War Tax on the Purchase of Fire Apparatus Tires
Correspondence on this Subject with Internal Revenue Bureau—Tires Subject to Tax of Five Per Cent as Provided in Section 900 of Revenue Act.
SEVERAL inquiries have come to FIRE AND WATER ENGINEERING from the chiefs of fire departments as to whether there was any war tax on the purchase of tires for fire department automobiles. It was decided to find out definitely just how this matter stood, and the result was the following correspondence which explains itself:
August 11, 1920.
The Treasury Department, Washington, D. C.
Attention: Bureau of Internal Revenue.
Gentlemen: Fire departments throughout the country seem confused regarding the war tax on the purchase of tires for fire department automobiles. Will you kindly let us have for publication any available data that will explain this matter clearly? 1 understand that Article X of a ruling dated July 26, 1919, has a bearing on this matter. With assurance of our appreciation for anything you will do for us.
Very truly yours, FIRE AND WATER ENGINEERING,
I. II. CASE, Business Manager.
Office of Commissioner of Internal Revenue, August 19, 1920. FIRE AND WATER ENGINEERING, 318-326 West 39th Street,
New York City, N. Y.
Attention: I. H. CASE, Business Manager.
Gentlemen: Referring to your letter of August 11, 1920, you are advised that sales of tires to fire departments for use on fire department automobiles are subject to the tax of 5 per cent, imposed by section 900, subdivision (3) of the Revenue Act of 1918, and there is no provision under the law whereby the manufacturer may obtain exemption from tax in respect to such sales.
A copy of T. D. 2897 is inclosed for your information.
Respectfully, (Signed) A. C. HOLDEN, Acting Deputy Commissioner.
Inclosure 8917 from Sales Tax Unit Bureau of Internal Revenue (T. D. 2897) Excise Taxes
Manufacturers, producers, importers and vendors are subject to excise taxes imposed upon them upon sales of taxable articles, even when the sales are made to a state or political subdivision thereof, unless the taxing act specifically exempts them from tax upon such sales. Article 10 of Regulations 47, and article 6 of regulations 48, are amended.
TREASURY DEPARTMENT—WASHINGTON, D. C.
Office of Commissioner of Internal Revenue,
To Collectors of Internal Revenue and Others Concerned:
Under an opinion of the Attorney-General, dated July 7, 1919, manufacturers, producers and importers are declared to be subject to the excise tax imposed by Section 900 of the Revenue Act of 1918 upon sales made to a state or a political subdivision thereof, except as provided in subdivision (10) of such section.
In accordance with the above opinion, manufacturers, producers and importers are subject to excise tax under Section 600 of the Revenue Act of 1917 and Section 900 of the Revenue Act of 1918 upon ail sales of taxable articles made to states or political subdivisions thereof, except where specifically exempt from tax upon such sales, as under subdivision (10) of Section 900 of the Revenue Act of 1918. In addition to liability to tax under the above sections, manufacturers, producers, importers and vendors are held to be liable to tax upon all sales of taxable articles made to states or political subdivisions thereof under Section 313 of the Revenue Act of 1917, and under Sections 628, 902 and 905 of the Revenue Act of 1918; and lessors of positive motion picture films containing pictures ready for projection are subject to tax upon amounts received from the leasing of such films to states or political subdivisions thereof under Section 906 of the Revenue Act of 1918. Where an excise tax is imposed directly upon the vendee as under Sections 904 and 907 of the Revenue Act of 1918, sales to states or political subdivisions thereof are exempt from tax. Article 10 of Regulations 47 is amended to read as follows: Article 10: Sales to the Government or a State—The tax applies to articles enumerated in Section 900 when sold to the Government. Where, however, the Government supplies a manufacturer with all materials and parts, except a small portion furnished by the manufacturer under a contract stipulating that the manufacturer shall be guaranteed a certain profit, no tax is payable, because the manufacturer does not sell the article. Articles manufactured in plants taken over and operated by the Government are not subject to the tax. The tax also applies to the articles enumerated in this section, except to those enumerated under subdivision (10), when sold to a state or political subdivision thereof, even though they are to be paid for entirely out of public moneys, and are to be used in the carrying on of governmental operations.
Article 6 of Regulations 48 is amended to read as follows:
Article 6: Sales to the United States or a State—The tax applies to articles enumerated in Sections 902 and 905 when sold to the United States. Such articles are also subject to tax when sold to a state or political subdivision thereof for use in carrying on its governmental operations.
DANIEL C. ROPER,
Commissioner of Internal Revenue.
Approved: July 22, 1919.