1 A. HB^HBB A = CI 1 A3 ~ CO 1 =3= O 1 = ^ 5 l o m — -1- 1 ^—^— m = 33 1 u = 3 m __ 2 1 ^^= 33 1 _ — 1 s£ 1 o 1 4 m ^^ *■ 1 8 ! = 1 1 K = BE j> 1 — 3D I jl 4 — He* 1 5 m 1 California igional cility UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY SUPPLEMENT TO TREASURY DECISIONS (T. D. 2832) TREASURY DEPARTMENT UNITED STATES INTERNAL REVENUE U/S, J*i*i«±l #«-0«*ut- 3*fJ\ K cA . >u REGULATIONS 47 RELATING TO THE EXCISE TAXES ON SALES BY THE MANUFACTURER UNDER SECTION 900 OF THE REVENUE ACT OF 1918 WASHINGTON GOVERNMENT PRINTING OFFICE 1919 s Bo 19 13 £F ■3« S REGULATIONS RELATING TO THE EXCISE TAXES ON SALES BY THE MANUFACTURER UNDER Sccticn £00 of Title IX of the Revenue Act of 1918. CONTENTS. Tago. Section 900. Imposition of tax 5 Article 1. Effective date 5 2. Use of terms 5 3. Basis of tax 5 4. Discounts and expenses 5 6. Exchanges 6. Credit for taxes already paid 6 7. Who is a manufacturer 6 8. Tax payable by manufacturer 7 9. When tax attaches 7 10. Sales to the Government or a State 8 Section 900 (1) (2). Automobiles 8 Article 11. Automobiles: Scope of tax 8 12. Automobile trucks and automobile wagons 8 13. Other automobiles and motorcycles 9 Section 900 (3). Automobile parts and accessories 9 Article 14. Tires, inner tubes, parts, and accessories sold to manufacturer. 9 15. Definition of " parts" 10 16. Definition of "accessories" 10 Section 900 (4). Musical instruments 11 Article 17. Musical instruments 11 Section 900 (5). Sporting goods 12 Article 18. Sporting goods 12 Section 900 (6). Chewing gum 12 Article 19. Chewing gum 12 Section 900 (7). Cameras 13 Article 20. Camera? 13 Section 900 (8). Films 13 Article 21. Photographic films and plates 13 Section 900 (9). Candy 13 Article 22. Candy 13 Section 900 (id). Firearms 14 Article 23. Firearms, shells, ard cartridges 14 Section 900 (11) (12). Hunting knivttS 14 Article 24. Hunting knives, dirk knives, daggers, etc 14 Section 900 (13). Electric fans 14, Article 25. Portable electric fans 14 3 4 CONTENTS. Page. Section 900 (14). Thermos bottles 14 Article 26. Thermostatic containers 14 Section 900 (15). Smokers' articles 15 Article 27. Cigar and cigarette holders, pipes; humidors, and smoking stands 15 Section 900 (16). Slot machines 15 Article 28. Automatic slot-device machines 15 Section 900 (17). Liveries 15 Article 29. Liveries and livery boots and hats 15 Section S00 (18). Hunting garments 15 Article 30; Hunting and shooting garments and riding habits..... 15 Section 900 (19). Fur goods 16 Article 31. Fur goods 16 Section 900 (20). Pleasure boats 17 Article 32. Yachts and motor boats 17 Section 900 (21). Toilet soaps 17 Article 38. Toilet soaps and toilet-soap powders 17 Section 900 Continued. Manufacturer also retailer « 17 Article 34. Manufacturer also retailer 17 Section 900 Continued. Repeal of former taxes . 18 Article 35. Repeal of former taxes .-.I: 18 Section 901. Colorable sales 18 Article 36. Colorable sales. . . .• 18 Section 903. Return and payment of tax 19 Article 37. Return and payment of tax 19 Section 1304. Trade with possessions of United States 19 Article 38. Trade with possessions of United States 19 Section 1305. Extension of existing statutes 20 Article 39. Aids to collection of tax 20 Section 1308. Penalties 20 Article 40. Penalties . 21 Section 1310 (a) (b). Credits and refunds 22 Article 41. Credits and refunds 22 Section 1310 (c). Exports 22 Article 42. Exemption of export sale 22 43. Proof of exportation 23 Section 1312. Transfer of burden of tax 23 Article 44. Contract of sale before May 9, 1917 .'. 24 45. Contract of sale before September 3, 1918, of article not then taxable 24 46. Contract of sale before September 3, 1918 o| article then tax- able 25 47. Return of tax 25 48. Meaning of "dealer".... 26 Section 1313. Fractional part of cent 26 Article 49. When fractional part of cent may be disregarded : 26 Section 1314. Medium of payment of tax 26 Article 50. Payment of tax by uncertified checks 26 51. Procedure with respect to dishonored checks 27 Section 1319. Misrepresentation of tax 27 Article 52. Misrepresentation of tax 27 Section 1309. Authority for regulations 27 Article 53. Promulgation of regulations 27 EXCISE TAXES ON SALES BY THE MANUFACTURER. IMPOSITION OF TAX. Sec. 900. That there shall be levied, assessed, collected, and paid upon the following articles sold or leased by the manufacturer, producer, or im- porter, a tax equivalent to the following percentages of the price for which so sold or leased— Article 1. Effective date. — The tax is imposed on all articles sold or leased by the manufacturer, producer, or importer on or after Feb- ruary 25, 1919, even though manufactured, produced, or imported before that date. Art. 2. Use of terms. — In these regulations, for convenience, unless obviously inapplicable, the term "manufacturer" is used to include also "producer" and "importer"; the term "sale" or "sold" to include "lease" or "leased"; the term "purchaser" to include "lessee," and the term "vendor" to include "lessor." The term "person" is used to include partnerships, corporations, and associa- tions, as well as individuals. Art. 3. Basis of tax. — The tax is on the sale by the manufacturer of the taxable article. It 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 price. If the price of a taxable article is increased to cover the tax, the tax is on such increased price. Where, however, the tax is billed as a sepa- rate item such amount need not be included in the -price of the article in computing the tax. The tax is payable in respect to a sale made, whether or not the purchase price is actually collected. (See further art. G.) Art. 4. Discounts and expenses. — A discount for cash or other discount made subsequently to the sale can not be deducted in computing the price for the purpose of the tax. Where, however, articles are sold over a period of time under an agreement for a quantity rebate, the tax, if originally computed on the gross price, may be adjusted in the return for the month in which the price is finally determined. Commissions to agents and other expenses of sale are not deductible from the price. If articles are sold at the factory or f. o. b. cars at the place of manufacture, and the delivery charges from such place to the point of delivery are paid by the pur- chaser as a specific item, or if they are sold delivered at a sum less de- livery charges to be paid by the purchaser, such charges need not be 5 6 EXCISE TAXES ON SALES BY MANl'l ACTUUKR. §900 included as a part of the price of the goods, but if the manufacturer sells goods at a delivered price and he himself pays the delivery charges, he is not entitled to make any deduction on account of the inclusion in the price of Mich charges. Art. 5. Exchanges.— If articles sold are returned and the salo entirely rescinded, no tax is payable, and if paid it may be credited against the tax included in a subsequent monthly return. See article 41. If a part only of the articles sold at one time is re- turned, and credit or rebate allowed by the vendor therefor, the por- tion of the tax to be credited will be only the proportion of the total tax paid which the amount allowed as a credit or rebate bears to the total sales price of all the articles. If an article is sold under a guarantee as to its quality or service and is thereafter returned and a rebate math 1 pursuant to the guarantee, the vendor may claim as a credit against the tax included in a subsequent return such portion of the tax originally paid in respect of the article as is proportionate to the amount of the price refunded. If an article is sold and there- after, before use. exchanged for another article of a higher price, the purchaser paying the difference, the vendor should pay the tax on the second sale, but may take as a credit against such tax such part of the tax paid on the returned article, which the amount allowed as a credit for the return of such article on the second sale bears to the amount of the purchase price in the case of the first sale. Art. 6. Credit for taxes already paid. — A manufacturer may take as a credit against the tax imposed on him in respect to the sale of any article taxable under section 900 an amount equal to any tax imposed under section 900 which he has reimbursed to the vendor from whom he purchased any article forming a component part (whether or not changed in form b}'' process of manufacture) of the article sold by him and in respect to which tax is paid by him. No credit is allowable, however, for any tax so reimbursed by a manu- facturer to the vendor in respect to any article, unless such article forms a component part of an article sold by such manufacturer and in respect to which a tax is payable by him. This credit will be allowed only if the taxpayer keeps such records and evidence as will clearly establish his right to the exemption. In cases of doubt, in order to avoid penalty for default if the claim is not established, the tax should be paid in full and application made for refund. Art. 7. Who is a manufacturer — (a) A manufacturer is a person who prepares a taxable article in marketable form. There are several cases, however, in which under section 900 there may be several manufacturers, each of whom must pay a tax, as, for ex- ample, the tax upon "articles made of fur." In such case the tax may attach on successive sales, if there are several stages of manu- facture. See, however, article 6 as to credits in such cases. {900 EXCISE TAXES ON SALES BY MANUFACTURER. 7 (b) Where baseball bats or other sporting goods taxable under subdivision (5) of section 900, or pianos taxable under subdivision (4) of section 900, are prepared in marketable form by A, who marks or labels them only with the name or trade-mark of B, who, on their being delivered to him, sells them without further manufacture to his own customers, if the transaction between A and B is an actual sale of the articles and not merely the employment of A by B to manu- facture them as his agent at a specified profit, A is the "manufac- turer" who is liable for the tax. (c) A person who is employed to make an article and receives for it the cost of materials and labor, plus a specified profit, shall be con- sidered a manufacturing agent, and the person who procures the preparation of the article for purposes of resale will be considered the manufacturer. Art. 8. Tax payable by the manufacturer. — The tax is to be paid by the manufacturer on all sales made directly by him or through an agent. If the manufacturer has a sales agent or sales agency to whom he only nominally sells an article, but retains an interest in the profits from the resale of the article, the taxable sale is that made by the sales agent or sales agency. On articles manufactured for a jobber by a foreign manufacturer, the jobber must pay the tax as the importer. A receiver or trustee in bankruptcy of a manufac- turer conducting a business under court order is liable to the tax upon articles sold by him. Where a manufacturer consigns arti- cles to a retailer, retaining ownership in them until they are dis- posed of by the retailer, the manufacturer must pay the tax based upon the price for which sold by the retailer. See article 34. Art. 9. When tax attaches. — The tax attaches when the article is sold; that is to say, when the title to it passes from the vendor to the purchaser pursuant to a previous contract of sale or upon a sale without previous contract. When title passes is a question of fact dependent upon the intention of the parties as gathered from the contract of sale and the attendant circumstances. Where goods are segregated from other goods owned by the vendor and it is the intention of both the vendor and the purchaser at the time the goods are segregated that they, shall then belong to the pur- chaser, the title will be presumed to pass at such time. In the absence of an intention to the contrary the title is presumed to puss 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 vendor 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 salfc by charging off, by any method of accounting he may adopt, the unpaid portion of the contract price. 8 EXCISE TAXES ON SALES BY MANUFACTURER. § 900 Art. 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 manu- facturer, under a contract stipulating that the manufacturer shall be guaranteed a certain profit, no tax is payable, because the manu- facturer dot's not sell the articles. Articles manufactured in plants taken over and operated by the Government are not subject to the tax. Articles sold to a State or a political subdivision thereof by the manufacturer for use in carrying on its governmental operations are not subject to the tax. Articles sold by the manufacturer to a State, county, or municipal institution are also exempt from tax when paid for entirely out of public money. AUTOMOBILES. (h Automobile trucks and automobile wagons, (including t,ires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), 3 per centum; ii' Other automobiles and motorcycles, (including tires, ' inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), except tractors, 5 per centum; * * * Art. 11. Automobiles: Scope of tax. — An automobile (as well as an automobile truck or automobile wagon) is a self-propelling vehicle designed primarily for the transportation in or upon it of persons or property. Motor-driven machines for pulling a vehicle around fac- tories and railway stations and motor-driven machine gun carriages are not taxable. An automobile hearse and a pallbearers' coach are taxable under subdivision 2. A self-propelled fire engine, at least if designed to carry only such persons as are necessary to drive it, is not taxable. If, however, it is especially designed to carry firemen not employed in or about the driving of the machine, it is taxable as an automobile. Automobile trucks ecmipped as hook and ladder trucks, and hose carts for the use of firemen, are likewise taxable. A usable substantially completed automobile or automobile truck produced by assembling new parts of trucks or cars is subject to tax, but a rebuilt car is not subject to tax as sucr^ although the new parts thereof are subject to tax when sold by the. manufacturer, even though assembled into a car. Automobiles which have been sold by the manufacturer are not taxable when sold again. Where, however, a manufacturer sells again an automobile which he has once sold and which has been returned to him and the first sale rescinded, the tax attaches on the second sale. A tractor is not taxable. Art. 12. Automobile trucks and automobile wagons. — The tax is 3 per cent of the price, for which automobile trucks and automobile §900 EXCISE TAXES ON SALES BY MANUFACTURER. 9 wagons are sold by the manufacturer. An automobile truck or automobile wagon is a self-propelling vehicle primarily designed or adapted for the transportation of property. The act specifically exempts tractors; even if sold in combination with a trailer. Any tires, inner tubes, parts or accessories for automobile trucks and automobile wagons sold on or in connection therewith or with the sale thereof are taxable at 3 per cent. Such tires, inner tubes, parts and accessories, however, as (although sold on or in connection with an automobile truck or automobile wagon or with the sale thereof) are in excess of the quantities usually sold in the ordinary course of trade to a single customer at the time of the purchase of an automo- bile truck or wagon, will not be taxable at 3 per cent, but will be tax- able under subdivision (3) of section 900 at the rate of 5 per cent. Art. 13. Other automobiles and motorcycles. — The tax is 5 per cent of the price for which such articles are sold by the manufacturer. It applies to all automobiles primarily designed for carrying persons, including passenger cars, taxicabs, auto-busses, sight-seeing cars, and also to all motorcycles, including side cars. Where an automobile chassis, although of such construction as is ordinarily used in auto- mobile trucks, is fitted with a body designed for the carriage of per- sons, or for the carriage of persons and property, the completed whole is taxable at 5 per cent of the price for which sold by the manufac- turer, and not under subdivision (1) at 3 per cent. Tires, tubes, parts, and accessories for motorcycles or automobiles other than automobile trucks, or automobile wagons sold on or in connection therewith or with the sale thereof are taxable at 5 per cent. AUTOMOBILE PARTS AND ACCESSORIES. (3) Tires, inner tubes, parts, or accessories, for any of the articles enum- erated in subdivision (1) or (2), sold to any person other than a manufacturer or producer of any of the articles enumerated in subdivision (1) or (2), 5 per centum; ' * * * Art. 14. Tires, inner tubes, parts, and accessories sold to manu- facturer. — Subdivision (3) of section 900 of the act provides (hat tires, inner tubes, parts, or accessories shall be exempt from the tax if sold to a manufacturer or producer of automobile trucks, auto- mobile wagons, other automobiles, or motorcycles. To come within this exemption the sale must be to such a manufacturer for use by him in the manufacture or production of new cars or for free replace- ment under contract of guaranty. If sold to such a manufacturer for any other purpose, such as resale to a dealer or for the rebuilding of used cars, the sale is taxable. In order for the sale to come within the exemption of the statute, the manufacturer must at the time the goods are shipped or sold (whichever is prior) have in his possession 113487°— 19 2 10 EXCISE TAXES ON SALES BY MANUFACTURER. §900 an order or contract of sale, with certificate of the purchaser in writing printed thereon or permanently attached thereto, showing that tho tires, inner tubes, parts, or accessories so purchased are to be used in the manufacture or production of new cars or for free replacement under contract or guaranty: If in any case such an order and certificate can not be produced on demand of any author- ized agent of the department tho tax in respect to the sale will be considered in default. Art. 15. Definition of parts. -A "part" for an automobile truck, automobile wagon, other automobile, or motorcycle is any article designed or manufactured for the special purpose of being used as or to replace a component part of any such vehicle, and which by reason of some peculiar characteristic is not such a commercial commodity as would ordinarily be sold for general use, and which is primarily adaptable only for use as a component part of such vehicle. Mere stock or commercial commodities such as bolts, nuts, washors, screws, though used as components for such vehicles, are not "parts" within the meaning of subsection (3) of section 900. Arti- cles, however, which ordinarily would be classed as commercial commodities become parts when, because of their design or construc- tion, they are primarily adaptable for use as component parts of such vehicles. Component parts of articles taxable under this definition are taxable when sold separately, if they have reached such stage of manufacture that they are primarily adaptable for use as such a component part. Thus plates, jars, and separators for automobile storage batteries are taxable when sold separately. A chassis is a part of an automobile and taxable at the rate of 5 per cent when sold separately regardless of whether it is a chassis for an automobile truck or wagon, or for any other kind of automobile. An auto- mobile body is also a part of an automobile. Art. 16. Definition of accessories. An "accessory" for an auto- mobile truck, automobile wagon, other automobile, or motorcycle is any article designed to be attached to or used in connection with such vehicle to add to its utility, and which is primarily adaptable for use in connection with such vehicle, whether or not essential to its operation. The term "accessories" includes, for example, horns, speedometers, self-starters, spot-lights, shock absorbers, tire pumps, pressure gauges, and hydrometers. All such articles primarily adapted for use in connection with an automobile are subject to the tax even though they may sometimes be used otherwise, as, for example, with motor boats. If any doubt, reasonable and bona fide, exists as to the special adaptability of an article the fact of its sale by the manufacturer to be used with an automobile or to an automobile accessories dealer will determine its taxability. A §900 EXCISE TAXES 02T SALES BY MANUFACTURER. 11 wrench or other tool of a kind sold in hardware stores for general purposes is not subject to the tax, but a wrench or other tool of special design or construction primarily adapted to be used in con- nection with automobiles will be subject to the tax. Robes, goggles, and lunch kits are not subject to the tax. Automobile trailers, regardless of the number of wheels which they may have, are not parts of or accessories for automobiles; but rear portions of automo- bile trucks, automobile wagons, or other automobiles, not properly called trailers, are taxable as a part of the automobile. Where a manufacturer sells automobile accessories or parts to a jobber who in turn sells them to a manufacturer of completed cars the tax upon the accessories or parts is payable by the manufacturer who sells them to the jobber. Where a manufacturer sells material to an accessories manufacturer who in turn sells the accessories constructed from them to a manufacturer of completed automobile trucks, automobile wagons, other automobiles, or motorcycles, except tractors, the manufacturer of the completed vehicle is liable for the tax upon his sales and no tax is due upon such previous sales. MUSICAL INSTRUMENTS. (4) Pianos, organs (other than pipe organs), piano players, graphophones, phonographs, talking machines, music boxes, and records used in connection with any musical instrument, piano player, graphophone, phonograph, or talking machine, 5 per centum; * * * Art. 17. Musical instruments. — The tax is 5 per cent on the price for which the articles enumerated are sold by the manufacturer. Player pianos are pianos. Where a person other than a manufac- turer of the, player action completes the player piano by installing the action in a piano, the tax must be paid on the selling price of the complete player piano. Conversely, where the manufacturer of the player action purchases pianos and turns out a complete player piano, he must pay the tax on the selling price of the player piano. Accessories and parts, other than records, for the articles enumer- ated, are not taxable unless sold in combination therewith. Toy talking machines arc taxable, but dictagraphs and dictaphones are not subject to the tax. 12 EXCISE TAXES ON SALES BY MANUFACTURER. §900 SPORTING GOODS. (5) Tenuis rackets, nets, racket covers find presses, skates, snowshoes, skis, toboggans; canoe paddles and cushions, polo mallets, baseball bats, gloves, masks, prot ect lis, shoes and uniforms, football helmets, harness and goals, basket-ball goals and uniforms, golf bags and clubs, lacrosse sticks, balls of all kinds, including baseballs, footballs, tennis, golf, lacrosse, billiard and pool balls, fishing rods and reels, billiard and pool tables, chess and checker boards and pieces, dice, games and parts of games (except playing cards and children's toys and games), and all similar articles commonly or commer- cially known as spoiling goods, 10 per centum; * * * , Art. IS. Sporting- goods. — The tax is 10 per cent of the price for which the articles enumerated are sold by the manufacturer. The words "similar articles commonly or commercially known as sporting goods," include all articles which bear a like or similar relation to any game or sport which the articles enumerated bear to the game or sport in which they are employed; thus, articles which are used as implements of a game or sport (such as bowling alley tenpins), pro- tectors of any type (such as shinguards), receptacles for carrying implements of a game or sport (such as bat bags), goals, etc., are taxable. If, however, such articles are commonly sold for other pur- poses than to be used in a game or sport, they are not taxable; thus, baseball shoes are taxable, but ordinary rubber soled canvas or rubber shoes, although used for playing tennis, are not taxable. Articles of clothing specially adapted for use in the playing of a game or sport are taxable, unless they are commonly sold for general use. Thus, baseball, football, and basketball trousers and shoes are taxable, but jerseys and sweaters are not taxable unless specially made or deco- rated in such manner as to identify them as a part of a uniform. Gymnasium and playground apparatus are not taxable. The act taxes games and parts of games. The act exempts children's toys and games, but card games to be played by adults, as well as chil- dren, other than ordinary playing cards, are subject to the tax. CHEWING GUM. (6) Chewing gum or substitutes therefor, 3 per centum; * * * Art. 19. Chewiug gum. — The tax is 3 per cqnt of the price for which chewing gum or any substitute therefor is sold by the manu- facturer. Substitutes include any imitation designed to take the place of chewing gum. Where chewing gum is covered with another substance, the tax is on the whole article. Chewing gum with candy coating will be taxable as chewing gum and not as candy. 900 EXCISE TAXES ON SALES BY MANUFACTURER. 13 CAMERAS. (7) Cameras, weighing not more than one hundred pounds, 10 per centum; # # * Art. 20. Cameras. — The tax is 10 per cent of the price for which cameras weighing not more than 100 pounds are sold by the manu- facturer. Stands and tripods are not to be weighed in computing the weight of the camera. Process and motion-picture cameras are subject to the tax. Toy cameras are taxable if capable of taking a picture. Parts of cameras are not taxable, unless sold in combina- tion with a camera. FILMS. (8) Photographic films and plates, other than moving-picture films, 5 per centum; * * * Art. 21. Photographic films and plates. — The tax is 5 per cent of the manufacturer's selling price of photographic films and plates, other than moving-picture films. For the purposes of the act, X-ray plates are deemed to be photographic plates. CANDY. (9) Candy, 5 per centum; * * * Art. 22. Candy. — Candy within the meaning of the act includes chocolate creams, bonbons, gum drops, jelly drops, jelly beans, imperials, caramels, stick candy, lozenges, taffies, candy kisses, wafers, fudges or Italian creams, nougats, peanut brittle, sugared almonds, chocolate covered fruits and nuts, glace or candied fruits and nuts, popcorn and other cereals or cereal products mixed with or covered with molasses, sugar or other sweetening agent, hard candies, plain and chocolate covered marshmallows, candy cough drops and sweet- ened licorice not taxed as cough drops, sweet chocolate and sweet milk chocolate whether plain or mixed with fruits or nuts; and all similar articles however designated. It does not include, however, cereal breakfast foods, cake and pastries, nor bitter chocolate which needs the addition of sugar before it becomes pleasing to the taste. If a manufacturer of glace or candied fruits at the time the goods are shipped or sold (whichever is prior) has in his possession an order or contract of sale with certificate of the purchaser printed thereon or in writing and permanently attached thereto, showing that such fruits so purchased are to be used in the manufacture of food products, such as ice cream, cakes, and pastries, the sale thereof shall not be taxable. Where a manufacturer of candy sells in connection with the sale of his own product candy which he has bought from another manufac- turer and on which he has performed no further process of manufac- ture the tax attaches only to such portion of the goods sold as havo been manufactured by him. 14 EXCISE TAXES ON SALES BY MANUFACTURER. §900 FIREARMS. (10) Firearms, shells, and cartridges, except those sold for the use of the United States, any State, Territory, or possession of the United States, any political subdivision thereof, the District of Columbia, or any foreign country while engaged against the German Government in the present war, 10 per centum; * * * Art. 23. Firearms, shells, and cartridges. — A firearm is any weapon from which shol is discharged by an explosive. For the purpose of the act, firearms include only portable firearms, as pistols, revolvers, rifles, carbines, machine guns, shotguns, and fowling pieces. Shells and cartridges include projectiles for all such portable arms. KNIVES. (11 ) Hunting and bowie knives, 10 per centum ; (12) Dirk knives, daggers, sword canes, stilettos, and brass or metallic knuckles, 100 per centum; * * * Art. 24. Hunting knives, dirk knives, daggers, etc. — A hunting or bowie knife is a knife with a blade over 3 inches in length, having a sharp point and one cutting edge, especially adapted for sticking, skinning, and cutting game. The knife may be of a rigid type, car- ried in a sheath, or it may be of a clasp type, containing devices other than the blades. Hunting and bowie knives aro subject to a tax of 10 per cent of the manufacturer's selling price, whereas the weapons described in (12) are subject to a tax of 100 per cent upon the price for which sold by manufacturers. ELECTRIC FANS. (13) Portable electric- fans, 5 per centum; * * * Art. 25. Portable electric fans. — The ordinary movable electric fan, oscillating or nonoscillating, constructed with a heavy base and receiving its current through a flexible cable, so that it can be readily moved from place to place is subject to the tax. So, also, fans of a like type, screwed to a wall, bracket, or other sup- port, but capable of being easily moved, are taxable. Ceiling fans, exhaust fans, and blowers which are permanently attached, and which require separate wires and switches and skilled workmen to install or remove them, are not portable fans within the meaning of the act. THERMOS BOTTLES. (14) Thermos and thermostatic bottles, carafes, jugs, or other thermostatic containers, 5 per centum ; * * * Art. 26. Thermostatic containers. — The tax is 5 per cent of the manufacturer's selling price of the enumerated articles. The tax attaches only to the sale of containers using the vacuum principle of heat or cold retention. Thus, tireless cookers are not taxable. §900 EXCISE TAXES ON SALES BY MANUFACTURER. 15 SMOKERS' ARTICLES. (15) Cigar or cigarette holders and pipes, composed wholly or in part O? meerschaum or amber, humidors, and smoking stands, 10 per centum; * * * Art. 27. Cigar and cigarette holders, pipes, humidors, and smoking stands. — For the purpose of the tax a humidor means either (a) a device for maintaining moist atmosphere in any receptacle used for holding tobacco products, or (b) a portable receptacle used for holding tobacco products and fitted with a device for maintaining moist atmosphere therein. A smoking stand means (a) a tobacco ash tray, having a pedestal and base, or (b) two or more tobacco ash trays supported in an upright position from a common base and designed to be placed on a table, desk, floor, or other surface. SLOT MACHINES. (16) Automatic slot-device vending machines, 5 per centum, and automatic, Blot-device weighing machines, 10 per centum; if the manufacturer, producer, or importer of any such machine operates it for profit, he shall pay a tax in respect to each such machine put into operation equivalent to 5 per centum of its fair market value in the case of a vending machine, and 10 per centum of its fair market value in the case of a weighing machine; * * * Art. 28. Automatic slot-device machines. — A machine used for both vending and weighing is taxable as a weighing machine. For the purpose of the tax fair market value is deemed to be the average wholesale price at which like machines have been sold by the manu- facturer at wholesale during the month next preceding the month in which such machine is put into operation. In case there has been no prior sale of such machines, fair market value is deemed to be the average wholesale price for which similar machines are sold at the time the taxable machine is put into operation. LIVERIES. (17) Liveries and livery boots and hats, 10 per centum; * * * Art. 29. Liveries and livery boots and hats. — For the purpose of the tax, the enumerated articles include the uniforms of personal or domestic servants or of doormen, footmen, pages, bell boys, and similar employees of clubs, hotels, theaters, cafes, stores, and similar places; but uniforms otherwise taxed, and the uniforms of employees of public-service corporations, such as railroad, telegraph, and tele- phone companies, are not taxable. HUNTING GARMENTS. (18) Hunting and shooting garments and riding habits, 10 per centum; * * * Art. 30. Hunting and shooting garments and riding habits. — Hunt- ing and shooting garments and riding habits are deemed to include articles primarily adapted for use in hunting, shooting, and riding, 16 EXCISE TAXES ON SALES BY MANUFACTURER. §900 and commonly so used, such as hunting coats, sleeveless and other; duck shooters' jackets and coats; ladies' divided skirts and shell skirts; ladies' riding coats; men's riding breeches; deer stalkers' hats; and shell belts. Articles coming within the above definition Whose use is intended to be for purposes other than hunting, shooting, or riding are exempt from the tax. Every manufacturer who claims exemption from the tax on this ground must have in his possession at the time the goods are shipped or sold (whichever is prior) an order or contract of sale with certificate of the purchaser printed thereon or in writing and permanently attached thereto, showing that such articles are to he used for purposes other than hunting, shooting, or riding. If in any case such a statement can not be produced on demand of any authorized agent of the department, the tax in respect to the sale will be considered in default. FUR GOODS. (19) Articles made of fur on the hide or pelt, or of which any such fur is the component material of chief value, 10 per centum; * * * Art. 31. Fur goods. — As used in these regulations the term "fur article" includes articles made of fur on the hide or pelt or of which any such fur is the component material of chief value and all such articles as are commercially known and sold as fur articles. Raw, dressed, and dyed skins are not subject to the tax when sold to a manufacturer for use in the manufacture of fur articles. Such skins, however, are subject to the tax when sold to a consumer. The tax is not confined to articles of wearing apparel. For example, fur rugs and fur robes are subject to the tax. The "component material of chief value" of any article is that component material which is not exceeded in value by any other single component material. The value of each component material shall be determined by the cost thereof to the manufacturer. The cost of production is no part of the value of any other single component material. The tax attaches to each sale of a fur article by the manufacturer. The provisions for credit for taxes already paid contained in article 6 will apply where taxes have been paid in respect of any sale and the article so sold is subjected to a further process of manufacture and" again sold. Ordi- nary repairs are not taxable, but when new fur is added the tax attaches to such fur, and the price for the job will be presumed to be the price for which such fur is sold unless it is billed as a separate item, in which case the tax attaches to the value properly ascribable to the fur in its manufactured form. §900 EXCISE TAXES ON SALES BY MANUFACTURER. 17 PLEASURE BOATS. (20) Yachts and motor boats not designed for trade, fishing, or national defense: and pleasure boats and pleasure canoes if sold for more than $15, 10 per centum; * * * ' Art. 32. Yachts and motor boats. — A "yacht" is a vessel larger than a rowboat, used either for private pleasure, official trips, or racing. The term "trade" is synonymous with the term "busi- ness." A boat commonly known as an "excursion boat" or of that general type and regularly in service in carriage of the public is used for business purposes and sales of such boats are not subject to the tax. Motor boats which are to be rented out by summer resorts, etc., for the pleasure of the persons renting the same aro not designed for trade within the meaning of the act. TOILET SOAPS. (21) Toilet soaps and toilet soap powders, 3 per centum. * Art. 33. Toilet soaps and toilet-soap powders.^Soaps and soap powders advertised or held out as suitable for toilet purposes or for application to the body, or part of the body, as cleansing agents, are taxable. Toilet soap may be in form either liquid, semiliquid, paste, or solid; thus, liquid hand soaps and shaving creams and powders are taxable. A soap used chiefly for removing grease and stains from the hands, though capable of an incidental use for cleaning pots and pans, is taxable as a toilet soap. A soap capable of use as a shampoo, though sold chiefly in bulk to laundries and cleaners, is taxable when sold in separate packages, though not when sold in bulk. A soap which is made, advertised, held out, or sold primarily for general cleansing purposes, but which may have an incidental and trivial use as a toilet soap, is not taxable. MANUFACTURER ALSO RETAILER. If any manufacturer, producer, or importer of any of the articles enum- erated in/ this section customarily sells such articles both at wholesale and re- tail, the tax in the case of any article sold by him at retail shall be computed on the price for which like articles are sold by him at wholesale. * * * Art. 34. Manufacturer also retailer. — By "customarily sells" is meant a bona fide practice of selling the same article at both whole- sale and retail, in substantial quantities, and not mere occasional sales at wholesale, with the bulk of the business done at retail. Only a manufacturer who does both a wholesale and retail business and holds himself out as a wholesaler as well as a retailer with respect to the goods sold will be entitled to compute the lax upon goods sold at retail on the price for which like articles are sold by him at wholesale. As to articles sold at wholesale, the tax paid must bo 18 EXCISE TAXES ON SALES BY MANUFACTURER. §901 based on the actual selling price of each article sold. As to sales at retail, the lax on each such sale made during any calendar month must be based on the average wholesale price of all sales of like articles made at wholesale during the previous calendar month. This average wholesale price is to be obtained by dividing the sum of the actual selling prices of all such articles sold at wholesale during such previous calendar month by the total number of such articles so sold. REPEAL OF FORMER TAXES. The taxes imp< sed by this section shall, in the ease of any article in respect to which a corresponding tax is imposed by section GOO of the Revenue Act of 1917, be in lieu of such tax. Art. 35. Repeal of former taxes. — The present taxes supersede the excise taxes imposed by the Revenue Act of 1917 upon the sale of automobiles, musical instruments, sporting goods, chewing gum, cameras, toilet soaps and similar articles. The Revenue Act of 1917 remains in force for the assessment and collection of all taxes which have accrued thereunder, and for the imposition and collection of all penalties or forfeitures which have accrued and may accrue in rela- tion to any such taxes. In the case of any tax imposed by the Reve- nue Act of 1917, if there is a tax imposed by the present statute in lieu thereof, the provision imposing such tax remains in force until the corresponding tax under the present statute takes effect. See section 1400 of the statute. COLORABLE SALES. Sec 901. That if any person manufactures, produces or imports any article enumerated in section 900, or leases or licenses for exhibition any positive motion- picture film containing a picture ready for projection, and, whether through any agreement, arrangement, or understanding, or other- wise, sells, leases or licenses such article at less than the fair market price obtainable therefor, either (a) in such manner as directly or indirectly to benefit such person or any person directly or indirectly interested in the business of such person, or (b) with intent to cause such benefit, the amount for which such article is sold, leased or licensed shall be taken to be the amount which would have been received from the sale, lease or license of such article if sold, leased or licensed at the fair market price. Art. 36. Colorable sales. — If a manufacturer, through the device of a selling branch or in any other manner, contrives to sell under the market price, with the result of benefiting his business or with the intent to cause such benefit, the tax shall be based on the fair market value of the articles and not on their nominal selling price. See article 8. § 1304 EXCISE TAXES ON" SALES BY MANUFACTURER. 19 RETURN AND PAYMENT OF TAX. Sec. 903. That every person liable for any tax imposed by section 900, 902, or 906, shall make monthly returns under oath in duplicate and pay the taxes imposed by such sections to the collector for the district in which ia located the principal place of business. Such returns shall contain such information and be made at such times and in such manner as the Commis- sioner, with the approval of the Secretary, may by regulations 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 fixed 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. Art. 37. Return and payment of tax. — Each manufacturer of any of the articles hereinabove enumerated must make monthly returns under oath in duplicate and pay the taxes imposed on such articles to the collector of internal revenue for the district in which his principal place of business is located. Any return may, if the amount of the tax covered thereby is not in excess of $10, be signed or acknowl- edged before two witnesses instead of under oath. The returns shall be made on form 728 (revised). Instructions for preparing Avill 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 all the transac- tions of the preceding month, the first return to cover all transactions after February 24, 1919, and before April 1, 1919. Branch houses should in general make reports to the parent house, which is liable to make monthly returns of the sales of the branch house. An itinerant manufacturer should make return and pay the tax to the collector of the district where the sales were made. The books of every person liable to the tax shall be open at all times for inspection by examining internal revenue officers. As to penalties, see article 40. TRADE WITH POSSESSIONS OF UNITED STATES. Sec 1304. That there shall be levied, collected, and paid in the United States, upon articles coming into the United States from the Virgin Islands, a tax equal to the internal-revenue tax imposed in the United States upon like articles of domestic manufacture; such articles shipped from such islands to the United States shall be exempt from the payment of any tax imposed by the internal-revenue laws of such islands: Provided, That there shall he levied, collected, and paid in such islands, upon articles imported from the United States, a tax equal to the internal-revenue tax imposed in such islands upon like articles there manufactured; and such articles going into such islands from the United States shall be exempt from payment of any tax imposed by the internal-revenue laws of the United States. Art. 38. Trade with possessions of United States. — A sale which results in the shipment of articles into the United States from the Virgin Islands is taxable to the same extent as a sale of articles within the United States. Articles going into the Virgin Islands from the United States are free from tax in the United States. The same rules apply to trade with Porto Rico and the Philippine Islands. 20 EXCISE TAXES ON SALES BY MANUFACTURER. §§1305,1308 See section 1000 of the Revenue Act of 1917 and section V of the Act of August 4, 1909, as amended by section IV, subdivision C, of the Act of October 3, 191.'?. The tax attaches, however, to articles shipped to other possessions of the United States, including the Canal Zone. EXTENSION OF EXISTING STATUTES. Sec. 1305. That all administrative, special, or stamp provisions of law, including the law relating to the assessment of taxes, so far as applicable, 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 euch regulations as the Commissioner, with the approval of the Secretary, may from time to time prescribe; Whenever in the judgment of the Commissioner necessary he may require any person, by notice served upon him, to make a return or such statements as he deems sufficient to show whether or not such person is liable to tax. The Commissioner, for the purpose of ascertaining the correctness of any return or for the purpose of making a return where none has been made, is here- by authorized, by any revenue agent or inspector designated by him for that purpose, to examine any books, papers, records or memoranda bearing upon the matters required to be included in the return, and may require the attendance of the person rendering the return or of any officer or employee of such person, or the attendance of any other 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. Art. 39. Aids to collection of tax. — In collecting the excise taxes the Commissioner has 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 examina- tion, and to comply with such regulations as may be prescribed. PENALTIES. Sec. 1308. (a) That any person required under Titles V, VI, VII, VIII, IX, X, or XII, to pay, or to collect, account for and pay over any tax, or required by law or regulations made under authority thereof to make a return or supply any information for the purposes of the computation, assessment or collection of any such tax, who fails to pay, collect, or truly account for and pay over any such tax, make any such return or supply any such information at the time or times required by law or regulation shall in addition to other penalties provided by law be subject to a penalty of not more than $1,000. (b) Any person who willfully refuses to pay, collect, or truly account for and pay over any such tax, make such return or supply such information at the time or times required by law or regulation, or who willfully attempts in any manner to evade such tax shall be guilty of a misdemeanor and in addition to other penalties provided by law shall be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution. (c) Any person who willfully refuses to pay, collect, or truly account for and pay over any such tax shall in addition to other penalties provided by law be liable to a penalty of the amount of the tax evaded, or not paid, col- J 3176 EXCISE TAXES ON SALES BY MANUFACTURER. 21 lected, or accounted for and paid over, to be assessed and collected in the same manner as taxes are assessed and collected: Provided, however, That no penalty shall be assessed under this subdivision for any offense for which a penalty may be assessed under authority of section 3176 of the Revised Statutes, as amended, or of sections 605 or 620 of this Act, or for any offense for which a penalty has been recovered under section 3256 of the Revised Statutes. (d) The term "person" as used in this section includes an officer or em- ployee, of a corporation or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs. Art. 40. Penalties. — Any person, including an officer or employee of a corporation and a member or employee of a partnership in the course of his duty, who fails to pay or collect a tax or to make a return, is liable to a penalty of SI, 000. If his failure is willful, or he other- wise tries to evade the tax, he is guilty of a misdemeanor and liable to a fine of $10,000 and imprisonment for a year. If his failure is willful, he is also liable to the addition to the tax of a 25 per cent penalty for failure to make a return and a 50 per cent penalty for a fraudulent return. Section 3176 of the Revised Statutes, as amended by section 1317 of the Revenue Act of 1918, provides: Sec. 3176. If any person, corporation, company, or association fails to make and file a return or list at the time prescribed by law or by regulation made under authority of law, or makes, willfully or otherwise, a false or fraudulent return or list, the collector or deputy collector shall make the return or list from his own knowledge and from such information as he can obtain through testimony or otherwise. In any such case the Commissioner may, from his own knowledge and from such information as he can obtain through testimony or otherwise, make a return or amend any return made by by a collector or deputy collector. Any return or list so made and subscribed by the Commissioner, or by a collector or deputy collector and approved by the Commissioner, shall be prima facie good and sufficient for all legal purposes. If the failure to file a return or list is due to sickness or absence, the collector may allow such further time, not exceeding thirty days, for making and filing the return or list as he deems proper. The Commissioner of Internal Revenue shall determine and assess all taxes, other than stamp taxes, as to which returns or lists are so made under the provisions of this section. In case of any failure to make and file a return or list within the time prescribed by law, or prescribed by the Commissioner of Internal Revenue or the collector in pursuance of law, the Commissioner of Internal Revenue shall add to the tax 25 per centum of its amount, except that when a return is filed after such time and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addi- tion shall be made to the tax. In case a false or fraudulent return or list ia willfully made, the Commissioner of Internal Revenue shall add to the tax 50 per 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 been paid before the discovery of 1h a neglect, falsity, or fraud, in which case the amount so added shall be collected in the same manner as the tax. See also sections 903 and 1312 (4) and articles 37 and 47. 22 EXCISE TAXES ON SALES BY MANUFACTURER. §1310 CREDITS AND REFUNDS. Sec. 1310. (a) That in the case of any overpayment or ovcreollection of any tax imposed by section 628 or 630 or by Title V, Title VII r, or Title IX, the person making such overpayment or overcollectidn may take credit therefor against taxes due upon any monthly return, and shall make refund of any excessive amount collected by him upon proper application by the person entitled thereto. (h) Wherever in this Act a tax is required to he paid by the purchaser to the vendor at the time of a sale, and such sale is made on credit, then, under regulations prescribed by the Commissioner, with the approval of the Secre- tary, the tax may, at the option of the vendor, be returned and paid by him to the 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 com- petent jurisdiction against the purchaser for the amount of the tax so re- turned and paid to the United States. * * * Art. 41. Credits and refunds. — If a manufacturer overpays the tax due with one monthly return, he may take credit for the over- payment against the tax due with a succeeding return. If under section 1312 of the statute or otherwise he similarly overcollects the tax, he shall refund the ovcreollection to the purchaser from him. If in a case under section 1312 he sells on credit, other than on con- ditional sale, he shall return the tax at the time of the sale, hut may defer collection of it from the purchaser. See articles 44-46. For the procedure with reference to claims for refund see sections 3220 and 3225 of the Revised Statutes, as amended by section 1316 of the Revenue Act of 1918, and Regulations No. 14 (revised). EXPORTS. (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 VI, VII, or IX shall not apply in respect to articles sold or leased for export and in due course so exported. Under such rules and regidations the amount of any internal-revenue tax erroneously or illegally collected in respect to exported articles may be refunded to the exporter of the article, instead of to the manufacturer, if the manufacturer waives any claim for the amount so to be refunded. Art. 42. Exemption of export sale. — The tax does not attach to the sale of an article which is either (1) shipped direct to a foreign destination by the manufacturer himself, or (2) both (a) sold by him for export and (b) in due course so exported by the purchaser. Where a manufacturer at the time an article is sold or shipped (whichever is prior) has in his possession an order or contract of sale showing in writing (1) that the manufacturer is to export the article, or (2) that the purchaser is buying the article in order to export it prior to its being used or subjected to further manufacture, there is a presump- tion that the sale of the article is exempt from tax, as an export sale, and the manufacturer may, for a period of six months from the date of sale or shipment (whichever is prior), rely on such presumption. §1312 EXCISE TAXES ON SALES BY MANUFACTURER. 23 This temporary presumption becomes a permanent presumption upon the manufacturer's receiving, and attaching to such order or contract, before the termination of such period of six months, due "proof of exportation " (see article 43) of such article. On the other hand, if, within such period of six months, the manufacturer has not received, and attached to such order or contract, such "proof of exportation," then the temporary presumption that such sale is an export sale disappears, and the manufacturer shall include a tax on the sale of such article in his return for the month in which such period of six months expires. The order or contract of sale and the "proof of exportation" must be preserved by the manufacturer in such a way as to be readily accessible for inspection by internal revenue officers. No sale shall be considered to be exempt from tax under section 1310 (c) of the act, unless its character as an export sale has been established in accordance with the above provisions. Art. 43. Proof of exportation. — By the term ' ' proof of exportation " is meant: (1) An affidavit containing the following information: The name and address of the manufacturer, the name and address of the exporter (who, if not the manufacturer, must be a person who has purchased direct from the manufacturer), the respective dates of the sale or shipment (whichever is prior), and exportation of the article, the price for which purchased, the fact that the article has been ex- ported by the manufacturer or original purchaser without having been used or subjected to further manufacture, the name of the port of foreign destination, the name and address of the carrier issuing the export bill of lading, and any further information necessary to iden- tify the article sold with the article exported; and (2) attached to such affidavit a copy of the export bill of lading, or a certificate, by the agent or representative of the export carrier showing the exporta- tion of the article, or, if exported by parcels post, a cop} 1 " of the cer- tificate of mailing. TRANSFER OF BURDEN OF TAX. Sfv. 1312. (1) That (a) if any person has prior to May 9, 1917, made a bona fide contract with a dealer for the sale or lease, after the tax lakes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI, or under this subdi- vision, and (b) if such contract does not permit the adding of the whole of such tax to the amount to be paid under such contract, then the vendee or • lessee shall, in lieu of the vendor or lessor, pay so much of such tax as is not bo permitted to be added to the contract price. If a contract of the char- acter above described was made with any person other than a dealer, the tax collected under this Act shall be the tax in force on May 9, 1917. (2) If (a) any person has prior to September 3, 1918, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI, or under this subdivision, 24 EXCISE TAXES OIST SALES BY MANUFACTURER. { 1312 and in respect to which no corresponding tax was imposed by the Revenue Act of 1917, and (b) such contract does not permit the adding, to the amount to be paid under such contract, of the whole of the tax imposed by this Act, then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of the tax imposed by this Act as is not so permitted to be added to the contract price. If a contract of the character above described was made with any person other than a dealer, no tax shall be collected under this act. (3) If (a) any person has prior to September 3, 1918, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI, or under this subdivision, and in respect to which a corresponding tax was imposed by the Revenue Act of 1917, and (b) such contract does not permit the adding to the amount to be paid under such contract, of the whole of the difference between such tax and the corresponding tax imposed by the Revenue Act of 1917, then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of such difference as is not so permitted to be added to the contract price. If a con- tract of the character above described was made with any person other than a dealer, the tax collected- under this Act shall be the tax in force on September 3, 1918. (4) The taxes payable by the vendee or lessee under this section shall be paid to the vendor or lessor at the time the sale or lease is consummated, and collected, returned, and paid to the United States by such vendor or lessor in the same manner as provided in section 502. (5) The term "dealer" as used in this section includes a vendee who purchases any article with intent to use it in the manufacture or production of another article intended for sale. (6) This section shall not apply to any tax imposed by section 906. Art. 44. Contract of sale before May 9, 1917.— If before May 9, 1917, A, a manufacturer, made with B, a wholesaler, a contract of Bale which does not permit the addition of the tax to the amount payable under the contract, then the liability for the tax is on B, with the duty on A only to collect and pay it to the collector as pro- vided in article 47. If B also made before May 9, 1917, a contract of the character described with C, a retailer, the liability for the tax thus imposed on B is transferred from B to C, B being obliged only to collect the tax from C and to pay it over to A for payment to the collector. If, however, any person before May 9, 1917, made a con- tract of the character described with any person. other than a dealer as defined in article 48, no tax is payable in respect of the sale by him, since on May 9, 1917, no tax was in force on the sale of any of the articles described in these regulations. Art. 45. Contract of sale before September 3, 1918, of article not then taxable. — If before September 3, 1918, A, a manufacturer of candy or other article not taxable under the Revenue Act of 1917, made with B, a wholesaler, a contract which does not permit the addition of the tax to the amount payable under the contract, then the liability for the tax is on B, with the duty on A only to collect and pay it to the collector as provided in article 47. If B also made §1312 EXCISE TAXES ON SALES BY MANUFACTURER. 25 before September 3, 1918, a contract of the character described with Q, a retailer, the liability for the tax thus imposed on B is transferred from B to C, B being obliged only to collect the tax from C and to pay it over to A for payment to the collector. If, however, any person before September 3, 1918, made a contract of the character described for the sale of candy with any person other than a dealer as defined im article 48, no tax is payable in respect of such sale by him. Art. 46. Contract of sale before September 3, 1918, of article then taxable. — If before September 3, 1918, A, a manufacturer of chewing gum or other article taxable under the Revenue Act of 1917, made with B, a wholesale^ a contract which does not permit the addition to the amount payable under the contract of the difference between the present tax and the corresponding tax imposed by the Revenue Act of 1917, then B is liable for such difference. A must collect and pay to the collector as provided in article 47 the portion of the tax for which B is so liable, and he must also include in his return and pay the portion of the tax for which B is not so liable. If B also made before September 3, 1918 a contract of the character described with C, a retailer, the liability for the tax thus imposed on B is transferred from B to C, who is liable for the difference between the tax imposed by the present statute and the tax imposed by the Revenue Act of 1917. B must collect and pay over to A for payment to the collector the portion of the tax for which C is so liable. For example, if any person made before September 3, 1918, a contract of the character described for the sale of chewing gum with any person other than a dealer as denned in article 48, the tax to be collected under the present statute will be the tax in force on September 3, 1918; that is, the tax under the Revenue Act of 1917. Art. 47. Return of tax. — Each person receiving any payments referred to in section 1312 of the statute shall collect the amount of the tax, if 1 any, imposed by such section from the person making such payments, and shall make monthly returns under oath in dupli- cate and pay the taxes so collected to the collector of the district in which his principal office or place of business is located. Any person making a refund of any payment upon which the fax is so collected may repay therewith the amount of the tax collected on such pay- ment; and the amount so repaid may be credited against amounts included in any subsequent monthly return. The return shall In* made on Form 728 (revised) on or before the last day of the month following the month in which the sale is made, as provided in article 37. The tax shall without assessment by the Commissioner or notice from the collector be due and payable to the collector at the time fixed for filing the return. If the tax is not paid when due, there shall be. added as a part of the tax a penalty of 5 per cent, together 2G EXCISE TAXES ON SALES BY MANUFACTURER. §§1313,1314 with interest at the rate of 1 per cent for each full month from the time when the tax became (hie. Art. -IS. Meaning of "dealer." — The term "dealer" includes not only dealers in the ordinary sense — that is, persons engaged in the business of selling articles — hut also a person who purchases an article with the intention of using it in the manufacture or produc- tion of any article intended for sale. The term does not include a person buying an article for his personal consumption or u^e. The United States, a State, Territory, or a political subdivision thereof, or a foreign government, purchasing an article for its own use is not a dealer. FRACTIONAL PART OF CENT. Sic. 1313. That in the payment of any tax under this Act not payable by stamp a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent. Art. 49. When fractional part of cent may be disregarded. — In the payment of taxes, and in each step or computation necessary in de- termining the amount of the tax, a fractional part of a cent may be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent. MEDIUM OF PAYMENT OF TAX. Sec. 1314. That collectors may receive, at par with an adjustment for accrued interest, certificates of indebtedness issued by the United States and uncertified checks in payment of income, war-profits and excess-profits taxes and any other taxes payable other than by stamp, during such time and under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe; but if a check so received is not paid by the bank on which it is drawn the person by whom such check has been tendered shall remain liable for the payment of the tax and for all legal penalties and additions the same as if such check had not been tendered. Art. 50. Payment of tax by uncertified checks. — Collectors may accept uncertified checks in payment of excise taxes, provided such checks are collectible at par;. that is, for their full amount, without any deduction for exchange or other charges. The collector will stamp on the face of each check before deposit the words /'This check is in payment of an obligation to the United States and must be paid at par. No protest," with his name and title. The day on which the collector receives the check will be considered the elate of pay- ment so far as the taxpayer is concerned, unless the check is returned dishonored. If one check is remitted to cover two or more persons' taxes, the remittance must be accompanied by a letter of transmittal stating (a) the name of the drawer of the check; (6) the amount of the check; (c) the amount of any cash, money order, or other instru- ment included in the same remittance; (d) the name of each person whose tax is to be paid by the remittance; (e) the amount of the payment on account of each person; and (/) the kind of tax paid. §§1319,1309 EXCISE TAXES ON SALES BY MANUFACTURER. 27 Art. 51. Procedure with respect to dishonored checks. — If the bank on which any such check is drawn should refuse to pa}- it at par, the check should be returned through the depositary bank and be treated in the same manner as a bad check. All expenses incident to the attempt to collect such a check and the return of it through the depositary bank must be paid by the drawer of the check to the bank on which it is drawn, since no deduction can be made from amounts received in payment of taxes. See section 3210 of the Revised Stat- utes. If any taxpayer whose check has been returned uncollected by the depositary bank should fail at once to make the check good, the collector should proceed to collect the tax as though no check had been given. A taxpayer who tenders a certified check in payment for taxes is also not released from his obligation until the check has been paid. See chapter 191 of the Act of March 2, 1911. MISREPRESENTATION OF TAX. Ski". !:'. 19. That whoever in connection with the .sale or lease, or offer for sale or lease, of any article, or for the purpose of making such sale or lease, makes any statement, written or oral, (1) intended or calculated to lead any person to believe that any part of the price at which such article is sold or leased, or offered for sale or lease, consists of a tax imposed under the author- ity of the United .States, or (2) ascribing a particular part of such price to a tax imposed under the authority of the United States, knowing that such state- ment is false or that the tax is not so great as the portion of such price ascribed to such tax, shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not more than §1,000 or by imprisonment not exceeding one year, or both. Art. 52. Misrepresentation of tax. — If a manufacturer or other vendor misrepresents the tax, he is guilty of a misdemeanor and is liable to a fine of $1,000 and to imprisonment for a year. This provision is designed, among other things, to prevent a vendor adding more than the amount of the tax to the price of an article and representing that the increase is due to the tax. AUTHORITY FOR REGULATIONS. Sec. 1309. Thai the Commissioner, with the approval of the Secretary, is hereby authorized to make all needful rules and regulations for the enforce- inent of I ho provisions of this Act. Art. 53. 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 Internal licitnuc. Approved May 1, 1919: J. H. MOYLE, Acting Secretary of the Treasury. INDEX. [References are to articles.] Accessories for automobiles and motorcycles, taxability 14 16 Adjustment of tax 4 Agent, sales by 8 Authority for regulations 53 Automobiles : Attachments and accessories, taxability 12 Chassis 15 Definition 11 Rate of tax 11, 12, 13 Scope of tax 11 Taxability 11 "Automobile trucks and automobile wagons, : ' definition 12 Basis of tax 3 Boats, taxability 32 Branch houses, return of tax 37 Cameras, taxability 20 Candy, taxability 22 Chewing gum, taxability 19 Children 's toys and games 18 Cigar or cigarette holders, taxability 27 Collection of tax, extension of existing statutes 39 Colorable sales 36 Commissions to agents, deduction in computing price for purpose of .tax 4 Computation of tax, fractional part of cent 49 Conditional sales, liability to tax 9 Contract affecting liability of manufacturer to tax 44, 45, 4G Credits: Arl Icles returned 5 Overpayment of tax * 41 Taxes already paid 6 Date tax effective 1 Dealer, burden of tax transferred to 44 Deductions from price in computing same for purpose of tax 1 Definitions: ' ' Automobile " '. 11 "Automobile truek or wagon " 12 "Customarily sells " 34 "Dealer " 4S "Importer " 2 "Manufacturer " 2, 7 "Manufacturing agent" 7 "Motorcycle"..... 13 "Parts" 15 "Person" 2 "Piano player" 17 "Producer" 2 "Purchaser" 2 "Retailer" 31 29 30 INDEX. Definitions — Continued. "Sale" 2,3 '"Sale in foreign commerce" 42 old" 2 "Vendor " 2 Delivery charges 4 Dictographs and dictaphones, taxability 17 Discount, deduction in computing price for purpose of tax 4 Distributor of commodities, sales by 8 Electric fanB, taxability 25 Exchange of goods, effect 5 Exemption: Of export sale 42 Sales to States 10 Expenses of sale, deduction in computing price for purpose of tax....: 4 Export, sales for, taxability 42 Fans, electric, taxability 25 Films, photographic 21 Firearms, taxability 22 Fishing rods and reels, taxability 18 Footballs, taxability 18 Foreign commerce, taxability of sales in 42 Fractional part of cent , disregard of, in computing tax 49 Freight charges, inclusion in computing price for purpose of tax 4 Fur goods, taxability 31 Games, taxability 18 Glace fruits, taxability 22 Golf balls and clubs, taxability 18' Government, sales to 10 Graphophones and accessories, taxability 17 Guarantee as to quality 5 Gum, taxability 19 Hook-and-ladder trucks, taxability ! 11 Hose carts, taxability m 11 Humidors, taxability 27 Hunting garments, taxability 30 "Importer," definition ' 2 Inspection of books of persons liable to tax U 40 Island possessions of United States, taxability of articles sold in commerce 38 Knives, taxability 24 Lens, taxability - 20 List price of commodity as basis of tax 3 Liveries, taxability L 29 Manufacturer: Definition 2 Liability for tax 7 Retailer 34 Misrepresentation of tax, penalty 52 Motorcycles, taxability 13 Side cars 13 Musical instruments, taxability 17 Organs, taxability 17 "Parts:" Automobiles, taxability 14, 15 Games and sporting goods, taxability ........... 18 INDEX. 31 Payment of tax 8, 37, 50, 51 Penalties 40, 52 Philippine Islands, sales to 38 "Piano players:" Definition 17 Taxability 17 Pipes, taxabilit y 27 Political subdivision of State, taxability of articles sold to 10 Porto Rico, sales to 38 Possessions of United States, trade with 3<:i Presumption as to time title passes 9 Price of commodity sold as basis of tax 3 " Producer " definition 2 Promulgation of regulations 53 Rebate, adjustment of tax in case of 4 Receivers, liability to tax 8 Records, used in connection with musical instrument, talking machine, etc., taxability ] 7 Refund of tax on rescission of sale 5 Refunds of tax 41 Repeal of former taxes 35 Rescission of sale, effect 5 Return: Manufacturer 37, 47 Riding habits, taxability 30 Sale of commodity as basis of tax 3, 9 Sales to United States and to States 10 Scope of tax, automobiles 11 Secondhand automobiles, taxability 11 Side cars for motor cycles, taxability „ 13 Slot machines 28 Smokers' articles, taxability 27 Soaps, taxability 33 Speedometers, taxability , 16 Sporting goods-; and games, taxability 18 State, taxability of articles sold to 10 Talking machines, taxability 17 Tennis balls and rackets, taxability 18 Thermos bottles, taxability 20 Time for payment of tax , 37 Rendering returns 37 When tax attaches !i Tires, automobile 14 Title, passage of 9 Toilet soaps, taxability '■'<■'■ Toys, taxability 18 ( !ameras, taxability 20 Tractors, taxability 11 Trailers, taxability 16 Transfer of burden of tax 44 Virgin Islands, sales to 38 Wholesale, manufacturer selling at both wholesale and retail 34 Yachts, taxability 32 o • I University of California SOUTHERN REGIONAL LIBRARY FACILITY 305 De Neve Drive - Parking Lot 17 • Box 951388 LOS ANGELES, CALIFORNIA 90095-1388 Return this material to the library from which it was borrowed. 7/ LIBRARY UNIVERSITY OF GALJFGRNIA T.OS ANOHLBfi Manufactured by a GAYLORD BROS. 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