27 CFR Part 53 — Manufacturers Excise Taxes—Firearms and Ammunition

PART 53—MANUFACTURERS EXCISE TAXES—FIREARMS AND AMMUNITION Authority: 26 U.S.C. 4181, 4182, 4216-4219, 4221-4223, 4225, 6001, 6011, 6020, 6021, 6061, 6071, 6081, 6091, 6101-6104, 6109, 6151, 6155, 6161, 6301-6303, 6311, 6402, 6404, 6416, 7502, 7805. Source: T.D. ATF-308, 56 FR 303, Jan. 3, 1991, unless otherwise noted. Editorial Note: Nomenclature changes to part 53 appear by T.D. ATF-447, 66 FR 19088, Apr. 13, 2001. Subpart A—Introduction § 53.1 Introduction. The regulations in this part (part 53, subchapter C, chapter I, title 27, Code of Federal Regulations) are designated “Manufacturers Excise Taxes—Firearms and Ammunition.” The regulations relate to the tax on the sale of firearms and ammunition imposed by section 4181 of the Internal Revenue Code of 1986, and to certain related administrative provisions of chapter 32, subchapter F, of the Code. Chapter 32, subchapter D of the Code imposes taxes on the sale or use by the manufacturer, producer, or importer of certain recreational equipment specified in that chapter. References in the regulations in this part to the “Internal Revenue Code” or the “Code” are references to the Internal Revenue Code of 1986 (United States Code of 1986), as amended, unless otherwise indicated. References to a section or other provision of law are references to a section or other provision of the Internal Revenue Code of 1986, as amended, unless otherwise indicated. § 53.2 Attachment of tax. (a) For purposes of this part, the manufacturers excise tax generally attaches when the title to the article sold passes from the manufacturer to a purchaser. (b) 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. (c) In the case of a sale on credit, the tax attaches whether or not the purchase price is actually collected. (d) 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. (e) 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 §§ 53.103 and 53.104 for a limitation on the amount of tax payable on lease payments. (f) In the case of use by the manufacturer, the tax attaches at the time the use begins. § 53.3 Exemption certificates. Several provisions of this part, relating to sales exempt from manufacturers excise tax, require the manufacturer to obtain an exemption certificate from the purchaser to substantiate the exempt character of the sale. Any form of exemption certificate will be acceptable if it includes all the information required by the provisions of this part. These certificates are available as preprinted forms, which are available for free download on the TTB website at https://www.ttb.gov/forms, [T.D. TTB-44, 71 FR 16957, Apr. 4, 2006, as amended by T.D. TTB-196, 89 FR 87951, Nov. 6, 2024] Subpart B—Definitions § 53.11 Meaning of terms. When used in this part and in forms prescribed under this part, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, terms shall have the meanings ascribed in this section. Words in the plural form shall include the singular, and vice versa, and words importing the masculine gender shall include the feminine. The terms “includes” and “including” do not exclude other things not enumerated which are in the same general class or are otherwise within the scope thereof. Administrator. Appropriate TTB officer. Calendar quarter. Calendar year. Chapter 32. Code. Electronic fund transfer (EFT). Exportation. Exporter. Financial institution. Firearms. Importer. Knockdown condition. Manufacturer. 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 or accessories and assembles a taxable article from them will be liable for tax as a 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 business or personal use. Person. Pistols. Possession of the United States. Purchaser. Revolvers. Sale. Secretary of the Treasury Secretary. Shells and cartridges. Taxable article. Treasury Account. Vendor. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31083, July 9, 1991; T.D. ATF-330, 57 FR 40325, Sept. 3, 1992; T.D. ATF-365, 60 FR 33670, June 28, 1995; T.D. ATF-404, 63 FR 52603, Oct. 1, 1998; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001; T.D. TTB-44, 71 FR 16957, Apr. 4, 2006; T.D. TTB-196, 89 FR 87951, Nov. 6, 2024] Subpart C—Administrative and Miscellaneous Provisions § 53.20 Delegations of the Administrator. The regulatory authorities of the Administrator contained in this part are delegated to appropriate TTB officers. These TTB officers are specified in TTB Order 1135.53, Delegation of the Administrator's Authorities in 27 CFR Part 53, Manufacturers Excise Taxes—Firearms and Ammunition. You may obtain a copy of this order by accessing the TTB Web site ( https://www.ttb.gov [T.D. TTB-44, 71 FR 16957, Apr. 4, 2006, as amended by T.D. TTB-196, 89 FR 87950, Nov. 6, 2024] § 53.21 Forms prescribed. (a) The appropriate TTB officer is authorized to prescribe all forms required by this part. All of the information called for in each form shall be furnished as indicated by the headings on the form and the instructions on or pertaining to the form. In addition, information called for in each form shall be furnished as required by this part. The form will be filed in accordance with the instructions on the form. (b) Forms prescribed by this part are available for printing through the TTB Web site ( https://www.ttb.gov (c) Signature authorization. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991. Redesignated in part by T.D. ATF-365, 60 FR 33670, June 28, 1995, as amended by T.D. 372, 61 FR 20724, May 8, 1996; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001; T.D. TTB-44, 71 FR 16957, Apr. 4, 2006; T.D. TTB-196, 89 FR 87950, Nov. 6, 2024] § 53.22 Employer identification number. (a) Requirement of application. (i) The individual if the person is an individual; (ii) The president, vice-president, or other principal officer, if the person is a corporation; (iii) A responsible and duly authorized member or officer having knowledge of its affairs, if the person is a partnership or other unincorporated organization; or (iv) The fiduciary, if the person is a trust or estate. An employer identification number will be assigned to the person in due course upon the basis of information reported on the application required under this section. (2) Time for filing Form SS-4. (3) One-time or occasional filers. (b) Use of employer identification number. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-365, 60 FR 33670, June 28, 1995; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001] § 53.23 Alternate methods or procedures. (a) A taxpayer, on specific approval by the appropriate TTB officer as provided in this section, may use an alternate method or procedure in lieu of a method or procedure specifically prescribed in this part. The appropriate TTB officer may approve an alternate method or procedure, subject to stated conditions, when— (1) Good cause has been shown for the use of the alternate method or procedure; (2) The alternate method or procedure is within the purpose of, and consistent with the effect intended by, the specifically prescribed method or procedure, and affords equivalent security to the revenue; and (3) The alternate method or procedure will not be contrary to any provision of law and will not result in an increase in cost to the Government or hinder the effective administration of this part. No alternate method or procedure relating to the assessment, payment, or collection of tax shall be authorized under this paragraph. (b) Where the taxpayer desires to employ an alternate method or procedure, a written application to do so must be submitted. The application must specifically describe the proposed alternate method or procedure and must set forth the reasons therefor. Alternate methods or procedures must not be employed until the appropriate TTB officer has approved the application. The taxpayer must, during the period of authorization of an alternate method or procedure, comply with the terms of the approved application. Authorization for any alternate method or procedure may be withdrawn whenever, in the judgment of the appropriate TTB officer, the revenue is jeopardized or the effective administration of this part is hindered by the continuation of such authorization. [T.D. ATF-365, 60 FR 33670, June 28, 1995, as amended by T.D. ATF-447, 66 FR 19088, Apr. 13, 2001] § 53.24 Records. (a) In general Form of records. (2) [Reserved] (b) Copies of returns, schedules, and statements. (c) Records of claimants. (d) Place and period for keeping records. (2) Except as otherwise provided in this subparagraph, every person required by the regulations in this part to keep records in respect of a tax shall maintain such records for at least three years after the due date of such tax for the return period to which the records relate, or the date such tax is paid, whichever is later. The records of claimants required by paragraph (c) of this section shall be maintained for a period of at least three years after the date the claim is filed. (e) Reproduction of original records. (2) Copies of records treated as original records. [T.D. ATF-365, 60 FR 33670, June 28, 1995, as amended by T.D. ATF-447, 66 FR 19088, Apr. 13, 2001] Subparts D-F [Reserved] Subpart G—Tax Rates § 53.61 Imposition and rates of tax. (a) Imposition of tax. (1) Pistols; (2) Revolvers; (3) Firearms (other than pistols and revolvers); and (4) Shells and cartridges. (b) Parts or accessories In general. (2) Component parts. (3) Nontaxable parts. (4) Nontaxable accessories. (5) Examples In general. (ii) Component parts. (iii) Nontaxable parts. (iv) Nontaxable accessories. (c) Rates of tax. Percent (1) Pistols 10 (2) Revolvers 10 (3) Firearms (other than pistols and revolvers) 11 (4) Shells and cartridges 11 (d) Computation of tax. (e) Liability for tax. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-404, 63 FR 52603, Oct. 1, 1998] § 53.62 Exemptions. (a) Firearms subject to the National Firearms Act. (b) Sales to Defense Department or to U.S. Coast Guard Military department. (2) Coast Guard. (3) Supporting evidence. (c) Small manufacturers, producers, and importers Exemption. (2) Controlled groups. (3) Applicability. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-344, 58 FR 40354, July 28, 1993; T.D. TTB-62, 72 FR 51711, Sept. 11, 2007] § 53.63 Other tax-free sales. For provisions relating to tax-free sales of firearms and ammunition see: (a) Section 4221 and 27 CFR 53.131, “Tax-free sales; general rule”. (b) Section 4223 and 27 CFR 53.132, “Tax-free sale of articles to be used for, or resold for, further manufacture”. (c) Section 4222 and 27 CFR 53.140, “Registration”. Subparts H-I [Reserved] Subpart J—Special Provisions Applicable to Manufacturers Taxes § 53.91 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. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31083, July 9, 1991] § 53.92 Exclusions from sale price. (a) Tax Tax not part of taxable sale price. (2) Computation 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. § 53.93 Other items relating to tax on sale price. (a) Exchanges. (b) Replacements under warranty. (c) Readjustments in sale price. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-344, 58 FR 40354, July 28, 1993] § 53.94 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) of the Code and § 53.96 apply; and (ii) Sales otherwise than at arm's length, and at less than fair market price. (2) Section 4216(b)(2) of the Code 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) of the Code 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) of the Code) 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) of the Code applies. (4) Section 4216(b)(4) of the Code 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. (c) Definitions. (1) Sale at retail. (2) Retail dealers. (3) Wholesale distributor. § 53.95 Constructive sale price; basic rules. (a) In general. (1) Sold at retail; (2) Sold while on consignment; or, (3) Sold otherwise than through an arm's-length transaction at less than fair market price. (b) Sales at retail. (c) Sales on consignment. (d) 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 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) and (4) of the Code, and § 53.97, for specific methods for determining constructive sale prices for intercompany sales under certain defined conditions. § 53.96 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) of the Code, and (3) The transactions are arm's-length transactions. (4) 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. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31083, July 9, 1991; T.D. TTB-91, 76 FR 5481, Feb. 1, 2011] § 53.97 Constructive sale price; affiliated corporations. (a) In general. (b) Sales to which section 4216(b)(3) of the Code applies. (1) A manufacturer, producer or importer regularly sells a taxable article to a wholesale distributor which is a member of the same affiliated group as the manufacturer, producers 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 inclusions or exclusions under section 4216(a) of the Code or price readjustments under section 6416(b)(1) of the Code. If both sections 4216(b)(3) and 4216(b)(4) of the Code 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 sections 4216(b)(3) and 4216(b)(4). (c) Sales to which section 4216(b)(4) of the Code 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. (4) Under section 4216(b)(4) of the Code, 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. (iii) 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 (c) and (d) of this section are prices that must reflect the inclusions and exclusions set forth in section 4216(a) of the Code. 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) of the Code. Example. M, a corporation engaged in the manufacture of article X, sold 100 of such articles at $10.00 per article to a wholesale distributor N, a corporation engaged in the business of selling X articles to independent retail dealers. N is a member of the same affiliated group of corporations as M. M sells X articles only to N. The normal method of manufacturers' sales of X articles in the industry is to sell to independent wholesale distributors. N corporation sells X articles to retailers for $15.00 each. The price for which comparable X articles are sold to wholesale distributors in the ordinary course of trade by manufacturers thereof is $12.00 per article. Wholesale distributors sell X articles to retailers in the ordinary course of trade for $16.00 per article. Under the foregoing facts the constructive sale price determined under section 4216(b)(4) of the Code and this paragraph is $11.25, computed as follows: (e) Determination of “lowest price”. (1) 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 (2) 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. (f) Definitions. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31083, July 9, 1991] § 53.98 Computation of tax on leases and installment sales. (a) Leases. (b) Installment sales. (c) Sales on credit. § 53.99 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 of the Code 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. (1) The proportionate share of the amount for which such accounts are sold which is allocable to each unpaid installment payment, by (2) The rate of tax which, under the provisions of chapter 32 of the Code as in effect on the date of the sale of the installment account, is (or is to be) in effect on the date such payment is due. (c) Collection of installment accounts on behalf of the manufacturer. (d) Returned installment accounts. (e) Limitation. § 53.100 Exclusion of local advertising charges from sale price. (a) In general. (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) Is broadcast over a radio station or television station, appears in a newspaper or magazine, or is displayed by means of an outdoor advertising sign or poster. (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. (i) Articles taxable at the same rate under the same section of the Code, and (ii) Articles which are not taxable under chapter 32 of the Code. For example, in the case of a single page newspaper or magazine advertisement, an allocation of costs reflecting the lineage or space devoted to the specified categories will be considered to reflect a reasonable allocation of the cost of advertising the different articles. As a general rule, only the cost of the “spot” portion identifying the retail establishment is considered “local advertising” in the case of national television or radio programs. (5) Meaning of “newspaper”. newspaper, (6) Meaning of “magazine”. magazine, (i) Commonly understood to be magazines, (ii) Printed and distributed periodically at least twice a year, and (iii) Published for the dissemination of information of a general nature or of special interest to particular groups. (iv) The term does not include handbills, circulars, flyers or the like, unless printed and distributed as a part of a publication which constitutes a magazine within the meaning of this subparagraph. For purposes of this subparagraph, advertising is not considered to be information of a general nature or information of special interest to particular groups within the contemplation of paragraph (b)(6)(iii) of this section. (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) An amount which would constitute the taxable price of the article (computed at the time of the sale of the article) if no part of any charge for local advertising were excludable in computing taxable price, and (B) The amount of any separate charge for local advertising, whatever the amount of such charge may be, (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 for 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. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31083, July 9, 1991] § 53.101 Limitation on aggregate of exclusions and price readjustments. (a) In general. (b) Computation of overall 5 percent limitation In general. (i) The amount which would constitute the total taxable price (computed at the time of sale) of all articles taxable under the same section of chapter 32 of the Code sold by the manufacturer during the elapsed calendar quarters of the calendar year, if no part of any charge for local advertising were excludable in computing taxable price, and (ii) The total of all amounts billed as separate charges for local advertising of such articles (whatever the amount of any single charge of the total of all charges). (iii) In making the computations under paragraphs (b)(1) (i) and (ii) of this section, credits or refunds under section 6416(b) of the Code of tax paid on the sale of any such articles are to be disregarded and articles sold tax-free by the manufacturer are to be excluded. The amount by which the overall 5 percent limitation computed as of the close of a particular calendar quarter in respect of articles taxable under the same section of chapter 32 of the Code exceeds the sum of the charges for local advertising excluded in computing the taxable price and the amount of reimbursements for local advertising of such articles made during the elapsed calendar quarters of the calendar year, in respect of which credit or refund has been claimed, represents the unused portion of the overall 5 percent limitation. Such unused portion is the maximum amount of reimbursements for local advertising in respect of which credit or refund may be claimed at the close of the particular calendar quarter, subject to the applicable conditions and limitations governing the right to claim a credit or refund in respect of local advertising (see § 53.175). The unused portion of the overall 5 percent limitation as of the close of the fourth calendar quarter of a calendar year in respect of which credit or refund may not be claimed as of the close of such quarter must be disregarded in computing the overall 5 percent limitation for any subsequent calendar quarter. Moreover, the amount of any reimbursements for local advertising made by a manufacturer in a calendar year which is in excess of the amount of such reimbursements in respect of which credit or refund may be claimed, within the overall limitation, as of the close of the calendar year, may not subsequently serve as the basis for a credit or refund. (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 the year, a manufacturer makes sales of articles taxable under section 4181 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) of the Code, in computing taxable price, are as follows: First Quarter: Articles taxable under Section 4181 $100,000 Local advertising charges 3,000 Total Charges 103,000 Second Quarter: Articles taxable under Section 4181 $150,000 Local advertising charges 4,000 Total Charges 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 the year, 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 no 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. Overall 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, of $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 overall 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 of 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 no 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. Overall 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 overall 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 to 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 the year, a manufacturer sold articles taxable under section 4181 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) of the Code, in computing taxable price. This total charge of $106,000 was billed as follows: Total Charge: Articles taxable under Section 4181 $100,000 Local advertising charges 6,000 Total charges 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 the year 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 no 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 d. Difference 100,000 4. Overall 5 percent limitation (5 percent of item 3) 5,000 5. Amount excluded in computing taxable price (see paragraph (c) of § 53.100 −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 overall 5 percent limitation. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.102 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) of the Code and paragraphs (a) and (b) of § 53.100, or (2) Does not satisfy all of the conditions and limitations stated in section 4216(e)(1) of the Code and paragraph (c) of § 53.100. (b) Readjustments of price. (1) Is for advertising which does not qualify as local advertising within the meaning of section 4216(e)(4) of the Code and paragraph (b) of § 53.100, or (2) Is not within the limitation provided in section 4216(e)(2) of the Code, as computed in accordance with § 53.101, 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, § 53.175, 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. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.103 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 [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991; T.D. 372, 61 FR 20724, May 8, 1996] § 53.104 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 in paid. (2) Changes in tax rates. (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 (f)(2) of this section, the provisions of section 4216(b) of the Code 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 (f)(2) of this section shall be computed on a constructive sale price as provided in § 53.95. (g) Sale of article after total tax has become payable. Use by Manufacturer or Importer Considered Sale § 53.111 Tax on use by manufacturer, producer, or importer. (a) In general. (b) Taxable articles in general Application of tax. (2) Taxable use in manufacturer of nontaxable articles In general. (ii) Types of use in manufacture of nontaxable articles. (3) Nontaxable use in manufacturer of taxable articles. (c) Use after lease. (d) Time of application of tax. (e) Exemptions because of other statutory provisions. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991] § 53.112 Business or personal use of articles. (a) Business use. (b) Personal use. § 53.113 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. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.114 Use in further manufacture. For purposes of section 4218 and § 53.111, 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. In addition, an article is considered to be used as material in the manufacturer 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, 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. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.115 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. (1) Parts used exclusively in the functioning of the taxable article in the combination; (2) Parts used exclusively in the functioning of the nontaxable article in the combination, and (3) Parts, called common parts, which serve a dual function in connection with the parts in both paragraphs (c) (1) and (2) of this section. The ratio which the cost of the parts in paragraph (c)(1) of this section bears to the sum of the cost of such parts and the parts in paragraph (c)(2) of this section is applied to the lowest established wholesale price for which like combination articles are at the time of the taxable use being sold by the manufacturer or producer in the ordinary course of trade. The resulting amount is the constructive sale price for the taxable article on which tax is to be computed. The cost of the common parts is allocable to the parts in paragraphs (c) (1) and (2) of this section in the same ratio, and, therefore, need not be taken into account in the computation since the inclusion and allocation of the cost of such parts in the determination would not result in a different ratio. In determining the lowest establishment wholesale price for the combination article, there shall be included and excluded, as applicable, the charges and readjustments specified in sections 4216(a) and 6416(b)(1) of the Code, as in effect at the time tax liability on the use of the taxable article is incurred, and the regulations thereunder contained in this subpart and subpart L of this part (§§ 53.91-53.94 and §§ 53.173-53.176). The tax applicable to the use of the article for which a constructive sale price has been computed is not affected by any charges or readjustments of the price for which the nontaxable combination article is sold, whether by reason of the return or repossession of the nontaxable article or its covering or container, or by a bona fide discount, rebate, allowance, or other factor. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] Application of Tax in Case of Sales by Other Than Manufacturer or Importer § 53.121 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 member 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 the 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. Subpart K—Exemptions, Registration, Etc. § 53.131 Tax-free sales; general rule. (a) In general. (1) For use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture, (2) For export, or for resale by the purchaser to a second purchaser for export, (3) For use by the purchaser as supplies for vessels or aircraft, (4) To a State or local government for the exclusive use of a State or local government, and (5) To a nonprofit educational organization for its exclusive use. Section 4221(a) of the Code applies only in those cases where the exportation or use referred to is to occur before any other use, and where the seller, first purchaser, and second purchaser, as may be appropriate, have registered as required under section 4222 of the Code and paragraph (a) of § 53.140. See paragraph (c) of this section for provisions relating to evidence required in support of tax-free sales. See § 53.141 for exceptions to the requirement for registration. Where tax is paid on the sale of an article, but the article is used or resold for use for an exempt purpose, a claim for credit or refund may be filed in accordance with and to the extent provided in sections 6402(a) and 6416 of the Code, and the regulations thereunder (§§ 53.161 and 53.171-53.186). (b) Manufacturer relieved of liability in certain cases General rule. (2) Situations wherein section 4221(c) of the Code is applicable. (i) Section 4221(a)(1) of the Code, to the extent that it relates to sales for further manufacture by a first purchaser (see § 53.132), (ii) Section 4221(a)(3) of the Code, relating to supplies for vessels and aircraft (see § 53.134), (iii) Section 4221(a)(4) of the Code, relating to sales to State or local governments (see § 53.135), (iv) Section 4221(a)(5) of the Code, relating to sales to nonprofit educational organizations (see § 53.136). (3) Situations wherein section 4221(c) of the Code is not applicable. (i) Section 4221(a)(1) of the Code, to the extent that it relates to sales for resale to a second purchaser for use by the second purchaser in further manufacture (see § 53.132), (ii) Section 4221(a)(2) of the Code, relating to sales for export (see § 53.133). (4) Duty of seller to ascertain validity of tax-free sale. (5) Information to be furnished to purchaser. (i) Certain articles normally subject to tax are being sold tax free, and (ii) The purchaser is obtaining those articles tax free for an exempt purpose under an exemption certificate or its equivalent. (6) The manufacturer may transmit this information by any convenient means, such as coding of sales invoices, provided that the information is presented with sufficient particularity so that the purchaser is informed that he has obtained the articles tax free and: (i) The purchaser can compute and remit the tax due if an article sold tax free for further manufacture is diverted to a taxable use, (ii) The manufacturer can remit the tax due with respect to an article purchased tax free for resale for use in further manufacture or for export if, within the 6-month period described in § 53.132(c) or § 53.133(c), the manufacturer does not receive proof that the article has been exported or resold for use in further manufacturer, or (iii) The purchaser can notify the manufacturer if an article otherwise purchased tax free is diverted to a taxable use. (c) Evidence required in support of tax-free sales Purchasers required to be registered. (2) Purchasers not required to be registered. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 FR 37005, July 16, 1996] § 53.132 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; for example, shells or cartridges that are used by the manufacturer of firearms to test new firearms. However, an article that is consumed in the manufacturing process other than in testing, so that it is not a physical part of the manufactured article, is not considered to have been used as material in the manufacture of, or as a component part of, another article. (c) Proof of resale for further manufacture Cessation of exemption. (2) Proof of resale Certificate of purchaser. (A) Date statement was executed. (B) Name and address of manufacturer's vendee (if other than the person executing statement). (C) Certificate of registry number held by vendee. (D) Specify article(s) purchased tax-free, by whom purchased, certificate of registry number of second purchaser, date of purchase(s), whether articles were purchased as material in the manufacture or production of, or as a component part or parts of, an article or articles taxable under Chapter 32 of the Code. (E) Statement that person executing statement or manufacturer's vendee possesses proof of tax-free resale of the article(s) in the form of purchase orders and sales invoices and identifying the person who will maintain custody of such proof for 3 years from the date of the statement and will make such proof available for inspection by TTB during such 3 year period. (F) Statement that a previous statement has not been executed in respect of such certificate of resale and that the person signing the statement is aware that fraudulent use of the statement may subject the person signing the statement and all parties making fraudulent use of the statement to all applicable criminal penalties under the Code. (G) Name, signature, and title of individual executing statement. (ii) Period covered. (iii) TTB F 5600.37. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 FR 37005, July 16, 1996; T.D. TTB-196, 89 FR 87950, Nov. 6, 2024] § 53.133 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) of the Code and this section, and (ii) Is returned subsequently to the United States in an unused and undamaged condition, then the importer is liable for the tax imposed by chapter 32 of the Code on the subsequent sale or use of the article in the United States. The provisions of this paragraph (a)(2) of this section may be illustrated by the following examples: Example (1). Q, a U.S. manufacturer of shells and cartridges, previously sold shells and cartridges to R, a company in Canada. The sale was tax free under section 4221(a)(2). Prior to use, R sold the shells and cartridges to S, who imports the articles into the United States and sells them. The sale of the shells and cartridges subjects S to an excise tax liability under section 4181. Example (2). X, a U.S. firearms manufacturer, sold a rifle to Y company in France. The sale was tax free under section 4221(a)(2). The rifle was sold by Y to W, an individual in the City of Nice, France. After initial use, W resold the rifle to X. X returned the rifle to the United States where it was resold. The resale of the rifle by X does not subject X to an excise tax liability under section 4181. (b) Sales or resales to a foreign purchaser for export. (1) A written order or contract of sale showing that the manufacturer is to ship the article to a foreign destination; or (2) Where delivery by the manufacturer is to be made within the United States, a statement from the purchaser showing: (i) That the article is purchased either to fill existing or future orders for delivery to a foreign destination or for resale to another person engaged in the business of exporting who will export the article, and (ii) That such article will be transported to its foreign destination in due course prior to use or further manufacture and prior to any resale except for export. See section 4221(b) of the Code and paragraphs (c) and (d) of this section for requirements as to timely proof of exportation and cessation of the exemption for export unless the evidence to show actual exportation has been received by the manufacturer. (c) Cessation of exemption. (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 the following: (i) Date statement was executed. (ii) Name and address of manufacturer's vendee (if other than the person executing statement). (iii) Certificate of registry number held by vendee. (iv) Specify article(s) purchased tax-free, by whom purchased, and date of purchase. (v) Statement that article(s) was either exported in due course by the vendee or was sold to another person who in due course exported the article(s). (vi) Name and address of vendee who will maintain possession of the proof of exportation documents, description of the documents, and statement that vendee will maintain documents for 3 years and make them available to TTB for inspection. (vii) Statement that a previous statement has not been executed in respect of the articles covered by this statement and that fraudulent use of this statement may subject person executing statement and all parties making fraudulent use of statement to all applicable criminal penalties under the Code. (viii) Name, signature, title, and address of individual executing certificate. (3) The statement executed and signed by the manufacturer's vendee, as provided in paragraph (d)(2) of this section, may be executed with respect to any one or more articles purchased tax free from a manufacturer and exported within the 6-month period prescribed in section 4221(b)(2) of the Code and paragraph (c) of this section. Such statement shall be kept for inspection by the appropriate TTB officer as provided in section 6001 of the Code. (4) TTB F 5600.36. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-344, 58 FR 40354, July 28, 1993; T.D. 372, 61 FR 20724, May 8, 1996; T.D. ATF-380, 61 FR 37006, July 16, 1996; T.D. TTB-196, 89 FR 87950, Nov. 6, 2024] § 53.134 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. (i) Between domestic ports in the Atlantic Ocean and the Gulf of Mexico, (ii) Between domestic ports on the Pacific Ocean, (iii) Between domestic ports on the Great Lakes, or (iv) On the inland waterways of the United States. (3) Sea stores. sea stores (4) Vessel. vessel (i) Every description of watercraft or other contrivance used, or capable of being used, as a means of transportation on water, (ii) Civil aircraft registered in the United States and employed in foreign trade or in trade between the United States and any of its possessions, and (iii) Civil aircraft registered in a foreign country and employed in foreign trade or trade between the U.S. and its possessions. (5) Vessels of war of the United States or of any foreign nation. vessels of war of the United States or of any foreign nation (i) Every description of watercraft or other contrivance used, or capable of being used, as a means of transportation on water and constituting equipment of the armed forces (including the U.S. Coast Guard and U.S. National Guard) of the United States or of a foreign nation, and (ii) Aircraft owned by the United States or by any foreign nation and constituting equipment of the armed forces thereof. (iii) For purposes of this section, vessels or aircraft owned by armed forces are not considered to be equipment of such armed forces while on lease or loan to an organization that is not part of the armed forces. (6) Vessels used in fisheries or whaling business. (7) Civil aircraft. (8) Trade. (c) Reciprocity required in the case of civil aircraft. (d) Evidence required to establish In general. (i) If both the manufacturer and purchaser are registered under the provisions of section 4222 of the Code, or (ii) The purchaser or both the manufacturer and the purchaser are not registered but have satisfied the provisions of paragraph (d)(2) of this section. See paragraph (c) of § 53.131 for the evidence required to establish exemption where the purchaser is registered pursuant to section 4222 of the Code and § 53.140. (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 appropriate TTB officer as provided in section 6001 of the Code. (iii) Acceptable form of exemption certificate. (A) Name of owner, charterer, or authorized agent. (B) Name of company and vessel. (C) List article(s) covered by the certificate or beginning and ending dates during which orders will be placed (not to exceed 12 calendar quarters). (D) Statement that articles will be used only for fuel supplies, ships' stores, sea stores, or legitimate equipment on a vessel belonging to one of the class of vessels to which section 4221 of the Code applies. Identify class of vessel certificate covers (see paragraphs (a) and (b) of this section). (E) If articles are purchased for use on civil aircraft engaged in foreign trade or trade between the United States and any of its possessions, state the country in which the aircraft is registered. (F) Statement that it is understood that if any articles are used for any purpose other than as stated in the certificate, or are resold or otherwise disposed of, the person executing the certificate must notify the manufacturer. (G) Statement that the certificate shall not be used to purchase tax-free articles for use as supplies, etc. on pleasure vessels or any type of aircraft except: ( 1 ( 2 (H) Statement that it is understood that any fraudulent use of the certificate may subject person executing certificate and all parties making fraudulent use of the certificate to all applicable criminal penalties under the Code. (I) Statement that person executing certificate is prepared to establish by satisfactory evidence the purpose for which the article(s) was used. (J) Date, name, signature, and address of person executing the certificate. (iv) TTB F 5600.34. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 FR 37006, July 16, 1996; T.D. TTB-44, 71 FR 16957, Apr. 4, 2006; T.D. TTB-196, 89 FR 87950, Nov. 6, 2024] § 53.135 Tax-free sale of articles to State and local governments for their exclusive use. (a) In general. (b) State or local government. State or local government See, et seq., (c) Evidence required in support of tax-free sales to State or local governments. (i) Title of official executing certificate, branch of government, date executed, and statement that official is authorized to execute certificate. (ii) List articles covered by the certificate or beginning and ending dates during which orders will be placed by the purchaser (period not to exceed 12 calendar quarters). (iii) Name of manufacturer from which articles purchased. (iv) Governmental unit purchasing articles. (v) Statement that is understood that articles purchased under this certificate of exemption are limited to use exclusively by the purchasing governmental entity. (vi) Statement that is understood that any fraudulent use of this certificate may subject the person executing the certificate and all parties making fraudulent use of the certificate to all applicable criminal penalties under the Code. (vii) Name, address, and signature of person executing the certificate. (2) A purchase order, provided that all of the information required by paragraph (c)(1) of this section is included therein, is acceptable in lieu of a separate exemption certificate. (3) TTB F 5600.35. (d) Resale of articles purchased tax free by a State or local government. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 FR 37006, July 16, 1996; T.D. TTB-196, 89 FR 87950, Nov. 6, 2024] § 53.136 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 tax exempt purpose for which the article or articles are being purchased, and (2) Its 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 § 53.131 for the evidence required to establish exemption. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-447, 66 FR 19088, Apr. 13, 2001] §§ 53.137-53.139 [Reserved] § 53.140 Registration. (a) General rule. (b) Information to be submitted. (c) Evidence required in support of tax-free sales. (d) Failure to register. (e) Cross references. (2) For revocation or suspension of registration, see § 53.142. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by ATF-447, 66 FR 19088, Apr. 13, 2001] § 53.141 Exceptions to the requirement for registration. (a) State and local governments. (2) Each State requesting registration will be assigned one Certificate of Registry. The registration number shown on this certificate may be used by all agencies, boards, and commissions of the State that are authorized by the State to make purchases for the exclusive use of the State. However, the registration number assigned to a State may not be used by any political subdivision of that State, such as a county or municipality. Each political subdivision of a State desiring to obtain a Certificate of Registry must obtain a separate registration number. (b) Sales or resales to foreign purchasers for export. (c) United States. (d) Supplies for vessels and aircraft. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.142 Denial, revocation or suspension of registration. (a) The appropriate TTB officer is authorized to deny, 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; or (3) The registrant has used his registration to avoid payment of the tax imposed by section 4181 of the Code, or to postpone or interfere in any manner with the collection of such tax; (4) Such denial, revocation, or suspension is necessary to protect the revenue; or (5) The registrant failed to comply with the requirements of paragraph (c) of § 53.140, relating to the evidence required to support a tax-free sale. (b) The denial, 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. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-365, 60 FR 33671, June 28, 1995] § 53.143 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. Subpart L—Refunds and Other Administrative Provisions of Special Application to Manufacturers Taxes § 53.151 Returns. (a) In general. (2) Return periods after September 30, 1992. (3) Return periods prior to October 1, 1992. (4) Forms, etc. (5) Special rule for one-time or occasional filings for return periods on or after July 1, 1995. (b) Monthly and semimonthly returns Requirement. (2) Change of requirement. (3) Return for period change takes effect. (ii) If a taxpayer who has been filing monthly or semimonthly returns receives notice to file a quarterly return, the last month or semimonthly period for which a return shall be filed is the last month or semimonthly period of the calendar quarter in which the notice is received. (iii) If a taxpayer who has been filing semimonthly returns receives notice to file a monthly return, the last semimonthly period for which a return shall be made is the last semimonthly period of the month in which the notice is received. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 FR 40325, Sept. 3, 1992; T.D. ATF-365, 60 FR 33671, June 28, 1995; T.D. TTB-91, 76 FR 5481, Feb. 1, 2011] § 53.152 Final returns. (a) In general. (b) Statement to accompany final return. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 FR 40325, Sept. 3, 1992. Redesignated in part by T.D. ATF-365, 60 FR 33670, June 28, 1995] § 53.153 Time for filing returns. (a) Quarterly returns. (b) Monthly, semimonthly and annual returns Monthly returns. (2) Semimonthly returns. (3) Annual returns. (c) Last day for filing. (d) Late filing. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 FR 40325, Sept. 3, 1992] § 53.154 Manner of filing returns. (a) Each return on TTB Form 5300.26 shall be filed with TTB, in accordance with the instructions on the form. (b) When the taxpayer sends the return on TTB Form 5300.26 by U.S. Mail, the official postmark of the U.S. Postal Service stamped on the cover in which the return was mailed shall be considered the date of delivery of the return. When the postmark on the cover is illegible, the burden of proving when the postmark was made will be on the taxpayer. When the taxpayer sends the return with or without remittance by registered mail or by certified mail, the date of registry or the date of the postmark on the sender's receipt of certified mail, as the case may be, shall be treated as the date of delivery of the return and, if accompanied, of the remittance. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 FR 40325, Sept. 3, 1992] § 53.155 Extension of time for filing returns. (a) In general. (b) Application for extension of time. (c) Filing the return. § 53.156 Extension of time for paying tax shown on return. (a) In general. (2) The granting of an extension of time for filing a return does not operate to extend the time for the payment of the tax or any part of the tax unless so specified in the extension. See § 53.155. (b) Undue hardship required for extension. (c) Application for extension. (d) Payment pursuant to extension. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001] § 53.157 Deposit requirement for deposits made for calendar quarters prior to July 1, 1995. Note: For deposit requirement for deposits made for calendar quarters beginning on or after July 1, 1995, see § 53.159. (a) Monthly deposits. (b) Semimonthly deposits. (2) A person will be considered to have complied with the requirements of paragraph (b)(1) of this section for a semimonthly period if— (i)(A) The person's deposit for the semimonthly period is not less than 90 percent of the total amount of the excise taxes reportable by the person on TTB Form 5300.26 for the period, and (B) If the semimonthly period occurs in a calendar month other than the last month in a calendar quarter, the person deposits any underpayment for the month by the 9th day of the second month following the calendar month; or (ii)(A) The person's deposit for each semimonthly period in the calendar month is not less than 45 percent of the total amount of the excise taxes reportable by the person on TTB Form 5300.26 for the month, and (B) If such month is other than the last month in a calendar quarter, the person deposits any underpayment for such month by the 9th day of the second month following the calendar month; or (iii)(A) The person's deposit for each semimonthly period in the calendar month is not less than 50 percent of the total amount of the excise taxes reportable by the person on TTB Form 5300.26 for the second preceding calendar month, and (B) If such month is other than the last month in a calendar quarter, the person deposits any underpayment for such month by the 9th day of the second month following the calendar month; or (iv)(A) The requirements of paragraph (b)(2) (i)(A), (ii)(A), or (iii)(A) of this section are satisfied for the first semimonthly period of a calendar month after December 1990, (B) If the person's deposit for the second semimonthly period of the calendar month is, when added to the deposit for the first semimonthly period, not less than 90 percent of the total amount of the excise taxes reportable by the person on TTB Form 5300.26 for the calendar month, and (C) If the semimonthly periods occur in a calendar month other than the last month in a calendar quarter, the person deposits any underpayment for the month by the 9th day of the second month following the calendar month. (3)(i) Paragraph (b)(2) (ii) and (iii) of this section shall not apply to any person who normally incurs in the first semimonthly period in each calendar month more than 75 percent of the person's total excise tax liability under this part for the month. (ii) Persons who make their deposits in accordance with paragraph (b)(2) (ii), (iii), or (iv) of this section will find it unnecessary to keep their books and records on a semimonthly basis. (c) Deposit of certain excess undeposited amounts. (d) Definitions Semimonthly period. semimonthly period (2) Depositary date. depositary date (3) Lockbox financial institution. lockbox financial institution (e) Depositary forms and procedures In general. (2) Number of remittances. (3) Information required. (4) Procurement of prescribed forms. (f) Nonapplication to certain taxes. (1) Any month or semimonthly period in which the taxpayer receives notice pursuant to § 53.151(b) to file TTB Form 5300.26 or (2) Any subsequent month or semimonthly period for which a return on TTB Form 5300.26 is required. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991; T.D. ATF-330, 57 FR 40325, Sept. 3, 1992; T.D. ATF-365, 60 FR 33671, June 28, 1995; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001; T.D. TTB-44, 71 FR 16958, Apr. 4, 2006] § 53.158 Payment of tax by electronic fund transfer. (a) In general. (b) Requirements. (2) For each deposit made or return filed in accordance with this subpart, the taxpayer shall direct the taxpayer's financial institution to make an EFT in the amount of the taxpayment to the Treasury Account as provided in paragraph (e) of this section. The request will be made to the financial institution early enough for the transfer of funds to be made to the Treasury Account no later than the close of business on the last day for making the deposit or filing the return as prescribed in §§ 53.157 or 53.159, and 53.153. The request will take into account any time limit established by the financial institution. (3) Taxpayers who elect to discontinue making remittances by EFT of firearms and ammunition excise taxes may make such election at any time following four consecutive calendar quarters in which tax is remitted by EFT. Taxpayers electing to discontinue making remittances by EFT shall remit the tax with the next deposit or return as prescribed in §§ 53.157 or 53.159, and 53.151 for remittances not made by EFT and notify the appropriate TTB officer by attaching a written notification to the tax deposit form or return stating that remittance of firearms and ammunition excise taxes will no longer be made by EFT. (c) Remittance. (2) Remittances will be considered as made when the taxpayment by EFT is received by the Treasury Account when it is paid to a Federal Reserve Bank. (3) When the taxpayer directs the financial institution to effect an electronic fund transfer message as required by paragraph (b)(2) of this section, the transfer data record furnished to the taxpayer through normal banking procedures will serve as the record of payment and will be retained as part of the required records. (d) Failure to make a taxpayment by EFT. (e) Procedure. [T.D. ATF-330, 57 FR 40326, Sept. 3, 1992, as amended by T.D. ATF-365, 60 FR 33671, June 28, 1995; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001] § 53.159 Deposit requirement for deposits made for calendar quarters beginning on or after July 1, 1995. (a) Definitions Definition of tax liability. (2) Semimonthly period. (b) In general Semimonthly deposits. (2) One-time or occasional filings. (c) Amount of deposit In general. (2) De minimis exception. (3) Amount of deposit; safe harbor rule based on look-back quarter liability In general. (i) The deposit of taxes for each semimonthly period in the current calendar quarter is an amount equal to not less than 1/6 (ii) Each deposit is made on time; and (iii) The amount of any underpayment of taxes for the current calendar quarter is paid by the due date of the return. (4) Modification for third calendar quarter. (i) The deposit of taxes for the semimonthly period July 1-September 15 meets the requirements of paragraph (c)(3) of this section; and (ii) Each deposit of taxes for the periods September 16-25 and September 26-30 is not less than 1/12th (8.34 percent) of the total tax liability incurred for the look-back quarter. (5) Modification for tax rate increase Application. (ii) Modification. 1/6 (6) First time filers. (i) The deposit of taxes for each semimonthly period in the calendar quarter is not less than 95 percent of the tax liability incurred with respect to those taxes during the semimonthly period; (ii) Each deposit is made on time; and (iii) The amount of any underpayment of taxes for the current calendar quarter is paid by the due date of the return. (d) Failure to comply with deposit requirements. (2) Cross reference. (e) Time for making deposit. (f) Last day for filing. (2) If the required due date of the deposit for the period September 16-25 falls on a Saturday, the deposit and remittance shall be due on the preceding day. If such required due date falls on a Sunday, the return and remittance shall be due on the following day. (g) Forms and procedures. (h) Number of remittances. (i) Procurement of prescribed forms. (j) Taxpayers required to file monthly or semimonthly returns. (1) Any month or semimonthly period in which the taxpayer receives notice pursuant to section 53.151(b) to file TTB Form 5300.26; or (2) Any subsequent month or semimonthly period for which a return on TTB Form 5300.26 is required. (3) Taxpayers required to file monthly returns shall make semimonthly deposits of 100 percent of the liability incurred during each semimonthly period by the 9th day of the month following the last day of the semimonthly period. Taxpayers required to file semimonthly returns shall pay any tax due for the semimonthly period with each return. (k) Examples. Example 1. One-time filing or occasional filing. (1) Facts. (2) Filing requirement. (3) Payment requirement. Example 2. Deposit requirement; based on look-back quarter liability. (1) Facts. (2) Deposit requirement. 1/6 Semimonthly period Deposit due by Amount of deposit April 1-15 April 24, 1996 $450.00 April 16-31 May 9, 1996 450.00 May 1-15 May 24, 1996 450.00 May 16-30 June 10, 1996 450.00 June 1-15 June 24, 1996 450.00 June 16-30 July 9, 1996 450.00 The deposit due on June 10, 1996, would ordinarily be due on June 9, 1996. However, because June 9, 1996 is a Sunday, under section 7503, B has an additional day to make the required deposit. (3) Filing requirement. Example 3. Deposit amount; no liability in look-back quarter. (1) Facts. (2) Deposit requirement. (3) Filing requirement. (4) Payment requirement. Example 4. Deposit requirement; First time Filer. (1) Facts. (2) Deposit requirement. Semimonthly period Deposit due by Amount of deposit Feb. 16-29 March 11, 1996 $0 March 1-15 March 25, 1996 4,389 March 16-31 April 9, 1996 2,194.50 The deposits due on March 11, 1996, and March 25, 1996, would ordinarily be due on March 9, 1996, and March 24, 1996, respectively. However, because March 9, 1996, is a Saturday, and March 24, 1996, is a Sunday, under section 7503, D has until March 11, 1996, to make the deposit due on March 9, 1996, and until March 25, 1996, to make the deposit due on March 24, 1996. (3) Filing requirement. Example 5. Deposit amount; third calendar quarter. (1) Facts. (2) Deposit requirement. 1/6 Semimonthly period Deposit due by Amount of deposit July 1-15 July 24, 1995 $5000.00 July 16-31 August 9, 1995 5000.00 Aug. 1-15 August 24, 1995 5000.00 Aug. 16-31 Sept. 11, 1995 5000.00 Sept. 1-15 Sept. 25, 1995 5000.00 Sept. 16-25 Sept. 28, 1995 2500.00 Sept. 26-30 October 9, 1995 2500.00 The deposits due on September 11, 1995, and September 25, 1995, would ordinarily be due on September 9, 1995, and September 24, 1995, respectively. However, because September 9, 1995, is a Saturday, and September 24, 1995, is a Sunday, under section 7503, D has until September 11, 1995, to make the deposit due on September 9, 1995, and until September 25, 1995, to make the deposit due on September 24, 1995. (3) Filing requirement. [T.D. ATF-365, 60 FR 33671, June 28, 1995, as amended by T.D. ATF-447, 66 FR 19089, Apr. 13, 2001; T.D. TTB-44, 71 FR 16958, Apr. 4, 2006] § 53.161 Authority to make credits or refunds. For provisions relating to credits and refunds of certain taxes on sales and services see section 6416 of the Code and §§ 53.171-53.186. For regulations under section 6402 of the Code of general application in respect of credits or refunds, see 27 CFR 70.122, 70.123, and 70.124 (Procedure and Administration). § 53.162 Abatements. For regulations under section 6404 of the Code of general application in respect of abatements of assessments to tax, see 27 CFR 70.125 (Procedure and Administration). §§ 53.163-53.170 [Reserved] § 53.171 Claims for credit or refund of overpayments of manufacturers taxes. Any claims for credit or refund of an overpayment of a tax imposed by chapter 32 of the Code shall be made in accordance with the applicable provisions of this subpart and the applicable provisions of 27 CFR 70.123 (Procedure and Administration). A claim on TTB Form 2635 (5620.8) 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 § 53.185. § 53.172 Credit or refund of manufacturers tax under chapter 32. (a) Overpayment not described in section 6416(b)(2) of the Code 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)(2) of the Code 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 appropriate TTB officer, the written consent of the ultimate vendor to the allowance of the credit or refund. (3) Ultimate vendor—General rule. ultimate vendor, (c) Overpayments not included. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.173 Price readjustments causing overpayments of manufacturers tax. In the case of any payment of tax under chapter 32 of the Code that is determined to be an overpayment by reason of a price readjustment within the meaning of section 6416(b)(1) of the Code and § 53.174 or § 53.175, 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 27 CFR 70.123 (Procedure and Administration), § 53.172(a)(2) and § 53.176. For provisions authorizing the taking of a credit in lieu of filing a claim for refund, see section 6416(d) of the Code and § 53.185. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.174 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. (2) Rules of special application Constructive sale price. Examples: (A) A manufacturer sells a taxable article at retail for $110 tax included. Under section 4216(b)(1) of the Code 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 exceeds the amount 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) of the Code. (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 shotguns, bills its distributors in a specified amount per shotgun 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 shotguns 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 firearms, bills its dealers in a specified amount per firearm purchased by them. Thereafter, C remits to the dealer X dollars of the original sale price for each firearm sold by the dealer. 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. 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. § 53.175 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. § 53.176 Supporting evidence required in case of price readjustments. No credit or refund of an overpayment arising by reason of a price readjustment described in § 53.174 or § 53.175 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. § 53.177 Certain exportations, uses, sales, or resales causing overpayments of tax. In the case of any payment of tax under chapter 32 of the Code that is determined to be an overpayment by reason of certain exportations, uses, sales, or resales described in section 6416(b)(2) of the Code and § 53.178, the person who paid the tax may file a claim for refund of the overpayment or, in the case of overpayments under chapter 32 of the Code, 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) of the Code and § 53.184, 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 27 CFR 70.123 (Procedure and Administration) and 53.179. For provisions authorizing the taking of a credit in lieu of filing a claim for refund, see section 6416(d) of the Code and § 53.185. § 53.178 Exportations, uses, sales, and resales included. (a) In general. (b) Exportation of tax-paid articles. (c) Supplies for vessels or aircraft. (d) Use by State or local government. (e) Use by nonprofit educational organization. § 53.179 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) of the Code and § 53.177, (2) Identifying the article, both as to nature and quantity, in respect of which credit or refund is claimed, (3) Showing the amount of tax paid in respect of the article or articles and the dates of payment, and (4) Indicating that the person claiming a credit or refund possesses evidence (as set forth in paragraph (b)(1) of this section) that the article has been exported, or has been used, sold, or resold in a manner or for a purpose which gives rise to an overpayment within the meaning of section 6416(b)(2) of the Code and § 53.178. (b) Evidence required to be in possession of claimant Evidence required under paragraph (a)(4) In general. (ii) Certificate of ultimate purchaser. (B) If the certificate sets forth the use to be made of any article, rather than its actual use, it must show that the ultimate purchaser has agreed to notify the claimant if the article is not in fact used as specified in the certificate. (C) The certificate must also contain a statement that the ultimate purchaser understands that the ultimate purchaser and any other party may, for fraudulent use of the certificate, be subject to all applicable criminal penalties under the Internal Revenue Code. (D) A purchase order will be acceptable in lieu of a separate certificate of the ultimate purchaser if it contains all the information required by this paragraph. (iii) Certificate of ultimate vendor. (A) Name of ultimate vendor if other than person executing the certificate. (B) Statement that article(s) was purchased by the ultimate vendor tax-paid and was thereafter exported, used, sold, or resold. (C) Description of proof which supports exportation or certificate as to use executed by ultimate purchaser. (D) Statement that ultimate vendor retains such proof for 3 years from the date of the statement and will, upon request, supply such proof at any time within such 3 year period to the taxpayer to establish that credit or refund is due in respect of the article. (E) Statement that to the best knowledge and belief of the person executing the certificate, no statement in respect of the proof of exportation or certificate has previously been executed and that the person executing the certificate understands that any fraudulent use of the certificate may subject the person executing the certificate or any other party to all applicable criminal penalties under the Code. (F) Name, title, address and signature of person executing certificate and date signed. (G) Description of all articles covered by the certificate, with the corresponding vendor's invoice number, date of resale of article, quantity, whether articles were exported or used and the use made of article or to be made of article. (iv) TTB F 5600.33. (2) Repayment or consent of ultimate vendor. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 FR 37007, July 16, 1996; T.D. TTB-44, 71 FR 16958, Apr. 4, 2006; T.D. TTB-196, 89 FR 87950, Nov. 6, 2024] § 53.180 Tax-paid articles used for further manufacture and causing overpayments of tax. In the case of any payment of tax under chapter 32 of the Code that is determined to be an overpayment under section 6416(b)(3) of the Code and § 53.181 by reason of the sale of an article, 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 27 CFR § 70.123 (Procedure and Administration), 53.172 and 53.182. For provisions authorizing the taking of a credit in lieu of filing a claim for refund, see section 6416(d) of the Code and § 53.185. § 53.181 Further manufacture included. (a) In general. (b) Use of tax-paid articles in further manufacture described in section 6416(b)(3)(A) of the Code. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31084, July 9, 1991] § 53.182 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) of the Code and § 53.180, (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, and (6) Identifying the second article, both as to nature and quantity. (b) Evidence required to be in possession of claimant Certificate of ultimate purchaser of second article. (2) Certificate of ultimate vendor of second article. (3) Repayment or consent of ultimate vendor. [T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 FR 31085, July 9, 1991] § 53.183 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) of the Code 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. § 53.184 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, see 27 CFR 70.123 (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, and (2) The amount of tax paid on the sale of the article and the date of payment. § 53.185 Credit on returns. Any person entitled to claim refund of any overpayment of tax imposed by chapter 32 of the Code 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 27 CFR 70.123 (Procedure and Administration). § 53.186 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. (4) Any other method of determining the manufacturer of a particular article must be approved by the appropriate TTB officer 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 appropriate TTB officer. (b) Determining amount of tax paid. § 53.187 OMB control numbers. (a) Purpose. (b) Display. 27 CFR part 53 OMB control number(s) § 53.1 1545-0723 § 53.3 1545-0685 § 53.11 1545-0723 § 53.92 1545-0023 § 53.93 1545-0023 § 53.99 1545-0023 § 53.131 1545-0023 § 53.132 1545-0023 § 53.133 1545-0023 § 53.134 1545-0023 § 53.136 1545-0023 § 53.140 1545-0023 § 53.141 1545-0023 § 53.142 1545-0023 § 53.143 1545-0023 § 53.151 1545-0023, 1545-0723 § 53.152 1545-0723 § 53.153 1545-0257, 1545-0723 § 53.155 1545-0723 § 53.157 1545-0257 § 53.171 1545-0023, 1545-0723 § 53.172 1545-0723 § 53.173 1545-0723 § 53.174 1545-0723 § 53.175 1545-0723 § 53.176 1545-0723 § 53.177 1545-0723 § 53.178 1545-0723 § 53.179 1545-0723 § 53.180 1545-0723 § 53.181 1545-0723 § 53.182 1545-0723 § 53.183 1545-0723 § 53.184 1545-0023, 1545-0723 § 53.185 1545-0023, 1545-0723 § 53.186 1545-0723

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