UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LffiRARY SUPPLEMENT TO TREASURY DECISIONS (T. D. 2866) TREASURY DEPARTMENT UNITED STATES INTERNAL REVENUE U..S- Xvit^ni,! Itiv^AMue oersJ^c€. REGULATIONS 54 RELATING TO THE EXCISE TAXES ON SALES BY THE DEALER OF WEARING APPAREL, ETC, UNDER Section 904 of Title IX of the REVENUE ACT OF 1918 WASHINGTON GOVERNMENT PRINTING OFFICE 1919 s Bo \9t9 REGULATIONS RELATING TO THE EXCISE TAXES ON SALES BY THE DEALER OF WEARING APPAREL, ETC. UNDER Section 904 of Title IX of the Revenue Act of 1918. TABLE OF CONTENTS. Page. Section 904. The law 5-6 Section 904 (a). Imposition of tax 6 Article 1. Effective date G 2. Purcliaser i.s liable 6 3. Who is the dealer? 6 4. Dealer responsible for tax G 5. CoiKsuuiption or use G-7 6. Basis of tax 7 Sale 7 Preniiuins 7 Price 7 7. Discounts and expenses 7 Commissions 7 Delivery charges 7 8. Exchanges and refunds 7-S 9. AVhen tax attaches 8 10. Sales to a State or subdivision 8 11. Second-hand articles 9 12. Repairs and alterations 9 Section 904 (a). Articles subject to tax 9 Article 13. Carpets and rugs 9 14. Picture frames ! 10 15. Trunks .— 10 16. Valises, etc 10-11 17. Purses, handbags, etc 11 IS. Portable lighting fixtures, lamps, shades, etc 11-12 19. Umbrellas, etc ^ 12 20. Fans 12 21. Smoking coats, bath and lounging robes, etc 12 22. Waistcoats, men's, sold separately 12-13 23. Hats, etc., women's and misses' 13 24. Hats, etc., men's and boys' 13 25. Caps, men's and boys' 13 26. Boots, shoes, etc 14 27. Neckwear, men's and boys' 14 3 4 TABLa O'P CONTENTS. Soetion 904 (a) — Conllnuod. Page. Article 2S. vStockings, silk 14-15 29. Shirts, men's 15 30. Undei'wear, etc 15 31. Waists, petticoats, kimonos 15 Section 904 (b) Exemptions : 16-18 Article 32. Exceptions " lG-18 Sections 904 (c), 502, 1309. Return and payment of tax 18 Article 33. lieturn and payment of tax 18-19 Section 1805. Extension of existing statutes 19 Article 34. Aids to collection of tax 20 Section 1310 (a) (b) Credits and refunds 20 Article 35. Credits and refunds 20 Section 1310 (c) Exports 20 Article 36. Exemption of export sales 20-21 37. Export, proof of ^ 21 Section 1313. Fractional part of cent 21 Article 38. Fractional part of cent disregarded, when 21-22 Section 1314. Medium of payment of tax 22 Article 39. Checks, uncertified, payment of tax by 22 40. Checks, dishonored, procedxire with respect to 22 Section 130S. Penalties 23 Article 41. Penalties 23-24 Section 1319, Misrepresentation of tax 24 Article 42. Misrepresentation of tax 24 Section 1309. Authority for regulations 25 Aiticle 43. Kegulatioos, promulgation of . 25 EXCISE TAXES UNDER SECTION 904. THE LAW. Sec. 904. (a) That on and after May 1, 1919, there shall be levied, assessed, collected, and paid a tax equivalent to 10 per centum of so much of the amount paid for any of the followinj:? articles as is in excess of the price hereinafter specified as to each such article, when such article is sold by or for a dealer or his estate on or after such date for consumption or use — (1) Carpets and rugs, including fiber, except imported and American rugs made principally of wool, on the amount in excess of $5 per square yard ; (2) Picture frames, on the amount in excess of $10 each; (3) Trunks, on the amount in excess of $50 each; (4) Valises, traveling bags, suit cases, hat boxes used by travelers, and fitted toilet cases, on the amount in excess of $25 each ; (5) Purses, pocketbooks, shopping and hand bags, on the amount in excess of $7.50 each ; (6) Portable lighting fixtures, including lamps of all kinds and lamp shades, on the amount in excess of $25 each ; (7) Uml)reHas, parasols, and sun shades, on the amount in excess of $4 each; (8) Fans, on the amount in excess of $1 each; (9) House or .smoking coats or jackets, and bath or lounging robes, on the amount in excess of $7.50 each ; (10) Men's wai.stcoats, sold separately from suits, on the amount in excess of $5 each ; (11) Women's and mis.ses' hats, bonnets, and hoods, on the amount in ex- cess of $15 each ; (12) Men's and boys' hats, on the amount in excess of $5 each; (13) Men's and boys' caps, on the amount in excess of $2 each ; (14) Men's women's, misses', and boys' boots, shoes, pumps, and slippers, not including shoes or appliances made to order for any person having a crippled or deformed foot or ankle, on the amount in excess of $10 per pair; (15) Men's and boys' neckties and neckwear, on the amount in excess of $2 each; (16) Men's and boys' silk stockings or hose, on the amount in excess of $1 per pair ; (17) Women's and misses' silk stockings or hose, on the amount in excess of $2 per pair; (18) Men's shirts, on the amount in excess of $3 each; (19) Men's, Avomen's, misses', and boys' pajamas, night gowns, and under- wear, on the amount in excess of $5 each; and •(20) Kimonos, petticoats, and waists, on the amount in excess of $15 each. (b) The tax imposed by this section shall not apply (1) to any article enumerated in paragraphs (2) to (8), both inclusive, of subdivision (a), if such article is made of, or ornamented, mounted, or fitted with, precious metals or imitations thereof or ivory, or (2) to any article made of fur on the hide or pelt, or of which any such fur is the component material of chief value, or to (3) any article enumerated in subdivision (17) or (IS) of section COO. 5 6 EXCISE TAXES ON SALES BT THE DEALER. 1904 (c) The taxes Imposed by this section shall be paid by the purchaser to the vendor at the time of the sale and shall be collected, returned, and paid to the United States by such vendor in the same manner as provided in section 502. IMPOSITION OF TAX. Sfx. 904. (a) That on and after May 1, 1919. there shall be levied, assessed, collected, and paid a tax equivalent to 10 per centum of so much of the amount paid for any, of the following articles as is In excess of the price hereinafter specified as to each such article, when such article is sold by or for a dealer or his estate on or after such date for consumption or use. Akticus 1. Effective date.— The tax is imposed with respect to articles sold on or after May 1, 1919. Art. 2. Purchaser is liable. — The law imposes the tax upon the pur- chaser. It is to be collected from him by the dealer, who must repay it to the collector of internal revenue, but see Article 4. Art. 3. Who is the dealer? — ^For the purpose of the tax and as used in these regulations, the term " dealer " means any individual, partnership, association, or corporation, and the estate of such a dealer, engaged in the business of selling for profit any of the enumerated articles, to a purchaser for consumption or use. Thus, a dealer may be a manufacturer, jobber, wholesaler, retailer,— mail order house, installment house, trustee in bankruptcj', receiver, pawn- broker, or peddler, if the sale is for consumption or use ; but a casual sale, not in the course of trade or business, by an individual, of any of the enumerated articles, does not constitute the vendor a "dealer" within the meaning of section 904. An auctioneer or broker is a dealer within the meaning of the act in respect to all sales made by him of articles in which he has title, but not in respect to articles which he is selling as an agent. Art. 4. Dealer responsible for tax, — Responsibility for collecting the tax is imposed upon the dealer, on all sales made direct by him or through an agent, whether a sales agent, broker, or auctioneer, and the dealer must pay it to the Collector of Internal Revenue (see article 88). A receiver or trustee in bankruptcy' conducting a busmess under court order is responsible for the collection of the tax upon articles sold by him. Failure to collect the tax will not relieve the dealer of responsibility for payment thereof. Art. 5. Consumption or use, — The tax applies to goods sold for cop- sumption or use. An article sold for the purpose of resale, either in the original or in an altered or further manufactured form or for similar profitable disposition, is not subject to tax upon such sale. However, an article will none the less be regarded as sold for con- sumption or use because it is expected to realize profit from its use. An article purchased, for instance, to be leased or rented, or for «004 EXCISE TAXES ON SALES BY THE DEALER. 7 furnishing a building to be leased or rented, is nevertheless procured for consumption or use and therefore taxable. Unless the purchaser is a wholesaler, retailer, or manufacturer, customarily engaged in the business of manufacturing or selling the article in respect to which the applicability of the tax is questioned, the sale to him will be deemed to be for consumption or use, unless the contrary is clearly shown. Art. G. Basis of tax — Sale. — The tax is on the sale by or for a dealer or his estate, of any of the articles enumerated in section 904 when sold for consumption or use. The tax is payable in respect to a sale made, whether or not the purchase price is actually collected, but see article 9. Pnce. — The tax is measured by the price for which the article is sold. It is on the actual sales price of the goods sold and not on the list price, where that differs from the sales jiiice. The tax can not be included in the selling pnce, but must be billed as a separate item, Premkiins. — The giving of so-called " premimns '' in return for wrappers, labels, coupons, trading stamps, or other script delivered in connection with the sale of a commodity, is a sale by a dealer within the meaning of section 904, if the premium is within the class of arti- cles enumerated in that section. In such cases the tax attaches at the time title in the premium passes to the person rcceiAnng it in exchange for such script, and is to be computed on the fair market value of the premium at such time. For the rule when an article is within the language of two or more sections of the statute, each imposing a tax, see article 3-2. Art. 7. Discounts and expenses. — A discount for cash or other dis- count jnade subsequently to the sale can not be deducted in com- puting the price for the purpose of the tax, but see article 6 as to goods sold for less than the list price. Conwiisslons. — Commissions to agents and othei? expenses of sale are not deductible from the price. Delivery charges. — If articles are sold and the delivery charges to point of delivery are paid by the purchaser as a specific item, or if they are sold delivered at a sum less delivery charges to be paid by the purchaser, such charges need not be included as part of the price of the goods; but if the dealer sells goods at a delivered price, and himself pays the delivery charges, he is not entitled to make any de- duction on account of the inclusion in the price of such charges. Art. 8. Exchanges and refunds. — (a) If taxable articles are sold and subsequently returned, and the sale entirely rescinded, no tax is payable; and if paid it may be refunded to the purchaser and the dealer may take credit therefor in the return for the month in which the refund is made. 8 EXCISE TAXES ON SALES BY THE DEALER. i 004 (b) If part only of the taxable articles sold atone time are returned and amount paid therefor refunded by the dealer, or if taxable arti- cles are sold and thereafter exchanged for other taxable articles at a lower price, or if taxable articles are sold and thereafter exchanged for other taxable articles at a higher price, the purchaser paying the difference, the purchaser must ipay the tax on the se>cond sale, and the dealer shall giAo a credit or refund to the purchaser of the tax paid on each of the taxable articles returned, and take credit there- for in the return for the month in which the refund is made or credit to the purchaser allowed, (c) If taxable articles are sold and thereafter exchanged for other articles which are not taxable, and credit or refund is allowed by tlie dealer therefor, no tax is payable on the first or second sale ; and if already paid, the tax on the first sale may be refunded to the pur- chaser and the dealer may take credit therefor in the return for the month in which the tax is refunded or credit is allowed to the purchaser. As to records to be kept, see article 33. Art. 9. When tax attaches. — The tax attaches when the article is sold: that is to say, wlien the title to it passes from the dealer to the purchaser pursuant to a previous contract of sale or upon at sale without previous contract. When title passes is a question of fact de])endent upon the intention of the parties as gathered from the contract of sale and the attendant circumstance^?. Where goods are segregated from other goods owned by the dealer and it i-s the intention of both the dealer and the purchaser at the time the goods are segregated that they shall then belong to the pur- chaser, the title will be presimied to pass at such time. In the ab- sence of an intention to the contrary the title is presumed to pass upon delivery of the article to the purchaser or to a carrier for the purchaser. In the case of a conditional sale, where the title is re- served in the dealer until payment of the purchase price in full, the tax attaches (a) upon such payment, or (b) when title passes if before completion of the payments, or (c) when, before completion of the payments, the dealer disposes of the sale by charging off, by any method of accounting he may adopt, the unpaid portion of the contract price. Art. 10. Sales to a State or subdivision thereof. — Articles sold to a State or political subdivision thereof for use in carrying on its gov- ernmental operations, or to a State, cmmty, or municipal institution, are, when paid for entirely out of public moneys, exemi)t from tax. Art. 11. Second hand articles. — Articles coming within the enumera- tion of section 904 are not exempt from taxation when sold by a dealer for consumption or use at second hand, or after being used, \ §004 EXCISE TAXES ON SALES BY THE DEALER. 9 but tax shall be paid upon the taxable portion of the purchase price for which sold. Art. 12. Repairs and alterations. — Ordinary repairs or alterations are not taxable. If, however, the cost of making- alterations is in- cluded in the price of an article sold for consumption or use, the total price must be considered in computing the tax. ARTICLES SUBJECT TO TAX. (1) Carpets ami rugs, including fiber, except imported and Amer- ican rugs made principally of wool, on the amount in excess of .$5 per square yard. AuT. 13. For the purpose of the tax, carpets and rugs shall in- clude all merchandise commonly or connnercially known as carpets, rugs, or matting, either woven or felted, and whether used as floor coverings or otherwise, or mats when used as floor covering. The act expressly exempts from taxation imported and American rugs made principally of wool. The words, "■ made principally of wool," shall be deemed to niGJin that the wool therein is the chief component material in value, Aveight, and bulk. Rugs made of silk, fiber, cotton, jute, linen, hemp, grasses of any kind, or straw, or any other material other than principally of wool, are subject to tax. A rug shall be held to be distinguishable from carpet when man- ufactured as one piece or made by the manufacturer from breadths which are imited so as to form one piece, of a distinctive manufac- ture, size, shape and design, figured or plain. Carpet, when sold by the yard and sewed together so as to produce a certain size or de- sign desired by the purchaser, shall not be deemed to be a rug within the meaning of the act, and is taxable, even though made principally of wool. The unit of measurement is the square yard. Therefore the size of a rug or the quantity of carpet shall be so calculated as to be capable of applying the tax thereto at so much per square j^ard. All lineal yardage, Avhether the strips be wider or narrower than 36 inches, must bo converted into square measure. For example, a lineal A^ard of carpet of the ordinary'- Avidth of 27 inches contains but three-quarters of a square yard. If such carpet is sold for more than $3.75 per lineal yard, it is taxable, because $3.75 per lineal yard is equivalent to $5 per square yard. Fringe will not be considered in computing the yardage. If carpet is sold at a specified price per j^ard and such price in- cludes sewing, sizing, or laying, the tax shall attach to the combined price in excess of $5 per square yard, unless the sewing, sizing, or laying is billed separately, in which case the tax attaches only to the price of the carpet in excess of $5 per square yard. 10 EXCISE TAXES ON SALES BY THE DEALER. § f»04 Eu'ceptJ-ons. — Carpets and rugs which are (1) sold for $5 or less per s(]uare yard, or which are (2) made of fur on the hide or pelt, or of which such fur is the component material of chief value, are not subject to this tax, but see article 32. (2) Pictxxre frames on the amoiiut in excess c»f $10 each. Art. 14. For the purpose of the tax, picture frames shall include shadow boxes and any frame primarily adapted for framing a pic- lure, irrespectiAe of the use to which actually put. Where the glass, mat, an.d frame or shadoAv box, are sold as one item, the tax attaches to the amount for which so sold in excess of $10. If a painting and frame are sold as one item, the 10 per cent tax imposed b}' section 902 of the act on paintings applies to the total selling price and the tax on frames will not apply. See article 32; also see article 16, regulations 48. If a frame and picture or other thing framed, not a painting, jire sold as one item, the tax shall be computed upon the value of the frame and object framed, unless the value of the frame can be separately determined, in which case the tax shall be com- puted upon the ^•alue of the frame. Ecccepf fans. —Picture frames which are sold for $10 or less each, or which are made of, or ornamented, mounted, or fitted with precioits metals or imitations thereof, or ivory, arc not subject to this tax, but see article 32. The exception with respect to articles made of or ornamented, mounted, or fitted with precious metKals or imitations thereof, or ivory, does not apply to frames merely ornamented or overlaid with gold or silver leaf or paint, which are subject to tas under these regulations as frames. (3) Trunks, on the auioxuit in excess of .$50 each. Art. 15. For the purpose of the tax the term "• trunks '" shall be lield to include all receptacles which are commonly or commercially designated as trunks, designed to be used wherein to convey the ef- fects of a traveler. It shall not, however, be held to include articles such as hampers, packing boxes or cases, nor chests designed to be used wherein to convey tools, medicine, or silver. Except io7is. — Trunks which are made of, or ornamented, mounted, or fitted Avith precious metals or imitations thereof, or i\ory, or which are sold for $50 or less each, are not subject to this tax. but see article 32. (4) Valises, traveling batis. suit cases, hat boxes used by travelers, and fitted toilet cases, on the amount iu excess of $25 each. Art. 16. For the purposes of the tax valises, traveling bags, and suit cases shall include all receptacles wliich are commonly or com- mercially de.signated as such or designed to be used wherein to carry §004 EXCISE TAXES ON SALES BY THE DEALER. H in the hand the effects of a traveler. Hat boxes shall include any receptacle designed to be used wherein to convey hats in traveling. Fitted toilet cases shall not be limited in meaning to those designed and used for traveling purposes, but shall include all receptacles of any form whatsoever (other than purses, pocketbooks, shopping and hand bags, as defined in art. 17) designed and fitted to contain toilet articles. Exceptions. — Valises, traveling bags, suit cases, and hat boxes, as above defined, and fitted toilet cases, which are sold for $25 or less each, or Avhich are made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivor}^, are not subject to this tax, but see art. 32. (5) Purses, pocketbooks, slioppinj;- und hand bags, on the amount iu excess of .$7.50 each. Art. 17. For the purpose of the tax purses shall be deemed to in- clude all receptacles used for carrying money on or about the person. The term " pocketbook " is broader in meaning than " purse," and includes any receptacle other than a purse for carrying money, papers, cards, memoranda, etc., in the pocket or on or about the person. The term " shopping and hand bags " shall include all bags, whether or not fitted with toilet articles, designed to be carried in the hand or on the arm for the purpose of conveying commodities or personal effects; but it shall not include articles such as valises, traA'eling bags, suit cases, and fitted toilet cases mentioned in article 16. The fact that a purse, pocketbook, hand or shopping bag is fitted with or for toilet articles does not take it from this subdivision nor make it taxable under the provisions of article 16. Exceptions. — Purses, pocketbooks, shopping and hand bags which are (1) sold for $7.50 or less each, or which are (2) made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivory, or (3) made of fur on the hide or pelt, or of which any such fur is the component material of chief value, are not subject to this tax, but see art. 32. (C) Portable lighting fixtures, including lamps of all kinds and lamp shades, on the amount in excess of .$2.5 each. Art. 18. For the purpose of the tax, portable lighting fixtures and portable lamps shall be deemed to include all lighting devices adapted for interior illumination and not designed to be affixed permanently in one location and all articles commonly or comuiercially known as such, irrespective of the principle of illumination used, A port- able lamp and shade sold jointly will be regarded as a single item, for taxing purposes, but a shade pertaining to a portable lamp or lighting fixture, if sold sepaxately, will be taxable. 12 EXCISE TAXES ON SALES BY THE DEALER. § &04 Ea-ceptions. — Portable ligliting fixtures, lamps, and lamp shadas Avliich are sold for $25 or less each, or which are. made of, or orna-. monted, mountpd., or fitted with precious metals, or imitations thereof, or i\orv, are not subject to this tax, but see article 32. (7) I^mbrellas, parasols, and sun shades, on the amount in excess of %4i each. Art. 19. For the purpose of the tax. umbrellas, parasols, and sun shades shall be deemed to include all portable or collapsible deviceis primarily adapted to protect the person from the rain or sun, and can-ied in the hand, and those of similar design and character attached to vehicles, etc. Exceptions. — Umbrellas, parasols, and sun shades which are sold for $4 or Jess each, or which are made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivory, are not subject to this tax, but see art. 32. (8) Fans, on tbe amount in excess of ?1 each. At?t. 20. For the purpose of the tax, fans shall be deemed u> in- clude those articles connvionly or commercially known by this name, desigiied to produce movements of the air by waving- iu the hand. '£',rr^/-»f/«9??,s.-^FaTis which are (1) sold for $1 or less each, or whicli are (2) made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivory, or (3) made of fur on the hide or pelt, or of which any such fur is the component material of chief value, are not taxable under this subdivision, but see art. 32. (•)i House or smoking coats or jackets, and hath or k)unging robes, on tbe amount in excess of $7.50 each. Art. 21. For the purpose of the tax, house and smoking coats or jackets, and bath robes shall include all garments which are com- monly or commercially known by these designations. "Loiuiging robes'' shall include all other men's and women's garments (except kimonos as defined in aiticle 31), designed for indoor wear only, as negligee robes; thus, breakfast coats, boudoir gowns, tea gowns, etc., are taxable as lounging robes, imless clearly embraced within the definition of a kimono. E.rcepfionf<. — House or smoking jackets, and bath or lounging robes which are sold for $7.50 or less each, or which are made of fur on the hide or pelt, or of which any such fur is the component ma- terial of chief value, are not subject to this tax, but see art. 32. (10) Men's waistcoats, sold separately from suits, on tbe amount in excess of $5 each. ' ''■ •" Art. 22. For the purpose of the tax, men's waistcoats (otherwise termed " vests") shall include all articles; commonlj' or commercially known as such, when sold sej^arately from suits. §904 EXCISE TAXES ON SALES BY THE DEALER. 13 Exceptions. — Men's waistcoats (1) Avhich are sold for $5 or less each, or (2) which are made of fur on the hide or pelt, or of which any such fur is the component material of chief value, or (3) which are designed and primarily adaptable as a part of a livery, or (4) ■v\{hich are designed and primarily adaptable as a hunting or shooting garment, or as a part of a riding habit, are not subject to this tax, but see art. 32. (11) Women's and misses' huts, bonnets, and hoods, on the amount in excess of $15 each. Art. 23. For the purpose of the tax, Avomen's and misses' hats, bonnets, and hoods include all such articles as are commonly or com- riiercially known by any of these designations, and all hats, bonnets, ar^l hoods designed to be worn by women and misses 14 years of age or older. Exceptions. — AVomen's and misses' hats, bonnets, and hoods (1) which arc sold for $15 or less each, or (2) which are made of fur on the hide or pelt, or of which such fur is the component material of chief value, or (3) Avhich are designed and pirmarily adaptable as a part of a livery, or (-1) which are designed and primarily adapt- able for use as a hunting or shooting garment or as a part of a riding habit, are not subject to this tax, but see art. 32. (12) ]\Ien's and l)oys' hats, on the amount in excess 'of $5 each. Art. 24. For the purpose of the tax, men's and boys' hats shall include any headdress designed to be worn by men, and any head- dress designed to be worn by boys of 6 years of age or older, or of sizes G| and larger, which are counnonly and commercially known as hats. Exceptions. — Men's and boys' hats (1) which are sold for $5 or less each, or (2) which are made of fur on the hide or pelt, or of which an}' such fur is the component material of chief value, «r (3) which are designed and primarily adaptaljle as a part of a livery, or (4) which are designed and primarily adaptable as a hunting or shooting garment, or as a part of a riding habit, are not subject to this tax, but see article 32. (13) IMen's and boys' caps, on the amount in excess of $2 each. Art. 25. For the purpose of the tax, men's and boys' caps shall include all articles worn by men, commonly and oonnnercially known as caps, having a visor but no brim, and all such articles designed to be worn by boys G years of age or older, or sizes 6^ and larger. Exceptions. — Men's and boys' caps (1) which are sold for $2 or less each, or (2) which are made of fur on the hide or pelt, or of which any such fur is the component material or chief value, or (3) which are designed and primarily adaptable as a hunting or shoot- ing garment, or (4) as a part of a riding habit, are not subject to this tax, but see article 32. 14 EXCISE TAXES ON SALES BY THE DEALER. 1 904 (14) Men's, women's, misses', and boys' boots, shoes, pumps, and slippers, not including shoes or appliances made to order for any per- son having a crippled or deformed foot or ankle, on the amount in ex- cess of $10 per pair. Art. 26. For the purpose of the tax, men's and women's boots, shoes, pumps, and slippers shall include all articles of whatever ma- terial made, commonly or commercially known by any of these designations. Similar articles for boys of G years of age and older or of sizes 1 and larger, and for misses of 14 j'cars of age and over or of sizes 11 and larger, are taxable. Shoes, boots, etc., although having buckles or other ornaments of precious metal, imitation thereof, or ivory, attached, are subject to this tax on the entire value in excess of $10 per pair, the ornaments not being subject to tax separately. If buckles or other such orna- ments are sold separately and afterwards attached, the ornaments will be subject to tax separately while the shoes, boots, etc., will be taxable as such on the amount for which sold in excess of $10. As to the rate of tax applicable to ornaments made of precious metals, or imitations tliereof , see article 32. ExcejMons. — The above mentioned articles which are (1) sold for $10 or less per pair, or (2) which are made of fur on the hide or pelt, or of which such fur is the component material of chief Aalue, or (8) which are designed and primarily adapted as part of a livery, are not subject to this tax, but see article 32. Express exemption from taxation under this subdivision is made of any shoe or appliance made to order for any person ha^'ing a crippled or deformed foot or ankle. (15) Men's and boys' neckties and neckwear, on the amount in ex- cess of $2 each. Art. 27. For the purpose of the tax, men's and boys' neckties and neckwear shall include cravats, ties, collars, stocks, neckerchiefs, mufflers, scarfs, and other articles of neckwear, by whatever name known, designed to be worn by men or boys of G years of age and over. Excepti-ons. — Men's and boys' neckties and articles of neckwear (1) which are sold for $2 or less each, or (2) which are made of fur on the hide or pelt, or of which any such fur is the component ma- terial of chief value, are not subject to this tax, but see article 32. (16) Men's and boys' silk stockings or hose, on the amount in ex- cess of $1 per pair. (17) Women's and misses' silk stockings or hose, on the amount in excess of .$2 per pair. Art. 28. The tax is on men's and boys' silk stockings or hose, on the amount in excess of $1 per pair, and women's and misses' silk stockmgK or hose, on the amount in excess of $2 per pair. The tax 1004 EXCISE TAXES ON SALES BY THE DE^M^ER. 15 attaches to stockings and hose for men and women, misses 14 years of age and older, and boys of 6 years of age and older, including, in the case of female attire, all stockings and hose of sizes 8 and larger, and in the case of boys, all stockings and hose of sizes 7 and larger. (18) Men's shirts, on the amount in excess of .$3 each. Art. 29. For the purpose of the tax, men's shirts shall include all garments commonly or commercially knoAvn as such, of whatever material made, but shall not include undershirts taxable as under- wear. Exceptions. — Shirts sold for $3 or less each are not subject to this tax ; also see article 32. (19) Men'^, women's, misses', and boys' pajamas, nightgowns, and underwear, on the amount in excess of $5 each. Art. 30. For the purpose of the tax, men's, women's, misses', and boys' pajamas and nightgowns shall include any garment commonly or com>nercially known by any of these designations for men or women, for misses 14 years of age and older, and f©r boys G years of age and older, including in the case of boys, sizes G and larger. Underwear shall include any garment worn under the outer dress, such as undei-sliirts, drawers, pants, bloomers, union suits, combina- tion suits, tights, camisoles, corsets, corset covei"s, brassieres, chemises, and vests. This list is by no means intended to be exhaustive, but merely to give a general notion of the wide Aariety of articles taxable. Petticoats and underskirts, whicli are specially taxed under subdi- vision (20) of section 904, are not taxa})le under this subdivision. (8ee art. 31 of these Regulations.) Ed'ceptions. — Any of the above enumerated articles which are sold for $5 or less each, or which are made of fur on the hide or ])elt, or of Avhich any such fur is the component material of chief value are not subject to this tax, but see article 32. (20) Kimonos, petticoats, and waists, on the amount in excess of $15 each. Art. 31. For the purpose of the tax, kimonos shall include (1) all garments commonly or commercially known as Idmonos, and (2) all apparel made in accordance with the so-called Japanese style of garment and not a modification thereof, such as is taxable under article 21. Petticoats and waists shall include underskirts and all kinds of waists, whether for outer wear or for wear under another outer garment, and all other garments commonly or commercially known by these designations. Exceptions. — Any of the above enumerated articles which are sold for $15 or less each, or which are made of fur on the hide or pelt, or of which such fur is the component material of chief value are not subject to this tax, but see article 32. 16 EXCISE TAXES ON SALES BY THE DEALER. f 904 EXCEPTIONS. Skc. 004 (b). Tln> tnx iinposod by this seotiou shall not npply (1) to any nrtielc i'niiiir<>rntefl in paragraphs (2) to (8), both inclusive, of sul>- ilivision (a), if such article is made of, or ornuniented, mounted, or fitted with, precious metals or imitations thereof or ivory, or (2) to any article made of fur on the hide or pelt, or of which any such fur is the component material of chief vahie, or to (3) any article enu- merated in subdivision (17) or (18) of section 900. Art. 32. When an article is within the language of two or more sections of the statute, bj^ each of Avhich a tax is imposed, the article shall not be doubly taxed, but shall, as a general rule, be held taxable under that section Avhich contains the more specific description; thus, subdivision 14 of section 904 (a) imposes a tax on shq^s and section 90a imposes a tax on articles made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivorv. A pair of leather shoes ornamented with gold buckles would fall v.ithin the, terms of both these sections; but the description ''shoes." being the. more specific, would be the controlling description for taxable pur- poses. (See art. 26 of these Regulations.) While this is the general rule, the statute makes certain broad exceptions. As an illustration of the exceptions made by the statute? the case of fans may be taken. Fans are taxable as such imder para- graph (8) of section 904 (a). They are also within the language of section 905 when tnade of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivory. In the absence of statutory provision to the contrary the description '•" fans.'' being the more specific, would control, bu.t subdivision (b) of section 904 specifically provides that articles enumerated in paragraphs (2) to (8), both inclusive, of section i)04 (a), when made of, or orna- mented, mounted, or fitted with precious metals or iiuitations thereof, or ivory, shall not be subject to the tax imposed by section 904; and this specific exclusion (so far as the articles which it covers are cou- cerned) reverses the above-mentioned general rule, and makes the less specific description apply. For instance, a fan, being one of the articles specifically exempted from taxation luider section 904, when made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivory, is taxable imder section 905 at the rate of 5 per cent of the full sales price and not under subdivision (8) of section 904 (a). (See art. 20 of these Eegulations.) And any other article which is made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ivory, if it is one of the articles enumerated in paragraphs (2) to (8), inclusive, of section 904 (a) (arts. 14 to 20, inclusive, of these Regulations), is not subject to tax under section 904. Of course, a fan or any other article enumer- ated in paragraphs (2) to (8), inclusive, of section 904, which is not §904 EXCISE TAXES ON^ S.iLES BY THE DEALER. 17 made of, or ornamented, mounted, or fitted with precious luetals or imitations thereof, or ivory, and which is not within either of the other exceptions made by section 904 (b) , is taxable under section 004. Of the other exceptions made by section 904 (b), one rehites to articles made of fur on the hide or pelt, or of which an^^ such fur is the component material of chief value (an article will not be re- garded as within this exception unless fur is that component material which is not exceeded in value by any other single component ma- terial in the ailicle; the other relates to articles enumerated in subdi- visions (IT) and (18) of section 900. Of these two subdivisions, (17) relates to liveries and livery boots and hats, and (18) relates to hunt- ing and shooting garments and riding habits. These exceptions are not limited to any particular subdivisions of section 904 (a), but re- late to them all. Therefore any article whatever, which is made prm- cipaliy of fur on the hide or pelt, or of which any such fur is the com- ponent material of chief value, or which is enumerated in subdivision (IT) of section 900 of the statute, covering liveries and liverj' boots and hats, or in subdivision (18) of section 900, covering hunting and shooting g-a rments and riding habits, is not subject to tax under these Regulations, but to the 10 per cent tax on the full sales price imposed by section 900 of the statute. (See arts. 29, 30, and 31 of Eegulations No. 47.) It will sometimes happen that the same article is within more than one of the exceptions specified by section 904 (b) of the statute. The rule, that the more specific description governs, again applies. Either of the other designations (that is, furs, liveries, or hunting gar- ments) co\ered by the several exceptions, is more specific than that relating to articles made of, or ornamented, mounted, or fitted with, precious metals or imitations thereof, or ivory. This latter is also the only designation covering a tax of 5 per cent on the full sales price. All the other designations covered by the exceptions cover a tax of 10 per cent on the full sales price. It accordingly follows that if any article is within more than one exception specified by sec. 904 (b), it is subject to a 10 per cent tax on its full sales price. It is only when it is within the exception relating to articles made of, or ornamented, mounted, or fitted with precious metals, or imitations thereof, or ivory, solely, that the tax at the rate of 5 per cent on the full sales price applies. Take, for example, purses. A leather purse without ornaments of precious metal, etc., Avould not be within any of the exceptions and if sold for more than $T.50 would be taxable on the excess of the sales price over that amount, under paragraph (5) of section 904 (a), simply as a purse. Next, take a leather purse with gold ornaments. The gold ornaments would bring it within the exception relating to articles ornamented with precious metats, 18 EXCISE TAXES ON SALES BY THE DEALER. $904 etc., and it would, therefore, be subject to tax of 5 per cent of the full sales price. Now, take a purse made principally of fur, or of which fur is the component of chief value. It would be within the exception covering articles made of fur, etc., and would be sub- ject to a tax of 10 per cent of the full sales price. Even though this latter purse were also ornamented with precious metals, it would still be subject to the same tax as an article made of fur, sinee the designation covering aiticles made of fur takes precedence over that covering articles ornamented with precious metals, etc. In short, an article which is within any of the specific designations of section 904(a) of the statute is .subject to the tax imj^osed thereb}'. unless it is covered by any of the exceptions enumerated in section 904(b). If it is covered by the exception relating to articles orna- mented with precious metals, etc., it is not subject to tax under sec- tion 904(a), but to a tax of 5 per cent of the full sales price under section 905, If it is within either of the other exceptions, even though it is also within that relating to articles ornamented with precious metals, etc., it is subject to a tax of 10 per cent of the full sales price under section 900 of the statute. RETURN AND PAYMENT OF TAX. Sec. 904 (c). The taxes imposed by this section sliall be puid by the piu'cliaser to the vendor at the time of the sale and sliall be collected, returned, and paid to the United States by such vendor in the same manner as provided in section 502. Sec. 502. That each person receiving any payments referred to * * * shall collect the amount of the tax, if any, * * * from the person making such payments, and shall make nunithly returns under oath, in duplicate, and pay the taxes so collected * * * to the collector of the district in which the principal office or place of business is located. 1^ it * * * * Hf The returns required lUider this section shall contain such informa- tion, and be made at such times and in such manner, as the Connnis- sioner, with the approval of the Secretary, may by regulation prescribe. The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the collector at the time so tixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. Sec. 1309. That the Connnissioner, with the approval of the Secre- tary, * * * may by regulation provide that any return required by Titles * * * IX * * * to be under oath may, if the amount of the tax covered thereby is not in excess of $10, be signed or acknowl- edged before two witTiesses instead of under oath. Art. 33. Accordingly, every person liable for the tax in respect to the sale of any of the articles enumerated in section 904, must make montlily returns under oath in duplicate (except that if the amount §904 EXCISE TAXES ON SALES BY THE DEALER. 19 of the tax covered therebj'^ is not in excess of $10, such returns may be signed and acknowledged before two witneijses instead of under oath), and pay the taxes imposed on such articles to the collector of internal revenue for the district in \\'hich his principal place of busi- ness is located. Branch houses should in general make reports to the parent house, which is required to include the sales of the branch house in its return. An itinerant dealer should make return and pay the tax to the collector of the district where the sales are made. Tike returns shall be made on Form 728 B. Instructions for preparing the return will be found on the back of the form. The returns are to be rendered and the tax paid on or before the last day of each month covering the transactions of the preceding month, the first return to cover all transactions from May 1, 1919, to May ?>1, 1919, both inclusive, and to be made on or before June 30, 1919. If the tax is not so paid, liability to the 5 per cent penalty and interest at the rate of 1 per cent for each full month, from the time when the tax becomes due will be incurred. The books of every person liable to the tax shall be open at all times for the inspection of exam- ining interna l-re\enue officers, and each such person shall keep an account showing the amount of tax liability upon the sales of taxable articles and the credits or refunds claimed under article 8 of these regulations. As to penalty for failure to file return in time and penalties in general, see article 41. As to credits for overpayments, see article 35. All rulings in conflict herewith are hereby revoked. EXTENSION OF EXISTING STATUTES. Sec. 1305. Tliat uU adininistfative, special, or .stamp provision.'! of law, including: tlie law relatiiic; to the assessment of taxes, so far a.=4 applicablo, are hereby extended to and made a part of this act, and every person liable to any tax imposed by this act, or for the collection thereof, shall keep such records and render, under oath, such statements and returns, and shall comply with such regulations as the Commis- sioner, with the approval of the Secretary, may from time to time pre- .scribe. Whenever in the judgment of the Comaiissioner necessary he may require any person, by notice servetl upon liim, to make a return or .such statements as he deems suflicient to show whether or not such per.son is liable to tax. The Commissioner, for the purpose of ascerlaining tlie correctness of any return or for the purpose of making a return where none has been made, is hereby authorized, by any revenue agent or insi>eclor designated by him for that purpose, to examine any books, papers, records, or memoranda bearing upon the matters required to be in- cluded in the return, and may require the attendance of the per.soii rendering the return or of any ofiicer or employee of such person, or the attendance of any otlier person having knowledge in the premises, and may take his testimony with reference to the matter required by law to be included in such return, with power to administer oaths to such person or persons. 20 EXCISE TAXES ON SALES BY THE DEALER. § 904 AuT. 34. Aids to collection of tax. — In collecting the excise taxes the Commissioner luis the benefit of all existing internal-revenue laws. In aid of the enforcement of the statute the Commissioner may require any person to keep specified records, to render returns and statements as directed, to submit himself and his books to examination, and to comply with such regulations as may be pre- scribed. As to returns, records, and examinations, see article 33 and article 37. See further sections 903 and 1312 (4) of the statute. CREDITS AND REFUNDS. Sec. 1310. (a) That in the case of any overpayment or overcollection of any tax iniiiosed by section 628 or 630 or by Title V, Title YUl, or Title IX, the person nialiing such overpayment or overcollection may take eretlit therefor against taxes due upon any monthly return, aiul shall make refund of any excessive amount oolleeted by him upon proper api)lieation by the person entitled. (b) Wherever in this act a tax is required to be paid by the pur- chaser to the vendor at the time of a sale, and such sale is made on credit, then, under regulations prescribed by the connnissioner, with the appi-oval of the Secretary, the tax may, at the option of the vendor, be retiK*ned and paid by him to tlie United States as if paid to him by the purchaser at the time of the sale, and in such case the vendor shall have a right of action in any court of competent juris- diction against the purchaser for the amount of the tax so returned and paid to the United States. Art. 35. Credits and refunds.— If a dealer overpays the tax due with one monthly return, he may take credit for the overpayment against the tax due with a succeeding return. See articles 7 and 8. If he sells on credit, he shall return and pay the tax as of the time of the sale, but uuiy defer collection of it from the purchaser. If he does so he may. if necessary, sue the purchaser to recover the tax. See article 8 as to refunds to purchasers. See article 33 as to returns. EXPORTS. Sec. 1310. (c) Under such rules and regulations as the Commissioner with the approval of the Secretary may prescribe, the taxes imposed under the provisions of Titles * * * jx shall not apply in respect to articles sold * * * f^y export and in due course so exported. Under such rules and regulations the amount of any internal-revenue tax erroneously or illegally collected in respect to exported articles may be refunded. * * * Art. 3G. Exemption of export sales. — The tax docs not attach to the sale of an article Avhich is either (1) shipped direct to a foreign desti- nation by the dealer himself or (2) both (a) sold by him for export and (b) in due course so exported by the purchaser. Where a dealer at the time an article is sold or shipped (whichever is prior) has in §904 EXCISE TAXES ON SALES BY THE DEALER. 21 his possession an order ov' Contract of sale showinir in writiuer centum of its amount. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has Ijeen paid before the discovery of the neglect, falsity, or fraud, in which case the amount so adde. Promulgation of regulations. — In pursuance of the statute the foregoing regulations are hereby made and promulgated and all rulings inconsistent herewith are hereby revoked. Daniel C. Roper, Commissioner of Infernal Revenue. Approved, May 14, 1919 : E. C Leffingwell, Acting /Secretart/ of the I'reasuri/. INDEX. [The references are to articles.] Art. Agents, sales by 4 Aids to coUectiOQ of tax 34 Alterations, repairs 12 Appliances for cripples 26 Articles, resale of 5 Articles, secondhand 11 Articles stibject to tax IS Articles purchased to be leased or rented 5 Auctioneer, sales by 3-4 Authority for regulations . 43 Bags, hand 17 Bags, shopping 17 Bags, traveling 16 Basis of tax 6 Bath robes 21 Billing the tax 6 Bonnets, women's and misses' 23 Boots 26 Boots, cripples' 26 Boxes, hat, used by travelers 16 Broker 3^ Caps, men's and boys' 25 Oarpets 13 Cases, fitted, toilet 16 Oases, suit 16 Casual sale not taxable 3 Charges, delivery, as affecting price 7 Checks, dishonored, procedure v/ith respect to 40 Checks, payment of tax by uncertified 39 Checks, procedure witli respect to dishonored 40 Coats, house 21 Coats, smoking 21 Collection of tax, aids to 34 Collect tax, failure to 4 Commissions not deductible from sale price 7 Consumption or use, sales for, as basis of tax 5 Credits and refunds of tax 35 Cripples' boots 26 Cripples' shoes or appliances 26 Date, effective, of tax 1 Dealer, itinerant, payment of tax by 83 Dealer responsible for tax 4 Dealer, who is the 3 Deformed foot or ankle, shoes and appliances for 26 27 28 I^TDEX. Art. Delivery charges as affectinfr tax 7 Discounts and expenses as affecting tax 7 Dishonored checl