Subchapter F—Special Provisions Applicable to Manufacturers Tax
Editorial Notes
Amendments
1958—
1956—Act June 29, 1956, ch. 462, title II, §207(b),
§4216. Definition of price
(a) Containers, packing and transportation charges.
In determining, for the purposes of this chapter, the price for which an article is sold, there shall be included any charge for coverings and containers of whatever nature, and any charge incident to placing the article in condition packed ready for shipment, but there shall be excluded the amount of tax imposed by this chapter, whether or not stated as a separate charge. A transportation, delivery, insurance, installation, or other charge (not required by the foregoing sentence to be included) shall be excluded from the price only if the amount thereof is established to the satisfaction of the Secretary in accordance with the regulations.
(b) Constructive sale price
(1) In general
If an article is—
(A) sold at retail,
(B) sold on consignment, or
(C) sold (otherwise than through an arm's length transaction) at less than the fair market price,
the tax under this chapter shall (if based on the price for which the article is sold) be computed on the price for which such articles are sold, in the ordinary course of trade, by manufacturers or producers thereof, as determined by the Secretary. In the case of an article sold at retail, the computation under the preceding sentence shall be on whichever of the following prices is the lower: (i) the price for which such article is sold, or (ii) the highest price for which such articles are sold to wholesale distributors, in the ordinary course of trade, by manufacturers or producers thereof, as determined by the Secretary. This paragraph shall not apply if paragraph (2) applies.
(2) Special rule
If an article is sold at retail or to a retailer, and if—
(A) the manufacturer, producer, or importer of such article regularly sells such articles at retail or to retailers, as the case may be,
(B) the manufacturer, producer, or importer of such article regularly sells such articles to one or more wholesale distributors in arm's length transactions and he establishes that his prices in such cases are determined without regard to any tax benefit under this paragraph, and
(C) the transaction is an arm's length transaction,
the tax under this chapter shall (if based on the price for which the article is sold) be computed on whichever of the following prices is the lower: (i) the price for which such article is sold, or (ii) the highest price for which such articles are sold by such manufacturer, producer, or importer to wholesale distributors (other than special dealers).
(3) Constructive sale price in case of certain articles
Except as provided in paragraph (4), for purposes of paragraph (1), if—
(A) the manufacturer, producer, or importer of an article regularly sells such article to a distributor which is a member of the same affiliated group of corporations (as defined in section 1504(a)) as the manufacturer, producer, or importer, and
(B) such distributor regularly sells such article to one or more independent retailers, but does not regularly sell to wholesale distributors,
the constructive sale price of such article shall be 90 percent of the lowest price for which such distributor regularly sells such article in arm's-length transactions to such independent retailers. The price determined under this paragraph shall not be adjusted for any exclusion (except for the tax imposed on such article) or readjustments under subsections (a) and (e) and under section 6416(b)(1). If both this paragraph and paragraph (4) apply with respect to an article, the constructive sale price for such article shall be the lower of the constructive sale price determined under this paragraph or paragraph (4).
(4) Constructive sale price in case of certain other articles
For purposes of paragraph (1), if—
(A) the manufacturer, producer, or importer of an article regularly sells (except for tax-free sales) only to a distributor which is a member of the same affiliated group of corporations (as defined in section 1504(a)) as the manufacturer, producer, or importer,
(B) the distributor regularly sells (except for tax-free sales) such article only to retailers, and
(C) the normal method of sales for such articles within the industry by manufacturers, producers, or importers is to sell such articles in arm's-length transactions to distributors,
the constructive sale price for such article shall be the price at which such article is sold to retailers by the distributor, reduced by a percentage of such price equal to the percentage which (i) the difference between the price for which comparable articles are sold to wholesale distributors, in the ordinary course of trade, by manufacturers or producers thereof, and the price at which such wholesale distributors in arm's-length transactions sell such comparable articles to retailers, is of (ii) the price at which such wholesale distributors in arm's-length transactions sell such comparable articles to retailers. The price determined under this paragraph shall not be adjusted for any exclusion (except for the tax imposed on such article) or readjustment under subsections (a) and (e) and under section 6416(b)(1).
(5) Definition of lowest price
For purposes of paragraphs (1) and (3), the lowest price shall be determined—
(A) without requiring that any given percentage of sales be made at that price, and
(B) without including any fixed amount to which the purchaser has a right as a result of contractual arrangements existing at the time of the sale.
(c) Partial payments
In the case of—
(1) a lease (other than a lease to which section 4217(b) applies),
(2) a contract for the sale of an article wherein it is provided that the price shall be paid by installments and title to the article sold does not pass until a future date notwithstanding partial payment by installments,
(3) a conditional sale, or
(4) a chattel mortgage arrangement wherein it is provided that the sales price shall be paid in installments,
there shall be paid upon each payment with respect to the article a percentage of such payment equal to the rate of tax in effect on the date such payment is due.
(d) Sales of installment accounts
If installment accounts, with respect to payments on which tax is being computed as provided in subsection (c), are sold or otherwise disposed of, then subsection (c) shall not apply with respect to any subsequent payments on such accounts (other than subsequent payments on returned accounts with respect to which credit or refund is allowable by reason of section 6416(b)(5)), but instead—
(1) there shall be paid an amount equal to the difference between (A) the tax previously paid on the payments on such installment accounts, and (B) the total tax which would be payable if such installment accounts had not been sold or otherwise disposed of (computed as provided in subsection (c)); except that
(2) if any such sale is pursuant to the order of, or subject to the approval of, a court of competent jurisdiction in a bankruptcy or insolvency proceeding, the amount computed under paragraph (1) shall not exceed the sum of the amounts computed by multiplying (A) the proportionate share of the amount for which such accounts are sold which is allocable to each unpaid installment payment by (B) the rate of tax under this chapter in effect on the date such unpaid installment payment is or was due.
The sum of the amounts payable under this subsection and subsection (c) in respect of the sale of any article shall not exceed the total tax.
(e) Exclusion of local advertising charge from sale price
(1) Exclusion
In determining, for purposes of this chapter, the price for which an article is sold, there shall be excluded a charge for local advertising (as defined in paragraph (4)) to the extent that such charge—
(A) does not exceed 5 percent of the price for which the article is sold (as determined under this section by excluding any charge for local advertising),
(B) is a separate charge made when the article is sold, and
(C) is intended to be refunded to the purchaser or any subsequent vendee in reimbursement of costs incurred for local advertising.
In the case of any such charge (or portion thereof) which is not so refunded before the first day of the fifth calendar month following the calendar year during which the article was sold, the exclusion provided by the preceding sentence shall cease to apply as of such first day.
(2) Aggregate amount which may be excluded
In the case of articles upon the sale of which tax was imposed under the same section of this chapter—
(A) The sum of (i) the aggregate of the charges for local advertising excluded under paragraph (1), plus (ii) the aggregate of the readjustments for local advertising under section 6416(b)(1) (relating to credits or refunds for price readjustments), shall not exceed
(B) 5 percent of the aggregate of the prices (determined under this section by excluding all charges for local advertising) at which such articles were sold in sales on which tax was imposed by such section of this chapter.
The preceding sentence shall be applied to each manufacturer, producer, and importer as of the close of each calendar quarter, taking into account the items specified in subparagraphs (A) and (B) for such calendar quarter and preceding calendar quarters in the same calendar year.
(3) No adjustment for other advertising charges
Except to the extent provided by paragraphs (1) and (2), no charge or expenditure for advertising shall serve, for purposes of this section or section 6416(b)(1), as the basis for an exclusion from, or as a readjustment of, the price of any article.
(4) Local advertising defined
For purposes of this section and section 6416(b)(1), the term "local advertising" means only advertising which—
(A) is initiated or obtained by the purchaser or any subsequent vendee,
(B) names the article for which the price is determinable under this section and states the location at which such article may be purchased at retail, and
(C) 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.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1984—Subsec. (b)(1).
Subsec. (b)(2)(B) to (D).
Subsec. (b)(3).
Subsec. (b)(5), (6).
Subsec. (f).
1978—Subsec. (b)(1).
1976—Subsec. (a).
Subsec. (b).
Subsecs. (d) to (g).
1971—Subsec. (b)(2)(C), (5).
Subsec. (g).
1970—Subsec. (b)(3).
Subsec. (b)(4).
Subsec. (b)(5), (6).
1969—Subsec. (b)(3), (4).
1965—Subsec. (b)(2).
Subsec. (b)(3).
Subsec. (c).
Subsec. (e)(1).
Subsec. (e)(2).
Subsec. (g).
1962—Subsec. (b)(2)(C).
Subsec. (f)(4)(C).
1960—Subsec. (f).
1958—Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (e).
1955—Subsec. (c)(1). Act Aug. 9, 1955, §1, inserted "(other than a lease to which subsection (d) applies)".
Subsec. (d). Act Aug. 9, 1955, §2, added subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1978 Amendment
Effective Date of 1976 Amendment
Amendment by section 1904(a)(2) of
Effective Date of 1971 Amendment
Amendment by
Effective Date of 1970 Amendment
Effective Date of 1969 Amendment
Effective Date of 1965 Amendment
Amendment by section 207(a), (b) of
Effective Date of 1962 Amendments
Effective Date of 1960 Amendment
Effective Date of 1958 Amendment
Amendment by
Effective Date of 1955 Amendment
Act Aug. 9, 1955, ch. 677, §4,
"(1) the fair market value of such article shall be the fair market value determined as of such effective date;
"(2) only payments under a lease received on or after such effective date shall be considered in determining when the total tax (as defined in such section 4216(d)) has been paid;
"(3) any lease existing on such effective date, or if there is none, the first lease entered into after such effective date, shall be considered an initial lease (except that fair market value shall be determined as provided in paragraph (1) of this sentence); and
"(4) any lease existing on such effective date shall be considered as having been entered into on such date."
§4217. Leases
(a) Lease considered as sale
For purposes of this chapter, the lease of an article (including any renewal or any extension of a lease or any subsequent lease of such article) by the manufacturer, producer, or importer shall be considered a sale of such article.
(b) Limitation on tax
In the case of any lease described in subsection (a) of an article taxable under this chapter, if the tax under this chapter is based on the price for which such articles are sold, there shall be paid on each lease payment with respect to such article a percentage of such payment equal to the rate of tax in effect on the date of such payment, until the total of the tax payments under such lease and any prior lease to which this subsection applies equals the total tax.
(c) Definition of total tax
For purposes of this section, the term "total tax" means—
(1) except as provided in paragraph (2), the tax computed on the constructive sale price for such article which would be determined under section 4216(b) if such article were sold at retail on the date of the first lease to which subsection (b) applies; or
(2) if the first lease to which subsection (b) applies is not the first lease of the article, the tax computed on the fair market value of such article on the date of the first lease to which subsection (b) applies.
Any such computation of tax shall be made at the applicable rate specified in this chapter in effect on the date of the first lease to which subsection (b) applies.
(d) Special rules
(1) Lessor must also be engaged in selling
Subsection (b) shall not apply to any lease of an article unless at the time of making the lease, or any prior lease of such article to which subsection (b) applies, the person making the lease or prior lease was also engaged in the business of selling in arm's length transactions the same type and model of article.
(2) Sale before total tax becomes payable
If the taxpayer sells an article before the total tax has become payable, then the tax payable on such sale shall be whichever of the following is the smaller:
(A) the difference between (i) the tax imposed on lease payments under leases of such article to which subsection (b) applies, and (ii) the total tax, or
(B) a tax computed, at the rate in effect on the date of the sale, on the price for which the article is sold.
For purposes of subparagraph (B), if the sale is at arm's length, section 4216(b) shall not apply.
(3) Sale after total tax has become payable
If the taxpayer sells an article after the total tax has become payable, no tax shall be imposed under this chapter on such sale.
(e) Leases of automobiles subject to gas guzzler tax
(1) In general
In the case of the lease of an automobile the sale of which by the manufacturer would be taxable under section 4064, the foregoing provisions of this section shall not apply, but, for purposes of this chapter—
(A) the first lease of such automobile by the manufacturer shall be considered to be a sale, and
(B) any lease of such automobile by the manufacturer after the first lease of such automobile shall not be considered to be a sale.
(2) Payment of tax
In the case of a lease described in paragraph (1)(A)—
(A) there shall be paid by the manufacturer on each lease payment that portion of the total gas guzzler tax which bears the same ratio to such total gas guzzler tax as such payment bears to the total amount to be paid under such lease,
(B) if such lease is canceled, or the automobile is sold or otherwise disposed of, before the total gas guzzler tax is payable, there shall be paid by the manufacturer on such cancellation, sale, or disposition the difference between the tax imposed under subparagraph (A) on the lease payments and the total gas guzzler tax, and
(C) if the automobile is sold or otherwise disposed of after the total gas guzzler tax is payable, no tax shall be imposed under section 4064 on such sale or disposition.
(3) Definitions
For purposes of this subsection—
(A) Manufacturer
The term "manufacturer" includes a producer or importer.
(B) Total gas guzzler tax
The term "total gas guzzler tax" means the tax imposed by section 4064, computed at the rate in effect on the date of the first lease.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1978—Subsec. (e).
1976—Subsec. (d)(4).
1958—
Subsec. (a).
Subsecs. (b) to (d).
1955—Act Aug. 9, 1955, exempted lease of an article upon which tax has been paid under section 4216(d)(1) or
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1958 Amendment
Amendment by
Effective Date of 1955 Amendment
Section effective on first day of first month which begins more than ten days after Aug. 9, 1955, see section 4 of act Aug. 9, 1955, set out as a note under
Application of Leases of Utility Trailers
§4218. Use by manufacturer or importer considered sale
(a) General rule
If any person manufactures, produces, or imports an article (other than a tire taxable under section 4071) and uses it (otherwise than as material in the manufacture or production of, or as a component part of, another article taxable under this chapter to be manufactured or produced by him), then he shall be liable for tax under this chapter in the same manner as if such article were sold by him. This subsection shall not apply in the case of gasoline used by any person, for nonfuel purposes, as a material in the manufacture or production of another article to be manufactured or produced by him. For the purpose of applying the first sentence of this subsection to coal taxable under section 4121, the words "(otherwise than as material in the manufacture or production of, or as a component part of, another article taxable under this chapter to be manufactured or produced by him)" shall be disregarded.
(b) Tires
If any person manufactures, produces, or imports a tire taxable under section 4071, and sells it on or in connection with the sale of any article, or uses it, then he shall be liable for tax under this chapter in the same manner as if such article were sold by him.
(c) Computation of tax
Except as provided in section 4223(b), in any case in which a person is made liable for tax by the preceding provisions of this section, the tax (if based on the price for which the article is sold) shall be computed on the price at which such or similar articles are sold, in the ordinary course of trade, by manufacturers, producers, or importers, thereof, as determined by the Secretary.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1984—Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (e).
1978—Subsec. (a).
1976—Subsec. (e).
1965—Subsec. (b).
Subsec. (c).
1961—Subsec. (a).
1960—Subsec. (a).
Subsec. (b).
Subsecs. (d), (e).
1958—
1955—Subsec. (a)(1). Act Aug. 11, 1955, §1(a), inserted as tax exempt articles under this chapter, automobile parts or accessories, refrigerator, radio, or television components, or camera lenses taxable under section 4061(b), 4111, or 4171, respectively, of this title.
Subsec. (b). Act Aug. 11, 1955, §1(b), excepted from application of section automobile parts or accessories, refrigerator, radio, or television components, and camera lenses, taxable under sections 4061(b), 4111, 4141, and 4171, respectively, of this title, when for use by the purchaser in the manufacture or production of, or as a component part of, any article.
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1965 Amendment
Amendment by
Effective Date of 1961 Amendment
Amendment by
Effective Date of 1960 Amendment
Amendment by
Effective Date of 1958 Amendment
Amendment by
Effective Date of 1955 Amendment
Amendment by act Aug. 11, 1955, effective on first day of first month which begins more than ten days after Aug. 11, 1955, see section 3 of act Aug. 11, 1955, set out as a note under
§4219. Application of tax in case of sales by other than manufacturer or importer
In case any person acquires from the manufacturer, producer, or importer of an article, by operation of law or as a result of any transaction not taxable under this chapter, the right to sell such article, the sale of such article by such person shall be taxable under this chapter as if made by the manufacturer, producer, or importer, and such person shall be liable for the tax.
(Aug. 16, 1954, ch. 736,
[§§4220 to 4225. Repealed. Pub. L. 85–859, title I, §119(a), Sept. 2, 1958, 72 Stat. 1282 ]
Section 4220, acts Aug. 16, 1954, ch. 736,
For sections 4221 to 4225, see Prior Provisions notes set out under
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective on first day of first calendar quarter which begins more than 60 days after Sept. 2, 1958, see section 1(c) of