, such as a serial, stock, model, type, or class number, or some other suitable means of identification; (C) A brief description of the article, such as its common name or designation; and (D) The quantity of articles held by the dealer as floor stocks on the inventory date. (3) Actual manufacturer unknown. (4) Payment to dealer by claimant. (5) Date of performance. (6) Record of inventories. (7) Sample written consent. Consent Statement of Dealer (For use by dealer in requesting manufacturer, producer, or importer to obtain credit under section 6412 of the Internal Revenue Code of 1954 with respect to floor stocks.) I hereby consent to the allowance to the manufacturer, producer, or importer of the floor stocks credit or refund of the excise tax imposed by the Internal Revenue Code of 1954 with respect to the articles in my inventory on __________. (Name) By (Signature of Officer) (Title) (Date) (f) Procedure for claiming credit or refund In general. (2) Supporting evidence to be submitted by the manufacturer. (i) The claimant paid to the district director or the director of the internal revenue service center the tax for which credit or refund is claimed; (ii) The total amount claimed represents payments requested by dealers before the dealer request limitation date; (iii) The total amount claimed either was paid by the claimant to the dealers, or the claimant received the written consent of the dealers to the allowance of the amount claimed: (iv) The claimant has in his possession, and available for inspection by internal revenue officers, the evidence with respect to inventories required by paragraph (g)(2) of this section, and any written consents referred to in paragraph (f)(2)(iii) of this section; and (v) No other claim for credit or refund under this section has been or will be made by the claimant with respect to any amount covered by the claim. (g) Evidence to be retained in the manufacturer's records. (1) The dealer's inventory statements required by paragraph (e)(2)(iii) of this section, to the extent that the articles are covered by the claim; (2) Records, in respect of the articles held by each dealer, showing— (i) The name and address of the dealer, (ii) The quantities of each article held by the dealer as floor stocks by taxable category, for example, by model or type number, (iii) The amount of tax considered to be paid by the manufacturer with respect to each article held by the dealer, as determined under § 48.6412-3, (iv) The amount of tax, if any, which the claimant would pay on the sale of each article held by the dealer if the tax were computed at the new rate, (v) The total amount of reimbursement due the dealer, (vi) The date on which the claimant received from the dealer the request described in paragraph (e)(1) of this section, but only if payment was not made to the dealer before the dealer request limitation date, and (vii) The date and amount of each payment to a dealer, or the date of receipt by the claimant from the dealer of a written consent, as set forth in paragraph (e)(2)(ii) of this section; and (3) Any such written consent received from a dealer. (h) Special rules where the presumed manufacturer is the agent of the actual manufacturer. (i) Effect on other claims for credit or refund. (j) Other applicable provisions. [T.D. 8043, 50 FR 32019, Aug. 8, 1985] § 48.6412-2 Definitions for purposes of floor stocks credit or refund. For purposes of section 6412 and the regulations thereunder— (a) Floor stocks. (1) Is sold by the manufacturer (otherwise than in a tax-free sale) before October 1, 1988, (2) Is held by a dealer at the first moment on October 1, 1988, and has not been used, and (3) Is intended for sale. However, the term “floor stocks” does not include gasoline in retail stocks held at the place where intended to be sold at retail, nor with respect to gasoline held for sale by a producer or importer of gasoline. (b) Inventory date. (c) Dealer. (d) Held by a dealer In general. (ii) Floor samples, demonstrators, and articles undergoing repair (whether or not on the dealer's premises) that are carried in stock to be sold as new articles, and articles purchased tax-paid by a manufacturer or a sales subsidiary and held by the person on the inventory date for resale as such, will be considered as unused and held by a dealer, if title to or possession of the article has not at any time been transferred to any person for purposes of consumption. (iii) Articles sold by a dealer to a consumer before the inventory date and thereafter repossessed by the dealer, and articles purchased tax-paid by a manufacturer for use in further manufacture within the meaning of section 4221(d)(6), will not be considered as held by a dealer. (iv) The determination as to the time title or possession passes for purposes of consumption shall be made under applicable local law. (2) Examples. Example (1). If, under local law, title to an article sold by a dealer under a conditional sales contract is in the dealer on the inventory date, but the consumer has physical possession of the article on that date, the article is not considered as held by the dealer. Example (2). If, under local law, title to an article is in the consumer on the inventory date because the article is specifically identified with a contract, but on that date the dealer still has physical possession of the article, for example, in his will-call department, the article is not considered as held by the dealer on that date because title to the article has passed to the consumer for purposes of consumption. Example (3). If, under local law, title to an article is in the consumer on the inventory date because the dealer transferred the article to a common carrier for delivery to the consumer, the article in transit is not considered as held by the dealer on that date because title has passed to the consumer for purposes of consumption, even though neither the dealer nor the consumer has physical possession of the article. Example (4). If, under local law, title to an article is in the dealer on the inventory date and does not pass to the consumer until delivery by a common carrier, the article in transit shall be considered as held by the dealer on that date because neither the title nor possession has passed to the consumer for purposes of consumption. Example (5). If an article has been mortgaged or otherwise hypothecated by a dealer as security for a loan and, under local law, title to the article is in the creditor on the inventory date, and physical possession is in the dealer, the article shall be considered as held by the dealer on that date because neither title nor possession has passed to the consumer for purposes of consumption. (e) Old rate. (f) New rate. (g) Dealer request limitation date. (h) Claim limitation date. (i) Tax paid. [T.D. 8043, 50 FR 32021, Aug. 8, 1985] § 48.6412-3 Amount of tax paid on each article. (a) General rule. (b) Selling price. (c) Transportation charges. (d) Credits for tax paid on inner tubes. (e) Price readjustments. (2) Price readjustments which cannot be attributed to specific articles as of the inventory date (as, for example, a price readjustment of a flat dollar amount which is made to dealers who meet a sales quota) may be taken into account on the basis of an average of the adjustments which is computed for a reasonable category of articles over a representative period. (3) Price readjustments related to specific items (as, for example, an automatic rebate of a specific percentage of the price of each unit sold to a dealer) may not be averaged, and in such a case only the actual price readjustment attributable to a particular article may be taken into account in computing the tax on that article. (4) If, because of the facts in a case, a price readjustment can be attributed to specific articles for purposes of consumer refunds but cannot be attributed to specific articles for purposes of floor stocks credits or refunds, the price adjustment may be averaged for purposes of both consumer refunds and floor stocks credits and refunds. (f) Representative period. (1) It covers (i) at least four consecutive calendar quarters, the last of which ends with a period of six calendar months immediately preceding the effective date of the tax reduction or repeal involved or (ii) any other period of time which the taxpayer can demonstrate constitutes a representative period for the particular category, and (2) The number of articles in the category involved sold by the manufacturer during the period either (i) equals or exceeds the number of articles in the category to which the average amount is to be applied or (ii) can be demonstrated by the taxpayer to be a representative quantity. (g) Reasonable category. [T.D. 8043, 50 FR 32022, Aug. 8, 1985] § 48.6416(a)-1 Claims for credit or refund of overpayments of taxes on special fuels and manufacturers taxes. Any claims for credit or refund of an overpayment of a tax imposed by chapter 31 or chapter 32 shall be made in accordance with the applicable provisions of this subpart and the applicable provisions of § 301.6402-2 of this chapter (Regulations on Procedure and Administration). A claim on Form 843 is not required in the case of a claim for credit, but the amount of the credit shall be claimed by entering that amount as a credit on a return of tax under this subpart filed by the person making the claim. In this regard, see § 48.6416(f)-1. [T.D. 8043, 50 FR 32022, Aug. 8, 1985] § 48.6416(a)-2 Credit or refund of tax on special fuels. (a) Overpayments not described in section 6416(b)(2) Claims included. (2) Supporting evidence required. (i) The person has neither included the tax in the price of the fuel with respect to which it was imposed nor collected the amount of the tax from a vendee, and identifying the nature of the evidence available to establish these facts, or (ii) The person has repaid the amount of the tax to the ultimate purchaser of the fuel. (3) Ultimate purchaser. (b) Overpayments determined under section 6416(b)(2) Claims included. (2) Supporting evidence required. (i) The person has neither included the tax in the price of the fuel with respect to which it was imposed nor collected the amount of the tax from a vendee, and identifying the nature of the evidence available to establish these facts, or (ii) The person has repaid, or agreed to repay, the amount of the tax to the ultimate vendor of the fuel, or (iii) The person has secured, and will submit upon request of the Service, the written consent of the ultimate vendor to the allowance of the credit or refund. (3) Ultimate vendor. (c) Nonapplication to tax on use of special fuels. [T.D. 8043, 50 FR 32022, Aug. 8, 1985] § 48.6416(a)-3 Credit or refund of manufacturers tax under chapter 32. (a) Overpayment not described in section 6416(b)(3)(C) or (4) (prior to April 1, 1983) and section 6416(b)(2) Claims included. (2) Supporting evidence required. (i) The person has neither included the tax in the price of the article with respect to which it was imposed nor collected the amount of the tax from a vendee, and identifying the nature of the evidence available to establish these facts, or (ii) The person has repaid the amount of the tax to the ultimate purchaser of the article. (3) Ultimate purchaser General rule. (ii) Special rule under section 6416(a)(3) Conditions to be met. (B) Supporting statement. (C) Inventory requirement. (b) Overpayments described in section 6416(b) (3)(C) or (4) (prior to April 1, 1983) and section 6416(b)(2) Claims included. (2) Supporting evidence required. (i) The person neither included the tax in the price of the article with respect to which it was imposed nor collected the amount of the tax from a vendee, and identifying the nature of the evidence available to establish these facts, or (ii) The person repaid, or agreed to repay, the amount of the tax to the ultimate vendor of the article, or (iii) The person has secured, and will submit upon request of the Service, the written consent of the ultimate vendor to the allowance of the credit or refund. (3) Ultimate vendor General rule— (ii) Special rule under section 6416(a)(3)(B) prior to revision by the Highway Revenue Act of 1982. (c) Overpayments not included. [T.D. 8043, 50 FR 32023, Aug. 8, 1985, as amended by T.D. 8748, 63 FR 15292, Mar. 31, 1998] § 48.6416(b)(1)-1 Price readjustments causing overpayments of manufacturers tax. In the case of any payment of tax under chapter 32 that is determined to be an overpayment by reason of a price readjustment within the meaning of section 6416(b)(1) and § 48.6416(b)(1)-2 or § 48.6416(b)(1)-3, the person who paid the tax may file a claim for refund of the overpayment or may claim credit for the overpayment on any return of tax under this subpart which the person subsequently files. Price readjustments may not be anticipated. However, if the readjustment has actually been made before the return is filed for the period in which the sale was made, the tax to be reported in respect of the sale may, at the election 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 of the price readjustment. A price readjustment will be deemed to have been made at the time when the amount of the readjustment has been refunded to the vendor or the vendor has been informed that the vendor's account has been credited with the amount. No interest shall be paid on any credit or refund allowed under this section. For provisions relating to the evidence required in support of a claim for credit or refund, see § 301.6402-2 of this chapter (Regulations on Procedure and Administration), § 48.6416(a)-3(a)(2), and § 48.6416(b)(1)-4. For provisions authorizing the taking of a credit in lieu of filing a claim for refund, see section 6416(d) and § 48.6416(f)-1. [T.D. 8043, 50 FR 32024, Aug. 8, 1985] § 48.6416(b)(1)-2 Determination of price readjustments. (a) In general Rules of usual application Amount treated as overpayment. (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 which the article was sold. (ii) Requirements of price readjustment. (A) Repays part or all of the purchase price in cash to the vendee, (B) Credits the vendee's account for part or all of the purchase price, or (C) Directly or indirectly reimburses a third party for part or all of the purchase price for the direct benefit of the vendee. In addition, to be deemed a price readjustment, the payment or credit must be contractually or economically related to the taxable sale that the payment or credit purports to adjust. Thus, commissions or bonuses paid to a manufacturer's own agents or salesperson for selling the manufacturer's taxable products are not price readjustments for purposes of this section, since those commissions or bonuses are not paid or credited either to the manufacturer's vendee or to a third party for the vendee's benefit. On the other hand, a bonus paid by the manufacturer to a dealer's salesperson for negotiating the sale of a taxable article previously sold to the dealer by the manufacturer is considered to be a readjustment of the price on the original sale of the taxable article, regardless of whether the payment to the salesperson is made directly by the manufacturer or to the salesperson through the dealer. In such a case, the payment is related to the sale of a taxable article and is made for the benefit of the dealer because it is made to the dealer's salesperson to encourage the sale of a product owned by the dealer. Similarly, payments or credits made by a manufacturer to a vendee as reimbursement of interest expense incurred by the vendee in connection with a so-called “free flooring” arrangement for the purchase of taxable articles is a price readjustment, regardless of whether the payment or credit is made directly to the vendee or to the vendee's creditor on behalf of the vendee. (iii) Limitation on credit or refund. Example. A manufacturer sells a taxable article for $100 plus $10 excise tax, and reports and pays tax liability accordingly. Thereafter, the manufacturer credits the customer's account for $11 (tax included) in readjustment of the original sale price. The overpayment of tax is $1, determined as follows: Tax-included readjustment × Tax-included sale price Original tax due = Tax overpayment. $11 × $10 = $1 tax overpaid. $110 (2) Rules of special application Constructive sale price. Example. (A) A manufacturer sells a taxable article at retail for $110 tax included. Under section 4216(b)(1) the constructive sale price (tax included) of the article is determined to be $93. Thereafter, the manufacturer grants an allowance of $10 to the purchaser, which reduces the actual selling price (tax included) to $100. Since the readjustment price still exceeds the amounts of the constructive sale price, this readjustment is not recognized as a price readjustment under this section. (B) Subsequently, the manufacturer extends to the purchaser an additional price allowance of $10, thereby reducing the actual sale price to $90. Since the actual sale price is now $3 less than the constructive sale price of $93, the manufacturer has overpaid by the amount of tax attributable to the $3. Assuming the tax rate involved is 10 percent, and the prices involved are tax-included, the overpayment of tax would be $0.27, determined as follows: (ii) Price determined under section 4223(b)(2). (b) Return of an article Price readjustment. (i) If the article is returned before use, and all of the purchase price is repaid to the vendee or credited to the vendee's account, or (ii) If the article is returned under an express or implied warranty as to quality or service, and all or a part of the purchase price is repaid to the vendee or credited to the vendee's account, or (iii) If title is still in the seller, as, for example, in the case of certain installment sales contracts, and all or a part of the purchase price is repaid to the vendee or credited to the vendee's account. (2) Return of purchase price. (3) Taxability of subsequent sale or use. (4) Treatment of other transactions as repurchases. (c) Repossession of an article. (d) Return or repossession of covering or container. (e) Bona fide discounts, rebates, or allowances In general. Examples. Example (1). B, a manufacturer of fishing rods, bills its distributors in a specified amount per fishing rod purchased by them. Thereafter, B issues to each distributor a credit memorandum in the amount of X dollars for each demonstration by the distributor of the fishing rods at a sporting goods exhibition. The credit which B allows the distributor for demonstration of B's product does not effect a readjustment of price. Example (2). C, a manufacturer of automobiles, bills its dealers in a specified amount per automobile purchased by them. Thereafter, C remits to the dealer X dollars of the original sale price for each automobile sold by the dealer in the last month of the model year. An additional amount of Y dollars is paid to the dealer upon a showing by the dealer that the dealer has paid Y dollars to the salesperson who made the sale. In this case, the X dollars paid to the dealer by C constitutes a bona fide discount, rebate, or allowance since payment of such amount is in the nature of a price reduction by reason of the dealer's inventory when new models are introduced. In addition, the Y dollars paid to the dealer in reimbursement for the amount paid by the dealer to the salesperson who made the sale, also constitutes a bona fide discount, rebate, or allowance. (2) Inability to collect price. (3) Loss or damage in transit. [T.D. 8043, 50 FR 32024, Aug. 8, 1985; 50 FR 42518, Oct. 21, 1985] § 48.6416(b)(1)-3 Readjustment for local advertising charges. (a) In general. (b) Local advertising charges excluded from taxable price in one year but repaid in following year Determination of price readjustments for year in which charge is repaid. (2) Redetermination of price readjustments for year in which charge was made. [T.D. 8043, 50 FR 32026, Aug. 8, 1985] § 48.6416(b)(1)-4 Supporting evidence required in case of price readjustments. No credit or refund of an overpayment arising by reason of a price readjustment described in § 48.6416(b)(1)-2 or § 48.6416(b)(1)-3 shall be allowed unless the manufacturer who paid the tax submits a statement, supported by sufficient available evidence— (a) Describing the circumstances which gave rise to the price readjustment, (b) Identifying the article in respect of which the price readjustment was allowed, (c) Showing the price at which the article was sold, the amount of tax paid in respect of the article, and the date on which the tax was paid, (d) Giving the name and address of the purchaser to whom the article was sold, and (e) Showing the amount repaid to the purchaser or credited to the purchaser's account. [T.D. 8043, 50 FR 32026, Aug. 8, 1985] § 48.6416(b)(2)-1 Certain exportations, uses, sales, or resales causing overpayments of tax. In the case of any payment of tax under section 4041 (a)(1) or (a)(2) (diesel fuel and special fuels tax) or under chapter 32 (manufacturers tax) that is determined to be an overpayment by reason of certain exportations, uses, sales, or resales described in section 6416(b)(2) and § 48.6416(b)(2)-2, the person who paid the tax may file a claim for refund of the overpayment or, in the case of overpayments under chapter 32, may claim credit for the overpayment on any return of tax under this subpart which the person subsequently files. However, under the circumstances described in section 6416(c) and § 48.6416(e)-1, the overpayments under chapter 32 may be refunded to an exporter or shipper. No interest shall be paid on any credit or refund allowed under this section. For provisions relating to the evidence required in support of a claim for credit or refund under this section, see § 301.6402-2 of this chapter (Regulations on Procedure and Administration) and §§ 48.6416(b)(2)-3 and 48.6416(b)(2)-4. For provisions authorizing the taking of a credit in lieu of filing a claim for refund, see section 6416(d) and § 48.6416(f)-1. [T.D. 8043, 50 FR 32026, Aug. 8, 1985, as amended by T.D. 8879, 65 FR 17160, Mar. 31, 2000] § 48.6416(b)(2)-2 Exportations, uses, sales, and resales included. (a) In general. (1) Sections 6416(b)(2)(C) and (D) do not apply to any tax paid under section 4064 (gas guzzler tax). (2) Sections 6416(b)(2)(B), (C), and (D) do not apply to any tax paid under section 4131 (vaccine tax) and section 6416(b)(2)(A) applies only to the extent prescribed in paragraph (b)(2) of this section. (3) Section 6416(b)(2) does not apply to any tax paid under section 4041(a)(1) or 4081 on diesel fuel or kerosene, section 4091 (aviation fuel tax), or section 4121 (coal tax). (4) Beginning on January 1, 2013, sections 6416(b)(2)(B), (C), (D), and (E) do not apply to any tax paid under section 4191 (medical device tax). (b) Exportation of tax-paid articles In general. (2) Rule for exportation of vaccines. (c) Supplies for vessels or aircraft. The term “supplies for vessels or aircraft”, as used in this paragraph, has the same meaning as when used in sections 4041(g), 4221(a)(3), 4221(d)(3), and 4221(e)(1), and the regulations thereunder. (d) Use by State or local government. (e) Use by nonprofit educational organization. (f) Tax-paid tires or inner tubes resold for use in further manufacture. (1) The tire or inner tube is, after the original sale of the article by the manufacturer, resold by any person to another manufacturer; (2) The other manufacturer sells the tire or inner tube on or in connection with, or with the sale of, any other article manufactured or produced by the other manufacturer; and (3) That other article is by any person either— (i) Exported to a foreign country or to a possession of the United States, (ii) Sold to a State, any political subdivision thereof, or the District of Columbia for the exclusive use of a State, any political subdivision thereof, or the District of Columbia, (iii) Sold to a nonprofit educational organization for its exclusive use, or (iv) Used or sold for use as supplies for vessels or aircraft. The overpayment described in this paragraph (f) is to be distinguished from the overpayment described in section 6416(b)(3)(C) prior to amendment by the Highway Revenue Act of 1982 and section 6416(b)(3) as amended by the Highway Revenue Act of 1982, and § 48.6416(b)(3)-2 (d) in that the overpayment here described arises from a “resale” for the use described in this paragraph, while the section 6416(b)(3)(C) overpayment arises from the “use” of tires or inner tubes in the manufacture of other articles by a subsequent manufacturer who purchases tax-paid tires or tubes and disposes of finished articles on the basis of one of the exemptions set forth in section 6416(B)(3)(C). A manufacturer claiming a credit or refund under this paragraph (f) must have substantially the same information available in support of the claim as is required under § 48.4221-7(c)(2) in support of exempt sales of tires or inner tubes under the provisions of section 4221(e)(2), except that none of the parties involved need be registered under section 4222. [T.D. 8043, 50 FR 32027, Aug. 8, 1985, as amended by T.D. 8561, 59 FR 43045, Aug. 22, 1994; T.D. 8659, 61 FR 10463, Mar. 14, 1996; T.D. 8879, 65 FR 17160, Mar. 31, 2000; T.D. 9604, 77 FR 72938, Dec. 7, 2012] § 48.6416(b)(2)-3 Supporting evidence required in case of manufacturers tax involving exportations, uses, sales, or resales. (a) Evidence to be submitted by claimant. (1) Showing the amount claimed in respect of each category of exportations, uses, sales, or resales on which the claim is based and which give rise to a right of credit or refund under section 6416(b)(2) and § 48.6416(b)(2)-1, (2) Identifying the article, both as to nature and quantity, in respect of which credit or refund is claimed, (3) Showing the amount of tax paid in respect of the article or articles and the dates of payment, and (4) In the case of an overpayment determined under section 6416(b)(2)(A) and paragraph (b) of § 48.6416(b)(2)-2 in respect of an article which was taxable prior to April 1, 1983 under section 4061(a), indicating that, pursuant to section 6416(g), the person claiming a credit or refund possessed at the time that person shipped the article or at the time title to the article passed to the vendee, whichever is earlier, evidence that the article was to be exported to a foreign country or shipped to a possession of the United States, or (5) In the case of any overpayment other than an overpayment determined under section 6416(b)(2)(E) and paragraph (f) of § 48.6416(b)(2)-2, indicating that the person claiming a credit or refund possesses evidence (as set forth in paragraph (b)(1) of this section) that the article has been exported, or has been used, sold, or resold in a manner or for a purpose which gives rise to an overpayment within the meaning of section 6416(b)(2) and § 48.6416(b)(2)-2, or (6) In the case of an overpayment determined under section 6416(b)(2)(E) and paragraph (f) of § 48.6416(b)(2)-2, relating to a tax-paid tire or inner tube sold on or in connection with, or with the sale of, a second article that has been manufactured, indicating that the person claiming credit or refund possesses (i) evidence (as set forth in paragraph (b)(2) of this section) that the second article has been exported, or has been used or sold as provided in § 48.6416(b)(2)-2(f), and (ii) a statement, executed and signed by the ultimate purchaser of the tire or inner tube, that the ultimate purchaser purchased the tire or inner tube from a person other than the person who paid the tax on the sale of the tire or inner tube. (b) Evidence required to be in possession of claimant Evidence required under paragraph (a)(5) In general. (ii) Certificate of ultimate purchaser. (A) The certificate executed and signed by the ultimate purchaser of the article to which the claim relates must identify the article, both as to nature and quantity; show the address of the ultimate purchaser of the article, and the name and address of the ultimate vendor of the article; and describe the use actually made of the article in sufficient detail to establish that credit or refund is due, except that the use to be made of the article must be described in lieu of actual use if the claim is made by reason of the sale or resale of an article for a specified use which gives rise to the overpayment. (B) If the certificate sets forth the use to be made of any article, rather than its actual use, it must show that the ultimate purchaser has agreed to notify the claimant if the article is not in fact used as specified in the certificate. (C) The certificate must also contain a statement that the ultimate purchaser understands that the ultimate purchaser and any other party may, for fraudulent use of the certificate, be subject under section 7201 to a fine of not more than $10,000, or imprisonment for not more than 5 years, or both, together with the costs of prosecution. (D) A purchase order will be acceptable in lieu of a separate certificate of the ultimate purchaser if it contains all the information required by this paragraph (b)(1)(ii). (iii) Certificate of ultimate vendor. The certificate must be in substantially the following form: Statement of Ultimate Vendor (For use in claiming credit or refund of overpayment determined under section 6416(b)(2) (other than section 6416(b)(2)(E)) of the Internal Revenue Code.) The undersigned or the (Name of ultimate vendor if other than undersigned) of which the undersigned is (Title), is the ultimate vendor of the article specified below or on the reverse side hereof. The article was purchased by the ultimate vendor tax-paid and was thereafter exported, used, sold, or resold (as indicated below or on the reverse side hereof). The ultimate vendor possesses (Proof of exportation in respect of the article, or a certificate as to use executed by the ultimate purchaser of the article) The (Proof of exportation or certificate) (1) is retained by the ultimate vendor, (2) will, upon request, be forwarded to (Name or person who paid the tax) at any time within 3 years from the date of this statement for use by that person to establish that credit or refund is due in respect of the article, and (3) will otherwise be held by the ultimate vendor for the required 3-year period. According to the best knowledge and belief of the undersigned, no statement in respect of the (Proof of exportation or certificate) has previously been executed, and the undersigned understands that the fraudulent use of this statement may, under section 7201, subject the undersigned or any other party making such fraudulent use to a fine of not more than $10,000, or imprisonment for not more than 5 years, or both, together with the costs of prosecution. (Signature) (Address) (Date) Vendor's invoice Articles Date of resale Quantity Exported or use made or to be made (specify) (2) Evidence required under paragraph (a)(6) In general— (ii) Certificate of ultimate purchaser— (iii) Certificate of ultimate vendor— STATEMENT Of ULTIMATE VENDOR (For use in claiming credit or refund of overpayment determined under section 6416 (b)(2)(E), Internal Revenue Code, involving tires or inner tubes sold on or with another article.) The undersigned or the (Name of ultimate vendor of second article if other than undersigned) of which the undersigned is (Title), is the ultimate vendor of an article, specified below or on the reverse side hereof, on which or with which a tax-paid tire or inner tube was sold. The ultimate vendor possesses (Proof of exportation in respect of the article on which or with which the tire or inner tube was sold, or a certificate as to use of the article executed by the ultimate purchaser of the article) The (Proof of exportation or certificate) (1) is retained by the ultimate vendor, (2) will, upon request, be forwarded to (Name of person who paid the tax on the tire or inner tube) at any time within 3 years from the date of this statement for use in establishing that credit or refund is due in respect of the tire or inner tube, and (3) will otherwise be held by the ultimate vendor for the required 3-year period. According to the best knowledge and belief of the undersigned, no statement in respect of the (Proof of exportation or certificate) has previously been executed, and the undersigned understands that the fraudulent use of this statement may, under section 7201, subject the undersigned or any other party making such fraudulent use to a fine of not more than $10,000, or imprisonment for not more than 5 years, or both, together with the costs of prosecution. (Signature) (Address) (Date) Tires or inner tubes (specify and state quantity) Vendor's invoice on second article Second article (specify and state quantity) Date of sale of second article Exported or use made of or to be made (specify in respect of second article) (3) Repayment or consent of ultimate vendor. [T.D. 8043, 50 FR 32028, Aug. 8, 1985] § 48.6416(b)(2)-4 Supporting evidence required in case of special fuels tax involving exportations, uses, sales, or resales of special fuels. (a) Evidence to be submitted by claimant. (1) Showing the amount claimed in respect of each category of exportations, uses, sales, or resales on which the claim is based and which give rise to right of credit or refund under section 6416(b)(2) and § 48.6416(b)(2)-1, (2) Identifying the fuel, both as to nature and quantity, in respect of which credit or refund is claimed, (3) Showing the amount of tax paid in respect of the fuel and the dates of payment, and (4) Indicating that the fuel has been exported, or has been used, sold, or resold in a manner or for a purpose which gives rise to an overpayment within the meaning of section 6416(b)(2) and § 48.6416(b)(2)-2. (b) Evidence required to be in possession of claimant. (2) The certificate must identify the fuel, both as to nature and quantity, in respect of which credit or refund is claimed; show the address of the purchaser; show the name and address of the person from whom the fuel was purchased and the date or dates on which the fuel was purchased; and show that the fuel was resold and the date of the resale. (3) If the claim is not based on resale of the fuel, the certificate must describe the use actually made of the fuel in sufficient detail to establish that credit or refund is due. However, the use to be made of the fuel must be described in lieu of actual use if the claim is made by reason of the sale of the fuel for a specified use which gives rise to an overpayment under § 48.6416(b)(2)-2. (4) If the certificate sets forth the use to be made of the fuel, rather than its actual use, it must show that the purchaser has agreed to notify the claimant if the fuel is not in fact used as specified in the certificate. (5) The certificate must also contain a statement that the purchaser has not previously executed a certificate in respect of the fuel and understands that any party may, for fraudulent use of the certificate, be subject under section 7201 to a fine of not more than $10,000, or imprisonment for not more than 5 years, or both, together with the costs of prosecution. [T.D. 8043, 50 FR 32030, Aug. 8, 1985] § 48.6416(b)(3)-1 Tax-paid articles used for further manufacture and causing overpayments of tax. In the case of any payment of tax under chapter 32 that is determined to be an overpayment under section 6416(b)(3) and § 48.6416(b)(3)-2 by reason of the sale of an article (other than coal taxable under section 4121), directly or indirectly, by the manufacturer of the article to a subsequent manufacturer who uses the article in further manufacture of a second article or who sells the article with, or as a part of, the second article manufactured or produced by the subsequent manufacturer, the subsequent manufacturer may file claim for refund of the overpayment or may claim credit for the overpayment on any return of tax under this subpart subsequently filed. No interest shall be paid on any credit or refund allowed under this section. For provisions relating to the evidence required in support of a claim for credit or refund, see § 301.6402-2 of this chapter (Regulations on Procedure and Administration) and §§ 48.6416(a)-3 and 48.6416(b)(3)-3. For provisions authorizing the taking of a credit in lieu of filing a claim for refund, see section 6416(d) and § 48.6416(f)-1. [T.D. 8043, 50 FR 32030, Aug. 8, 1985] § 48.6416(b)(3)-2 Further manufacture included. (a) In general. (b) Use of tax-paid articles in further manufacture described in section 6416(b)(3)(A). (1) Taxable under chapter 32, or (2) An automobile bus chassis or an automobile bus body. For this purpose it is immaterial whether the second article is sold or otherwise disposed of, or if sold, whether the sale is a taxable sale. Any article to which this paragraph (b) applies which would have been used in the manufacture or production of a second article, except for the fact that it was broken or rendered useless in the process of manufacturing or producing the second article, will be considered to have been used as a component part of the second article. This paragraph (b) does not apply to articles sold and used as provided in any of paragraphs (c) through (f) of this section. (c) Use of truck, bus, etc., parts or accessories. (d) Tax-paid tires or inner tubes used in further manufacture. (i) An automobile bus chassis or automobile bus body, or (ii) By any person (A) exported to a foreign country or to a possession of the United States, (B) sold to a State, any political subdivision thereof, or the District of Columbia for the exclusive use of a State, any political subdivision thereof, or the District of Columbia, (C) sold to a nonprofit educational organization for its exclusive use, or (D) used or sold for use as supplies to vessels or aircraft. For tax-paid tires used in further manufacture after December 31, 1983, see section 6416(b)(3)(A) and the regulations thereunder. (2) The overpayment in this paragraph (d) is to be distinguished from that overpayment described in section 6416(b)(2)(E) and § 48.6416(b)(2)-2(f) in that this overpayment arises from the “use” described in this paragraph, whereas the overpayment under section 6416(b)(2)(E) arises from the “resale” of tax-paid tires or inner tubes by any person to a subsequent manufacturer who disposes of the articles on or in connection with, or with the sale of, a second article manufactured or produced by the subsequent manufacturer which is disposed of on the basis of one of the exemptions set forth in section 6416(b)(3)(C). (3) If the second article is exported or shipped as provided in this paragraph (d), it is immaterial whether the subsequent manufacturer sold the article with the knowledge that it would be exported or shipped. (4) An overpayment arises under paragraph (d)(1) of this section only if the tire or inner tube constitutes a part of, or is associated with, the second article at the time the second article is exported, shipped, sold, used, or sold for use, as prescribed in this paragraph. (5) For definition of certain terms used in this paragraph, see section 4221 and the regulations thereunder. (6) For provisions relating to overpayments arising by reason of tires or inner tubes sold tax-paid by the manufacturer of the same, on or in connection with, or with the sale of, any article manufactured or produced by that manufacturer and exported, sold, or used or sold for use, as provided in this paragraph (d), see section 6416(b)(4). (7) For provisions relating to credit allowable in respect of tires and inner tubes sold on or in connection with, or with the sale of, another article taxable under chapter 32, prior to January 1, 1984, see section 6416(c) and § 48.6416(c)-1. (8) If a second article referred to in paragraph (d)(1) of this section is sold for a use described in that paragraph and is not so used, this paragraph (d) is in all respects inapplicable. (e) Use of bicycle tires or tubes in further manufacture. (f) Use of gasoline in further manufacture. [T.D. 8043, 50 FR 32030, Aug. 8, 1985, as amended by T.D. 8748, 63 FR 15292, Mar. 31, 1998] § 48.6416(b)(3)-3 Supporting evidence required in case of tax-paid articles used for further manufacture. (a) Evidence to be submitted by claimant. (1) Showing the amount claimed in respect of each category of exportations, uses, or sales on which the claim is based and which give rise to a right of credit or refund under section 6416(b)(3) and § 48.6416(b)(3)-1, (2) Showing the name and address of the manufacturer, producer, or importer of the article in respect of which credit or refund is claimed, (3) Identifying the article, both as to nature and quantity, in respect of which credit or refund is claimed, (4) Showing the amount of tax paid in respect of the article by the manufacturer or producer of the article and the date of payment, (5) Indicating that the article was used by the claimant as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer or was sold on or in connection with, or with the sale of, a second article manufactured or produced by the manufacturer, (6) Identitying the second article, both as to nature and quantity, and (7) In the case of an overpayment determined under section 6416(b)(3)(C) as it existed prior to January 1, 1984, and paragraph (d)(1) of § 48.6416(b)(3)-2 in respect of a tire or inner tube taxable under section 4071, indicating that the manufacturer has evidence available (as set forth in paragraph (b) of this section) that the second article is an automobile bus chassis or automobile bus body, or has been exported, used, or sold as provided in section 6416(b)(3)(C)(ii) and § 48.6416(b)(3)-2(d)(1)(ii). (b) Evidence required to be in possession of claimant In general. (2) Certificate of ultimate purchaser of second article. (3) Certificate of ultimate vendor of second article. (4) Repayment or consent of ultimate vendor. [T.D. 8043, 50 FR 32032, Aug. 8, 1985] § 48.6416(b)(5)-1 Return of installment accounts causing overpayments of tax. (a) In general. (b) Overpayment of tax allocable to repaid consideration. (c) Evidence to be submitted by claimant. (1) The name and address of the person to whom the installment account was sold, (2) The amount of tax due under section 4216(d)(1) by reason of the sale of the installment account, the amount of the tax paid under section 4216(d)(1) with respect to the sale, and the date of payment, (3) The amount for which the installment account was sold, (4) The amount which was repaid or credited to the purchaser of the account by reason of the return of the account to the person claiming the credit or refund, and (5)(i) The fact that the amount repaid or credited to the purchaser of the account was so repaid or credited pursuant to the agreement under which the account was sold, and (ii) The fact that the account was returned to the manufacturer pursuant to that agreement. [T.D. 8043, 50 FR 32033, Aug. 8, 1985] § 48.6416(c)-1 Credit for tax paid on tires or, prior to January 1, 1984, inner tubes. (a) Allowance of credit against tax on sale of taxable article. (b) Tires or tubes purchased by manufacturer of the other article. i.e., (c) Tires or tubes manufactured by manufacturer or other articles. (d) Other applicable rules. (2) No interest shall be paid on any credit allowed under this section. (3) If credit is not claimed under this section against the tax applicable to the sale of the other article, the manufacturer of the other article may claim refund of an amount equivalent to the credit or may claim credit on any return of tax under this subpart subsequently filed. [T.D. 8043, 50 FR 32034, Aug. 8, 1985] § 48.6416(e)-1 Refund to exporter or shipper. (a) In general. (1) The exporter or shipper files a claim for refund of the overpayment, and (2) The person who paid the tax waives the right to claim credit or refund of the tax. No interest shall be paid on any refund allowed under this section. For provisions relating to the evidence required in support of a claim under this paragraph (a), see § 301.6402 of this chapter (Regulations on Procedure and Administration) and paragraph (b) of this section. (b) Supporting evidence required. (1) That the person who paid the tax waives the right to claim credit or refund of the tax, (2) In the case of an overpayment determined under section 6416(b)(2)(A) and paragraph (b) of § 48.6416(b)(2)-2 in respect of a truck, bus, tractor, etc., taxable under section 4061(a), that, pursuant to section 6416(g), the person who paid the tax possessed at the time that person shipped the article or at the time title to the article passed to that perons's vendee, whichever is earlier, evidence that the article was to be exported to a foreign country or shipped to a possession of the United States. (3) The amount of tax paid on the sale of the article and the date of payment, and (4) The internal revenue service office to which the tax was paid. [T.D. 8043, 50 FR 32034, Aug. 8, 1985] § 48.6416(f)-1 Credit on returns. Any person entitled to claim refund of any overpayment of tax imposed by section 4041, 4042, 4051 or chapter 32 may, in lieu of claiming refund of the overpayment, claim credit for the overpayment on any return of tax under this subpart subsequently filed. Any such credit claimed on a return must be supported by the evidence prescribed in the applicable regulations in this subpart and § 301.6402 of this chapter (Regulations on Procedure and Administration). [T.D. 8043, 50 FR 32034, Aug. 8, 1985] § 48.6416(h)-1 Accounting procedures for like articles. (a) Identification of manufacturer. (1) FIFO method. (2) LIFO method. (3) Any method by which the actual manufacturer of the article is in fact identified. Any other method of determining the manufacturer of a particular article must be approved by the district director before its adoption. After any method for identifying the manufacturer has been properly adopted, it may not be changed without first securing the consent of the district director. (b) Determining amount of tax paid. [T.D. 8043, 50 FR 32035, Aug. 8, 1985] § 48.6420-1 Credits or payments to ultimate purchaser of gasoline used on a farm. (a) In general. (b) Allowance of income tax credit in lieu of payment. (c) Allowance of payment. (1) The United States or agency or instrumentality thereof, a State, a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions of a State, or the District of Columbia, or (2) An organization which is exempt from tax under section 501(a) and is not required to made a return of the income tax imposed under subtitle A for its taxable year. (d) Use of gasoline. (2) For purposes of determining the allowable credit or payment in respect of gasoline used on a farm for farming purposes, gasoline on hand shall be considered used in the order in which it was purchased. Thus, if the owner, tenant, or operator of a farm has on hand gasoline acquired in two purchases made at different times and subject to different rates of tax, in determining credit or payment for gasoline used on a farm for farming purposes, it will be assumed that the gasoline purchased first was the first gasoline used, and the rate applicable to that purchase will apply in determining the credit or payment, until all that gasoline is accounted for. [T.D. 8043, 50 FR 32035, Aug. 8, 1985] § 48.6420-2 Time for filing claim for credit or payment. (a) In general. (b) Time for filing. (2) A claim for payment of a governmental unit or exempt organization described in § 48.6420-1(c) must be filed no later than 3 years following the close of its taxable year. (See paragraph (h) of this section.) (3) See § 301.7502-1 of this chapter (Regulations on Procedure and Administration) for provisions treating timely mailing as timely filing and § 301.7502-1 of this chapter for time for performance of an act where the last day falls on Saturday, Sunday, or a legal holiday. (c) Limit of one claim per taxable year. (d) Form and content of claim Claim for credit. (ii) If an individual dies during the taxable year, the claim for credit may be made only for that portion of the individual's taxable year ending with the date of death. If a sole proprietorship, a partnership or corporation is terminated or liquidated during the taxable year, the claim for credit may be made only for the portion of its year ending with the date of the termination or liquidation. (2) Claim for payment. [T.D. 8043, 50 FR 32035, Aug. 8, 1985] § 48.6420-3 Exempt sales; other payments or refunds available. (a) Exempt sales. (b) Other payments or refunds available. [T.D. 8043, 50 FR 32036, Aug. 8, 1985] § 48.6420-4 Meaning of terms. For purposes of the regulations under section 6420, unless otherwise expressly indicated— (a) Used on a farm for farming purposes. (b) Trade or business of farming. (c) Farm. (d) Gasoline used in cultivating, raising, or harvesting. (e) Gasoline used in handling, packing, or storing. (2) Gasoline used in connection with canning, freezing, packaging, or processing operations will not be considered to be used for farming purposes, even though these operations are performed on a farm. Thus, for example, although gasoline used on a farm in connection with the production or harvesting of maple sap or oleoresin from a living tree is considered to be used for farming purposes under paragraph (d) of this section, gasoline used in the processing of maple sap into maple syrup or maple sugar or used in the processing of oleoresin into gum spirits of turpentine or gum resin is not used for farming purposes, even though these processing operations are conducted on a farm. (3) Gasoline used in connection with processing operations which change a commodity from its raw or natural state, or operations performed with respect to a commodity after its character has been changed from its raw or natural state by a processing operation, will not be considered to be used for farming purposes. For example, gasoline used for the extraction of juices from fruits or vegetables is used in a processing operation which changes the character of the fruits or vegetables from their raw or natural state and will not be considered to be used for “farming purposes.” (4) The term “commodity,” as used in this paragraph (e), refers to a single agricultural or horticultural product. For example, all apples are treated as a single commodity while apples and peaches are treated as two separate commodities. Operations with respect to each commodity are to be considered separately in applying the “one-half” production test described in paragraph (e)(1) of this section. (f) Gasoline used in planting, cultivating, or caring for trees. (g) Gasoline used in the maintenance of a farm or farm equipment. (h) Taxable year. (i) Gasoline. (j) Ultimate purchaser. (k) Certain farming use by persons other than the owner, tenant or operator In general. (2) Example. Example. Farmer A hired custom operator B to cultivate the soil on A's farm. B used 200 gallons of gasoline which B had purchased in performing the work on A's farm. In addition, A hired Farmer C to do some plowing on A's farm, using C's own tractor and 50 gallons of gasoline which C had purchased. A is deemed to be the ultimate purchaser and user of the gasoline used on A's farm by B and C, and A is entitled to take a credit in respect of the gasoline. Accordingly, no credit in respect to the gasoline may be taken by either B or C. (l) Aerial applicators treated as ultimate purchasers General rule. (2) Form and manner of waiver. (3) Agreement included on aerial applicator's invoice. (4) Copies of agreement waiving right to credit or payment. (5) Waiver on behalf of owner, tenant, or operator of farm. (6) Sample form of agreement. I hereby waive my right as owner/tenant/operator of a farm located at ____________ (address) ____________ to receive credit or payment from the United States for gasoline used by __________ (aerial applicator) ____________ on the farm in connection with cultivating the soil, or the raising or harvesting of any agricultural or horticultural commodity. This waiver applies to gasoline used during the period ____________ both dates inclusive. I understand that by signing this waiver, I give up my right to claim any credit or payment for gasoline used by the aerial applicator during the period indicated, and I acknowledge that I have not previously claimed any credit for that gasoline. (Signature of Owner/Tenant/Operator) [T.D. 8043, 50 FR 32036, Aug. 8, 1985, as amended by T.D. 8152, 52 FR 31621, Aug. 21, 1987] § 48.6420-5 Applicable laws. (a) Penalties, excessive claims, etc. (b) Examination of books and witnesses. (c) Fractional part of a dollar. [T.D. 8043, 50 FR 32038, Aug. 8, 1985] § 48.6420-6 Records to be kept in substantiation of credits or payments. (a) In general. (1) The number of gallons of gasoline purchased and the dates of purchase, (2) The name and address of each vendor from whom gasoline was purchased and the total number of gallons purchased from each, (3) The number of gallons of gasoline purchased by the claimant and used during the taxable year for farming purposes on a farm of which the claimant is the owner, tenant, or operator, (4) The number of gallons of gasoline used during the taxable year for the purposes described in section 6420(c)(3)(A) and § 48.6420-4(d) (relating to cultivating, raising, or harvesting) by a person other than the owner, tenant, or operator on a farm of which the claimant is the owner, tenant, or operator, and (5) Other information as necessary to establish the correctness of the claim. (b) Acceptable records. (2) Records maintained for Federal or State income tax purposes, or to support claims for refund of a State tax on gasoline, may be used to the extent that they contain the information necessary to substantiate the accuracy of the claim for credit under section 6420. However, the records must show separately the number of gallons of gasoline used on a farm for farming purposes. (3) If trucks or other vehicles are used both on and off the farm, an allocation of gasoline used in the vehicle will be required to show separately the number of gallons of gasoline used on a farm for farming purposes in respect of which the claim is made. (4) If the owner, tenant, or operator is entitled under section 6420(c)(4)(A) to claim credit or payment in respect of gasoline used on the person's farm by another person other than an owner, tenant, or operator of the farm for a purpose described in section 6420(c)(3)(A) and § 48.6420-4(d), the claimant must have records showing (i) the name and address of the person who performed the farming operation, (ii) a description of the type of work (such as plowing, threshing, combining, etc.) and the type of equipment used, (iii) the date or dates on which the work was done, and (iv) the number of gallons of gasoline so used on the claimant's farm. (c) Place and period for keeping records. (2) Records required to substantiate a claim under section 6420 must be maintained for a period of at least 3 years from the last date prescribed for the filing of the claim for credit or payment. [T.D. 8043, 50 FR 32038, Aug. 8, 1985] § 48.6420(a)-2 Gasoline includible in claim. Payment may be claimed under section 6420 only in respect of gasoline used on a farm in the United States for farming purposes. No payment is allowable under section 6420 with respect to gasoline used for nonfarming purposes, or gasoline used off a farm, regardless of the nature of such use. If a vehicle or other equipment is used both on a farm and off the farm, or if it is used on a farm both for farming and nonfarming purposes, payment is allowable only with respect to that portion of the gasoline which was “used on a farm for farming purposes” as defined in paragraph (a) of § 48.6420(c)-1. The type of equipment or vehicle and whether or not it is registered for highway use is immaterial. However, the actual use of the equipment or vehicle and place where it is used are material. For example, if a truck used on a farm for farming purposes is also used on the highways (even though in connection with operating the farm), the gasoline used in operating the truck on the highways is not to be taken into account in computing the payment for which a claim is filed, since such gasoline was used off the farm. [T.D. 6433, 24 FR 10395, Dec. 22, 1959] § 48.6421-0 Off-highway business use. For purposes of the regulations under section 6421, after March 31, 1983, the term “off-highway business use” is used in lieu of the term “qualified business use” and has the same meaning as “qualified business use” under § 48.6421-4(b). [T.D. 8043, 50 FR 32039, Aug. 8, 1985] § 48.6421-1 Credits or payments to ultimate purchaser of gasoline used for certain nonhighway purposes. (a) In general. (2) For purposes of determining the allowable credit or payment in respect of gasoline used in a qualified business use or as fuel in an aircraft (other than aircraft in noncommercial aviation), gasoline on hand shall be considered used in the order in which it was purchased. Thus, if the ultimate purchaser has on hand gasoline acquired in two purchases made at different times and subject to different rates of tax, in determining credit or payment for the gasoline used in a qualified business use or as fuel in an aircraft (other than aircraft in noncommercial aviation), it will be assumed that the gasoline first purchased was the first gasoline used, and the rate applicable to that purchase will apply in determining the credit or payment, until all that gasoline is accounted for. (b) Allowance of income tax credit in lieu of payment. (c) Allowance of payment. (1) The United States or any agency or instrumentality thereof, a State, a political subdivision of a State, or an agency or instrumentality of one or more State political subdivisions of a State, or the District of Columbia, (2) An organization which is exempt from tax under section 501(a) and is not required to make a return of the income tax imposed under subtitle A for its taxable year, or (3) A person described in section 6421(c)(2) to whom $1,000 or more is payable (without regard to paragraph (b) of this section) under this section with respect to gasoline used during any of the first three quarters of the person's taxable year. (d) Dual use of gasoline. (2) If a highway vehicle is equipped with a separate motor to operate the special equipment used in a trade or business or for the production of income, such as a refrigeration unit, pump, generator, or mixing unit, credit or payment may be claimed in respect of the gasoline used in the separate motor. (3) If gasoline used in a separate motor is drawn from the same tank as the one which supplies gasoline for the propulsion of the highway vehicle, the determination as to the quantity of gasoline used in the separate motor operating the special equipment must be based on operating experience and supported by records. (4) Devices to measure the number of miles the highway vehicle has traveled, such as hubometers, may be used in making a preliminary determination of the number of gallons of gasoline used to propel the vehicle. In order to make a final determination of the number of gallons of gasoline used to propel the vehicle, there must be added to this preliminary determination the number of gallons of gasoline consumed while idling or warming up the motor preparatory to propelling the vehicle. (e) Gasoline lost or destroyed. (f) Supporting evidence required. (1) The total number of gallons of gasoline purchased and used during the period covered by the claim in a qualified business use multiplied by the rate of payment allowable in respect of the gasoline. (For the rate of payment allowable, see paragraph (a)(1) of this section.) (2) The total number of gallons of gasoline purchased and used during the period covered by the claim for use as fuel in an aircraft (other than aircraft in noncommercial aviation) multiplied by the rate of payment allowable in respect of the gasoline. (3) The purpose or purposes for which the gasoline was used, determined by reference to general categories, and the amount used for each purpose; and (4) If a claim on Form 843 is being filed, the internal revenue district or service center with which the claimant last filed an income tax return (if any). [T.D. 8043, 50 FR 32039, Aug. 8, 1985] § 48.6421-2 Credits or payments to ultimate purchasers of gasoline used in intercity, local, or school buses. (a) In general. (b) Allowance of income tax credit. (c) Allowance of payment. (1) The United States or any agency or instrumentality thereof, a State, or political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions of a State, or the District of Columbia, (2) An organization which is exempt from tax under section 501(a) and is not required to make a return of the income tax imposed under subtitle A for its taxable year, or (3) A person described in section 6421(c)(2) to whom $1,000 or more is payable (without regard to paragraph (b) of this section) under this section with respect to gasoline used during any of the first three quarters of the person's taxable year. (d) Supporting evidence required. (1) The total number of gallons of gasoline purchased and used during the period covered by the claim for each intercity or local bus while engaged in furnishing (for compensation) passenger land transportation available to the general public multiplied by the rate at which tax was imposed on the gasoline by section 4081. (2) The total number of gallons of gasoline purchased and used in each bus while engaged in school bus transportation operations multiplied by the rate at which tax was imposed on the gasoline by section 4081, and (3) If a claim on Form 843 is being filed, the internal revenue district or service center with which the claimant last filed an income tax return (if any). [T.D. 8043, 50 FR 32040, Aug. 8, 1985, as amended by T.D. 8879, 65 FR 17161, Mar. 31, 2000] § 48.6421-3 Time for filing claim for credit or payment. (a) In general. (b) Time for filing Annual claims. (ii) A claim for payment of a governmental unit or exempt organization described in § 48.6421-1(c) or § 48.6421-2(c) must be filed no later than 3 years following the close of its taxable year (see § 48.6421-4). (2) Quarterly claims. (3) Other applicable rules. (c) Limit on claims per taxable year. (d) Form and content of claim Claim for credit. (2) Claim for payment. (3) Death or termination. (ii) A claim for payment on behalf of a decedent may be filed by the decedent's executor, administrator, or any other person charged with responsibility for the decedent's affairs. Such a claim must be accompanied by copies of the letters testamentary, letters of administration, or, in the case of a claim filed by other than the executor or administrator, the information called for in Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer). The claim may cover only gasoline in respect of which the decedent would have been entitled to claim payment. For example, if an individual dies on July 15, 1982, prior to claiming payment under § 48.6421-1 or $1,000 or more applicable to gasoline purchased and used in a qualified business use during the calendar quarter ending June 30, 1982, the decedent's executor or other legal representative may file a claim for payment covering that calendar quarter, and take the credit provided by section 39(a)(2) against the decedent's income tax on the income tax return for the short taxable year in respect of gasoline purchased by the decedent and so used during the period from July 1, 1982 to July 15, 1982, the date of death. (e) Restrictions on claims for credit or payment. [T.D. 8043, 50 FR 32041, Aug. 8, 1985, as amended by T.D. 8659, 61 FR 10463, Mar. 14, 1996; T.D. 8748, 63 FR 26, Jan. 2, 1998] § 48.6421-4 Meaning of terms. For purposes of the regulations under section 6421, unless otherwise expressly indicated— (a) Gasoline. (b) Qualified business use. (i) That at the time of the use is registered, or is required to be registered, for highway use under the laws of any state, the District of Columbia, or a foreign country, or (ii) That, in the case of a highway vehicles owned by the United States, is used on the highway. The term “qualified business use” does not include any use in a motorboat, other than a vessel used in the fisheries or whaling business. See paragraph (c) of this section for the definition of “highway vehicle.” See paragraph (d) of this section for the definition of “highway.” (2) Any highway vehicle operated under a dealer's tag, license, or permit will be considered to be registered. A highway vehicle is not considered to be “registered” solely because there has been issued a special permit for operation of the vehicle at particular times and under specified conditions. However, a highway vehicle that is required to be registered and that is also issued a special permit for operation of the vehicle under specified conditions, such as carrying an oversize load, is still considered to be “registered.” (3) Nonbusiness, off-highway use of gasoline by such vehicles and equipment as minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment does not qualify as gasoline used a qualified business use. (4) Examples of gasoline used in a qualified business use include: (i) Gasoline used (in a trade or business or for the production of income) in stationary engines to operate pumps, generators, compressors, and power saws; (ii) Gasoline used (in a trade or business or for the production of income) for cleaning purposes; (iii) Gasoline used (in a trade or business or for the production of income) in forklift trucks, bulldozers, and earthmovers; and (iv) Gasoline used by a nonhighway vehicle in connection with the trade or business of construction, mining or logging. (5) Illustration. Example. M Corporation, a logging company, files its income tax return on the basis of the calendar year. During 1982, the company used 20,000 gallons of gasoline in its logging business. Of this amount, 12,000 gallons were used as fuel in registered highway vehicles which were operated both on the public highways and on the company's private roads. Of the remaining 8,000 gallons, 6,000 were used in nonhighway vehicles, such as tractors and bulldozers, and 2,000 gallons were used in highway vehicles, such as heavy trucks which, at the time of use, were neither registered nor required to be registered under state law for highway use by reason of being operated entirely on the company's property. As the ultimate purchaser, M may take a credit on its income tax return for 1982 under this section in respect of the 6,000 gallons used in the nonhighway vehicles and the 2,000 gallons used in the unregistered highway vehicles. However, no credit may be allowed with respect to the 12,000 gallons used in the registered highway vehicles even though a portion of this gasoline was used in operating the vehicles on the company's own property. (c) Highway vehicle. (d) Highway. (e) Noncommercial aviation. (f) Calendar quarter. (g) Taxable year. [T.D. 8043, 50 FR 32042, Aug. 8, 1985] § 48.6421-5 Exempt sales; other payments or refunds available. (a) Exempt sales. (b) Other payments or refunds available. (c) Gasoline used on farms. [T.D. 8043, 50 FR 32042, Aug. 8, 1985] § 48.6421-6 Applicable laws. (a) Penalties, excessive claims, etc. (b) Examination of books and witnesses. [T.D. 8043, 50 FR 32042, Aug. 8, 1985] § 48.6421-7 Records to be kept in substantiation of credits or payments. (a) In general. (1) The number of gallons of gasoline purchased and the dates of purchase, (2) The name and address of each vendor from whom gasoline was purchased and the total number of gallons purchased from each, (3) The number of gallons of gasoline purchased by the claimant and used during the period covered by the claim for nonhighway purposes or in intercity, local or school buses, (4) Other information as necessary to establish the correctness of the claim. (b) Acceptable records. (2) Records maintained for Federal or State income tax purposes, or to support claims for refund of a State tax on gasoline, may be used to the extent that they contain the information necessary to substantiate the accuracy of the claim for credit under section 6421. However, the records must show separately the number of gallons of gasoline used for nonhighway purposes or in intercity, local, or school buses during the period covered by the claim. (c) Place and period for keeping records. (2) Records required to substantiate a claim under section 6421 must be maintained for a period of at least 3 years from the last date prescribed for the filing of the claim for credit or payment. [T.D. 8043, 50 FR 32043, Aug. 8, 1985] § 48.6427-0 Off-highway business use. For purposes of the regulations under section 6427, after March 31, 1983, the term “off-highway business use” is used in lieu of the term “qualified business use” and has the same meaning as “qualified business use” under § 48.6421-1(b). [T.D. 8043, 50 FR 32046, Aug. 8, 1985] § 48.6427-1 Credit or payments to purchaser of special fuels resold or used for nontaxable, farming, or other purposes. (a) Amount of repayment Nontaxable or other uses. (A) The amount of the tax imposed on the sale of the fuel to the purchaser if the purchaser resells the fuel, or (B) If the purchaser uses the fuel, the amount of tax imposed on the sale of the fuel to the purchaser, less the amount of tax, if any, that would have been imposed on the purchaser's use of the fuel if no tax had been imposed on the sale of the fuel to the purchaser. (ii) For purposes of paragraph (a)(1)(i) of this section, and for the regulations under section 6427 applying such paragraph, tax imposed on the sale of fuel will be treated as an overpayment by the purchaser if the person resells the fuel or uses it for a nontaxable purpose or for a purpose taxable at a lower rate than that for which sold to the purchaser. Thus, for example, special motor fuel which was sold tax paid to the purchaser for use otherwise than in a qualified business use in a motor vehicle will qualify for the payment under section 6427 if the purchaser uses it as a fuel in a qualified business use. (2) Used for farming purposes. (ii) The term “purchaser,” as used in paragraph (a)(2)(i) of this section, includes only a person who is an owner, tenant, or operator of a farm. A person who is owner, tenant, or operator of a farm is a purchaser of fuel only with respect to such fuel as is purchased by the person and used for farming purposes on a farm of which the person is the owner, tenant, or operator. Thus, the owner of a farm who purchases fuel which is used on the farm by its owner, tenant, or operator for farming purposes is generally the purchaser of the fuel. If, however, the cost of fuel supplied by an owner, tenant, or operator of a farm, is by agreement or other arrangement borne by a second person who is an owner, tenant, or operator of the farm, the second person who bore the cost of the fuel is considered to be the purchaser of the fuel. (iii) Except as provided in paragraph (a)(2)(iv) of this section, if fuel is used on a farm by any person other than the owner, tenant, or operator for the purposes described in section 6420(c)(3)(A) and § 48.6420-4(d) (relating to gasoline used in cultivating, raising, or harvesting), the owner, tenant, or operator (as the case may be) will be treated for the purposes of § 48.6427-1(a)(2)(i) as the purchaser who used the fuel on the farm for farming purposes. (iv) Section 6427(c) provides that an aerial applicator or other applicator is entitled to be treated as the user and ultimate purchaser of fuel that the applicator uses on a farm for the purposes described in section 6420(c)(3)(A), but only if the owner, tenant, or operator of the farm who is otherwise entitled to be treated as the ultimate purchaser waives the right to credit or payment. The rules contained in section 6420 and the regulations under the section regarding waivers by owners, tenants, and operators of farms of their rights to payments under section 6420 for gasoline used by aerial applicators on a farm for farming purposes apply to waivers under this section. (3) Definitions, uses, and other rules. (ii) See § 48.6427-3 for the time within which a claim for credit or payment must be made under this section. (iii) See § 48.6420-4 for the meaning of the terms “used on a farm for farming purposes” and “farm.” The term “gasoline” has the same meaning given to this term by section 4082(b) and the regulations thereunder. For the meaning of the terms “diesel fuel,” “special motor fuel,” “motor vehicle,” “highway vehicle,” and “registered” see section 4041 and the regulations thereunder. The term “fuel” means diesel fuel, special motor fuel, or gasoline, as the context requires. Where appropriate, the term “use” includes a resale. See § 48.6421-4 for the meaning of “calendar quarter” and “taxable year”. (iv) For purposes of determining the allowable credit or payment in respect of fuel used for nontaxable purposes, on a farm for farming purposes, or for purposes taxable at a lower rate, fuel on hand shall be considered used in the order in which it was purchased. Thus, if the purchaser made purchases at different times and subject to different rates of tax, then in determining credit or payment for fuel used for a described purpose, it will be assumed that the fuel first purchased was the first fuel used, and the rate applicable to that purchase will apply in determining the credit of payment, until all of that fuel is accounted for. (v) Fuel lost or destroyed through spillage, fire, or other casualty is not considered to have been “used” within the meaning of this section, and, accordingly, no credit or payment of the tax paid on the sale of the fuel may be made under this section. (b) Allowance of income tax credit in lieu of payment. (c) Allowance of payment. (1) The United States or any agency or instrumentality thereof, a State, a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions of a State, or the District of Columbia, (2) An organization which is exempt from tax under section 501(a) and is not required to make a return of the income tax imposed under subtitle A for its taxable year, or (3) In the case of fuel used for nontaxable purposes to which section 6427(a) applies, to a person described in section 6427(g)(2) to whom $1,000 or more is payable (without regard to paragraph (b) of this section) under this section with respect to fuel used during any of the first three quarters of his taxable year. (d) Dual use of fuel. (e) Supporting evidence required. (1) The total number of gallons of fuel purchased and used for nontaxable or farming purposes during the period covered by the claim, multiplied by the rate of payment allowable under this section with respect to such fuel; (2) The purpose or purposes for which the fuel was used, determined by reference to general categories, and the amount used for each of the purposes; and (3) If a claim on Form 843 is being filed, the internal revenue district or service center with which the claimant last filed an income tax return, (if any). (f) Illustrations. Example. Special motor fuel was sold for use as fuel in a highway vehicle that was registered for highway use. Tax was imposed on the sale at the rate of 9 cents a gallon under section 4041(a)(2). The special motor fuel was eventually used by the purchaser in a qualified business use. The credit or payment of tax is to be computed as follows: Cents per gallon Rate at which tax was paid 9 Less: Rate at which tax would have been imposed on a qualified business use under sec. 4041(b) 0 Net credit or payment under sec. 6427(a) 9 [T.D. 8043, 50 FR 32046, Aug. 8, 1985, as amended by T.D. 8152, 52 FR 31621, Aug. 21, 1987] § 48.6427-2 Credits or payments to purchaser of diesel or special motor fuels used in intercity, local, or school buses. (a) In general. (2) The terms “diesel fuel” and “special motor fuel” have the same meaning as in section 4041 and the regulations thereunder. The term “fuel” means diesel fuel and special motor fuel. See § 48.6421-4 for the meaning of “calendar quarter” and “taxable year.” (b) Allowance of income tax credit. (c) Allowance of payment. (1) The United States or any agency or instrumentality thereof, a State, a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions of a State, or the District of Columbia, (2) An organization which is exempt from tax under section 501(a) and is not required to make a return of the income tax imposed under subtitle A for its taxable year, or (3) A person described in section 6427(g)(2) to whom $1,000 or more is payable (without regard to paragraph (b) of this section) under this section with respect to fuel used during any of the first three quarters of the person's taxable year. (d) Supporting evidence required. (1) The total number of gallons of fuel purchased and used in each intercity or local bus while engaged in furnishing (for compensation) passenger land transportation available to the general public multiplied by the rate at which tax was imposed on the fuel by section 4041(a)(1) or section 4041(a)(2). See, however, section 6427(b)(2) with respect to the limitation on the amount of credit for buses other than qualified local buses. (2) The total number of gallons of fuel purchased and used in each bus while engaged in school bus transportation operations multiplied by the rate at which tax was imposed on the fuel by subsection (a)(1) or (a)(2) of section 4041. See, however, section 6427(b)(2) with respect to the limitation on the amount of credit for buses other than qualified local buses. (3) If a claim on Form 843 is being filed, the internal revenue district or service center with which the purchaser last filed an income tax return (if any). [T.D. 8043, 50 FR 32047, Aug. 8, 1985] § 48.6427-3 Time for filing claim for credit or payment. (a) In general. (b) Time for filing Annual claims. (ii) A claim for payment of a governmental unit or exempt organization described in § 48.6427-1(c) or unit or exempt organization described in § 48.6427-2(c), must be filed no later than 3 years following the close of its taxable year. See § 48.6421-4. (2) Quarterly claims. (3) Other applicable rules. (c) Limit on claims per taxable year. (d) Form and content of claim Claim for credit. (2) Claim for payment. (3) Death or termination. (ii) A claim for payment on behalf of a decedent may be filed by the decedent's executor, administrator, or any other person charged with responsibility for the decedent's affairs. Such a claim must be accompanied by copies of the letters testamentary, letters of administration, or, in the case of a claim filed by other than the executor or administrator, the information called for in Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer). The claim may cover only fuel in respect of which the decedent would have been entitled to claim payments. For example, if an individual dies on July 15, 1982, prior to claiming payment under § 48.6427-1 of $1,000 or more applicable to fuel purchased and used for nontaxable purposes during the calendar quarter ending June 30, 1982, the decedent's executor or other legal representative may file a claim for payment covering that calendar quarter, and take the credit provided by section 39(a)(3) against the decedent's income tax on the income tax return for the short taxable year in respect of fuel purchased by the decedent and so used during the period from July 1, 1982, to July 15, 1982, the date of death. (e) Restrictions on claims for credit or payment. [T.D. 8043, 50 FR 32048, Aug. 8, 1985, as amended by T.D. 8659, 61 FR 10464, Mar. 14, 1996; T.D. 8748, 63 FR 26, Jan. 2, 1998] § 48.6427-4 Applicable laws. (a) Penalties, excessive claims, etc. (b) Examination of books and witnesses. [T.D. 8043, 50 FR 32049, Aug. 8, 1985] § 48.6427-5 Records to be kept in substantiation of credits or payments. (a) In general. (1) The number of gallons of fuel purchased and the dates of purchase, (2) The name and address of each vendor from whom fuel was purchased and the total number of gallons purchased from each, (3) The number of gallons of fuel purchased by the claimant and used during the period covered by the claim for nontaxable purposes, farming purposes, for other purposes taxable at a lower rate, in local, intercity, or school buses, and (4) Other information as necessary to establish the correctness of the claim. (b) Acceptable records. (2) Records maintained for Federal or State income tax purposes, or to support claims for refund of a State tax on fuel, may be used to the extent that they contain the information necessary to substantiate the accuracy of the claim for credit under section 6427. However, the records must show separately the number of gallons of fuel used for nontaxable purposes, farming purposes, other purposes taxable at a lower rate, or in intercity, local, or school buses during the period covered by the claim. (c) Place and period for keeping records. (2) Records required to substantiate a claim under section 6427 must be maintained for a period of at least 3 years from the last date prescribed for the filing of the claim for credit or payment. [T.D. 8043, 50 FR 32049, Aug. 8, 1985] § 48.6427-6 Limitation on credit or refund of tax paid on fuel used in intercity, local or school buses after July 31, 1984. (a) Limitation on amount of credit or refund In general. (2) Qualified local bus. (i) Is engaged in furnishing (for compensation) intracity passenger land transportation that is available to the general public and is scheduled and along regular routes, (ii) Has a seating capacity of at least 20 adults (not including the driver), and (iii) Is under contract with (or is receiving more than a nominal subsidy from) any State or local government (as defined in section 4221(d)(4)) to furnish such transportation. A company that operates qualified local buses is eligible for a full refund or credit only with respect to fuel used while such buses are operating as qualified local buses. For example, a company that operates its buses along subsidized intracity routes and also on intercity or unsubsidized intracity routes may obtain a full refund or credit only with respect to fuel used while operating the subsidized intracity routes. (b) Meaning of terms Contract with a State or local government. (2) More than a nominal subsidy. (3) Intracity passenger land transportation. [T.D. 8027, 50 FR 21252, May 23, 1985] § 48.6427-8 Diesel fuel and kerosene; claims by ultimate purchasers. (a) Overview. (b) Conditions to allowance of credit or payment In general. (i) Tax was imposed by section 4081 on the diesel fuel or kerosene to which the claim relates; (ii) The claimant produced or bought the diesel fuel or kerosene and did not sell it in the United States; (iii) The claimant has filed a timely claim for a credit or payment that contains the information required under paragraph (d) of this section; (iv) The diesel fuel or kerosene was not bought under a certificate described in § 48.6427-9(e)(2) (relating to Certificate of Farming Use or State Use); (v) The diesel fuel or kerosene was not used on a farm for farming purposes (as defined in § 48.6420-4) or by a State; (vi) With respect to kerosene, the kerosene was not sold from a blocked pump or sold for blending with diesel fuel under the conditions described in § 48.6427-11; and (vii) The diesel fuel or kerosene was either— (A) Used in a use described in § 48.4082-4(c)(3) through (c)(8); (B) Exported; (C) Used other than as a fuel in a propulsion engine of a diesel-powered highway vehicle; or (D) Used as a fuel in the propulsion engine of a diesel-powered bus if the bus was engaged in a use described in section 6427(b)(1) (after the application of section 6427(b)(3)). (2) Examples. Example 1. (i) In September 2000, F bought 250 gallons of undyed diesel fuel. In October 2000, F used 200 gallons of the fuel in a farm tractor. This use qualifies as use on a farm for farming purposes (as defined in § 48.6420-4). The farm tractor is not a diesel-powered highway vehicle (as defined in § 48.4081-1(b)). F used the remaining 50 gallons to heat F's residence. F filed a complete and timely claim for a credit relating to the 250 gallons. (ii) A credit or payment is not allowable to F with respect to the 200 gallons of diesel fuel used in the farm tractor. Even though this fuel was used other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (thus meeting the condition in paragraph (b)(1)(vii)(C) of this section), the condition in paragraph (b)(1)(v) of this section is not satisfied because the fuel was used on a farm for farming purposes. (iii) A credit is allowable to F with respect to the 50 gallons F used for heating purposes because the conditions in paragraph (b)(1) of this section have been met. F used this fuel other than as a fuel in a propulsion engine of a diesel-powered highway vehicle and the use of the fuel for residential heating is not use on a farm for farming purposes. Example 2. (i) In September 2000, W, a wholesale distributor, sold 3,500 gallons of diesel fuel on which tax has been imposed to C, a construction company located in the United States. W's selling price to C did not include an amount equal to the federal excise tax on the fuel. C used the fuel other than as a fuel in a propulsion engine of a diesel-powered highway vehicle. Both W and C file a complete and timely claim for a credit relating to the fuel. (ii) Because W resold the fuel in the United States, the condition of paragraph (b)(1)(ii) of this section is not met. Thus, W is not allowed a credit or payment with respect to the fuel. (iii) C is eligible for a credit or payment with respect to the fuel because the conditions to allowance in paragraph (b)(1) of this section have been met. The conditions to allowance do not include a requirement that C buy the fuel at a price that includes the amount of the tax. (c) Form of claim. (d) Content of claim. (1) The total number of gallons. (2) A statement by the claimant that— (i) The diesel fuel or kerosene did not contain visible evidence of dye; or (ii) In the case of diesel fuel or kerosene that contains visible evidence of dye, explains the circumstances under which tax was imposed on that fuel. (3) The use made of the diesel fuel or kerosene covered by the claim described by reference to specific categories listed in paragraph (b)(1)(vii) of this section (such as use in a qualified local bus or the exclusive use of a nonprofit educational organization). (4) If the diesel fuel or kerosene covered by the claim was exported, a declaration that the claimant has proof of exportation (as described in § 48.4221-3(d)(1)). (5) A declaration that the claimant has in its possession the name and address of the person(s) that sold the diesel fuel or kerosene to the claimant and the date(s) of the purchase(s). (e) Time and place for filing claim. (f) Effective date. [T.D. 8659, 61 FR 10464, Mar. 14, 1996, as amended by T.D. 8879, 65 FR 17161, Mar. 31, 2000; T.D. 9051, 68 FR 15942, Apr. 2, 2003] § 48.6427-9 Diesel fuel and kerosene; claims by registered ultimate vendors (farming and State use). (a) Overview. (b) Definitions. ultimate vendor, (i) The owner, tenant, or operator of a farm for use by such person on a farm for farming purposes (as defined in § 48.6420-4); (ii) A person other than the owner, tenant, or operator of a farm for use by such person for any of the purposes described in § 48.6420-4(d) (relating to cultivating, raising, or harvesting); or (iii) Any State for its exclusive use. (2) A registered ultimate vendor (c) Conditions to allowance of credit or payment. (1) Tax was imposed by section 4081 on the diesel fuel or kerosene to which the claim relates; (2) The claimant sold the diesel fuel or kerosene to— (i) The owner, tenant, or operator of a farm for use by such person on a farm for farming purposes (as defined in § 48.6420-4); (ii) A person other than the owner, tenant, or operator of a farm for use by such person for any of the purposes described in § 48.6420-4(d) (relating to cultivating, raising, or harvesting); or (iii) Any State for its exclusive use; (3) The claimant is a registered ultimate vendor; and (4) The claimant has filed a timely claim for a credit or payment that contains the information required under paragraph (e) of this section. (d) Form of claim. (e) Content of claim In general. (i) The total number of gallons. (ii) A statement by the claimant that— (A) The diesel fuel or kerosene did not contain visible evidence of dye; or (B) In the case of diesel fuel or kerosene that contains visible evidence of dye, explains the circumstances under which tax was imposed on that fuel. (iii) The claimant's registration number. (iv) The name and taxpayer identification number of each person that bought diesel fuel or kerosene from the claimant in a transaction described in paragraph (c)(2) of this section and the number of gallons that the claimant sold to that person. (v) A statement that the claimant— (A) Has not included the amount of the tax in its sales price of the diesel fuel or kerosene and has not collected the amount of tax from its buyer; (B) Has repaid the amount of the tax to the ultimate purchaser of the fuel; or (C) Has obtained the written consent of its buyer to the allowance of the claim. (vi) A statement that the claimant has in its possession an unexpired certificate described in paragraph (e)(2) of this section and the claimant has no reason to believe any information in the certificate is false. (2) Certificate In general. (A) The date one year after the effective date of the certificate. (B) The date a new certificate is provided to the seller. (ii) Model certificate. Certificate of Farming Use or State Use (To support vendor's claim for a credit or payment under section 6427 of the Internal Revenue Code.) Name, address, and employer identification number of vendor The undersigned buyer (“Buyer”) hereby certifies the following under penalties of perjury: Buyer will use the diesel fuel or kerosene to which this certificate relates—(check one) ______ On a farm for farming purposes (as defined in § 48.6420-4(c) of the Manufacturers and Retailers Excise Tax Regulations) and Buyer is the owner, tenant, or operator of the farm on which the fuel will be used; ______ On a farm (as defined in § 48.6420-4(c)) for any of the purposes described in paragraph (d) of that section (relating to cultivating, raising, or harvesting) and Buyer is a person that is not the owner, tenant, or operator of the farm on which the fuel will be used; or ______ For the exclusive use of a State or local government, or the District of Columbia. This certificate applies to the following (complete as applicable): If this is a single purchase certificate, check here ______ and enter: 1. Invoice or delivery ticket number ______ 2. ______ (number of gallons) If this is a certificate covering all purchases under a specified account or order number, check here ______ and enter: 1. Effective date ______ 2. Expiration date ______ (period not to exceed 1 year after the effective date) 3. Buyer account or order number ______ Buyer will provide a new certificate to the vendor if any information in this certificate changes. If Buyer uses the diesel fuel or kerosene to which this certificate relates for a purpose other than stated in the certificate Buyer will be liable for tax. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution. Printed or typed name of person signing Title of person signing Name of Buyer Employer identification number Address of Buyer Signature and date signed (f) Time and place for filing claim. (g) Effective date. [T.D. 8659, 61 FR 10464, Mar. 14, 1996, as amended by T.D. 8879, 65 FR 17161, Mar. 31, 2000] § 48.6427-10 Kerosene; claims by registered ultimate vendors (blocked pumps). (a) Overview. (b) Definitions. (1) A blocked pump (i) Is used to dispense undyed kerosene that is sold at retail for use by the buyer in any nontaxable use; (ii) Is at a fixed location; (iii) Is identified with a legible and conspicuous notice stating “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY”; and (iv)(A) Cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or diesel-powered train (because, for example, of its distance from a road surface or train track or the length of its delivery hose); or (B) Is locked by the vendor after each sale and unlocked by the vendor only in response to a request by a buyer for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or diesel-powered train. (2) A registered ultimate vendor (blocked pump) (3) An ultimate vendor (blocked pump) (c) Conditions to allowance of credit or payment. (1) Tax was imposed by section 4081 on the kerosene to which the claim relates; (2) The claimant sold the kerosene from a blocked pump for its buyer's use other than as a fuel in a diesel-powered highway vehicle or diesel-powered train and the claimant has no reason to believe that the kerosene will not be so used; (3) The claimant is a registered ultimate vendor (blocked pump); (4) With respect to each sale of more than five gallons of kerosene from a blocked pump that does not meet the conditions of paragraph (b)(1)(iv)(A) of this section, the claimant has in its possession the date of the sale, name and address of the buyer, and the number of gallons sold to the buyer; and (5) The claimant has filed a timely claim for a credit or payment that contains the information required under paragraph (e) of this section. (d) Form of claim. (e) Content of claim. (1) The claimant's ultimate vendor (blocked pump) registration number. (2) The total number of gallons. (3) A statement by the claimant that— (i) The kerosene did not contain visible evidence of dye; or (ii) In the case of kerosene that contains visible evidence of dye, explains the circumstances under which tax was imposed on that kerosene. (4) With respect to each sale of more than five gallons of kerosene from a blocked pump that does not meet the conditions of paragraph (b)(1)(iv)(A) of this section, a statement by the claimant that it has in its possession the date of the sale, name and address of the buyer, and the number of gallons sold to the buyer. (5) A statement by the claimant that it— (i) Has not included the amount of the tax in its sales price of the kerosene and has not collected the amount of the tax from its buyer; (ii) Has repaid the amount of the tax to its buyer; or (iii) Has obtained the written consent of its buyer to the allowance of the claim. (f) Time and place for filing claim. (g) Cross reference. (h) Effective date. [T.D. 8879, 65 FR 17162, Mar. 31, 2000] § 48.6427-11 Kerosene; claims by registered ultimate vendors (blending). (a) Overview. (b) Definitions. (1) A declaration of extreme cold (2) A cold weather blend (3) A registered ultimate vendor (blending) (c) Conditions to allowance of credit or payment. (1) Tax was imposed by section 4081 on the kerosene to which the claim relates; (2) The claimant sold the kerosene in an area described in a declaration of extreme cold for the production of a cold weather blend; (3) The claimant is a registered ultimate vendor (blending); and (4) The claimant has filed a timely claim for an income tax credit or payment that contains the information required under paragraph (e) of this section. (d) Form of claim. (e) Content of claim In general. (i) The claimant's registration number. (ii) The total number of gallons. (iii) A statement by the claimant that— (A) The kerosene did not contain visible evidence of dye; or (B) In the case of kerosene that contains visible evidence of dye, explains the circumstances under which tax was imposed on that kerosene. (iv) A statement by the claimant that it— (A) Has not included the amount of the tax in its sales price of the kerosene and has not collected the amount of the tax from its buyer; (B) Has repaid the amount of the tax to its buyer; or (C) Has obtained the written consent of its buyer to the allowance of the claim. (v) A statement that the claimant has in its possession an unexpired certificate described in paragraph (e)(2) of this section and the claimant has no reason to believe any information in the certificate is false. (2) Certificate In general. (ii) Withdrawal of the right to provide a certificate. (iii) Model certificate. CERTIFICATE OF BUYER FOR PRODUCTION OF A COLD WEATHER BLEND (To support vendor's claim for a credit or payment under section 6427 of the Internal Revenue Code.) __________(Buyer) certifies the following under penalties of perjury: Name of buyer The kerosene to which this certificate applies will be used by Buyer to produce a blend of kerosene and diesel fuel in an area described in a declaration of extreme cold and the blend will be sold for use or used for heating purposes. This certificate applies to ____ percent of Buyer's purchase from __________ (name, address, and employer identification number of seller) on invoice or delivery ticket number ____. If Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer's right to provide a certificate. Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution. __________________________________________ Printed or typed name of person signing. __________________________________________ Title of person signing __________________________________________ Employer identification number __________________________________________ Address of Buyer __________________________________________ Signature and date signed (f) Time and place for filing claim. (g) Effective date. [T.D. 8879, 65 FR 17162, Mar. 31, 2000, as amended by T.D. 8879, 65 FR 26489, May 8, 2000] § 48.6435-1T Dyed fuel refund. (a) Overview. (b) Definitions. (1) Approved terminal. approved terminal (2) Eligible dyed fuel. eligible dyed fuel (3) Section 6435 refund. section 6435 refund (c) Refund of overpayment. (d) Conditions to allowance of refund. (1) Section 4081 tax was imposed with respect to diesel fuel or kerosene; (2) The taxpayer was liable for and paid such tax to the IRS and the tax has not been credited or refunded; (3) The taxpayer removes from an approved terminal the diesel fuel or kerosene, which has been dyed as provided in section 4082(a); and (4) The taxpayer meets the reporting requirements of paragraph (e) of this section. (e) Reporting requirements In general. (2) Model section 6435 taxpayer's report. Section 6435 Taxpayer's Report 1. Taxpayer's name, address, and employer identification number 2. Date and location of taxable event 3. Volume and type of taxable fuel 4. Check type of taxable event: ____Removal at the terminal rack ____Entry into United States ____ Other:________________ Description 5. Amount of federal excise tax paid on the taxable event 6. [　] Check the box if Taxpayer previously filed a First Taxpayer's Report under § 48.4081-7 relating to the same fuel described in this statement. Year and quarter First Taxpayer's Report filed Taxpayer hereby revokes such report with respect to the fuel described in this statement. Except for the section 6435 claim to which this report relates, the undersigned taxpayer (the “Taxpayer”) has not received, and will not claim, a credit with respect to, or a refund of, the tax to which this form relates. Under penalties of perjury, Taxpayer declares that Taxpayer has examined this statement, including any accompanying schedules and statements, and to the best of Taxpayer's knowledge and belief, such statements are true, correct, and complete. Signature and date signed Printed or typed name of person signing this report Title (f) Filing instructions for a section 6435 claim Form of claim. Claim for Refund of Excise Taxes, Section 4081(e) and 6435 Claims, (2) Content of claim. (i) Volume and type of fuel removed. (ii) Date of removal of fuel. (iii) Amount of section 4081 tax previously paid with respect to such fuel. (iv) The section 6435 taxpayer's report that relates to such fuel. (g) Time for filing claim. (h) Example. (i) Applicability date. (j) Expiration date. [T.D. 10047, 91 FR 23367, May 1, 2026] Effective Date Note: At 91 FR 23367, May 1, 2026, § 48.6435-1T was added, effective May 1, 2026, through May 1, 2029. § 48.6715-1 Penalty for misuse of dyed fuel. (a) In general. (1) Diesel fuel or kerosene that satisfies the dyeing and marking requirements of § 48.4082-1 (b) and (c) is blended with any undyed liquid and the resulting product satisfies the dyeing and marking requirements of § 48.4082-1 (b) and (c). (2) Diesel fuel or kerosene that satisfies the dyeing and marking requirements of § 48.4082-1 (b) and (c) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye and marker required for diesel fuel or kerosene dyed and marked in accordance with § 48.4082-1 (b) and (c). (3) The alteration or attempted alteration occurs in an exempt area of Alaska after September 30, 1996. (4) Diesel fuel or kerosene that does not satisfy the dyeing and marking requirements of § 48.4082-1 (b) and (c) is blended with diesel fuel or kerosene that satisfies the dyeing and marking requirements of § 48.4082-1 (b) and (c) and the blending occurs as part of a use described in § 48.4082-4(c) or § 48.6427-8(b)(1)(vii)(C) or (D). (b) Effective date. [T.D. 8659, 61 FR 10465, Mar. 14, 1996, as amended by T.D. 8685, 61 FR 58007, Nov. 12, 1996; T.D. 8748, 63 FR 26, Jan. 2, 1998; T.D. 8879, 65 FR 17163, Mar. 31, 2000]

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