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United States Code (Last Updated: May 24, 2014) |
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Title 26. INTERNAL REVENUE CODE |
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SubTitle D. Miscellaneous Excise Taxes |
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Chapter 32. MANUFACTURERS EXCISE TAXES |
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SubChapter G. Exemptions, Registration, Etc. |
§ 4221. Certain tax-free sales
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(a) General rule Under regulations prescribed by the Secretary, no tax shall be imposed under this chapter (other than under section 4121 or 4081) on the sale by the manufacturer (or under subchapter A or C of chapter 31 on the first retail sale) of an article— (1) for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture, (2) for export, or for resale by the purchaser to a second purchaser for export, (3) for use by the purchaser as supplies for vessels or aircraft, (4) to a State or local government for the exclusive use of a State or local government, (5) to a nonprofit educational organization for its exclusive use, or (6) to a qualified blood collector organization (as defined in section 7701(a)(49)) for such organization’s exclusive use in the collection, storage, or transportation of blood, but only if such exportation or use is to occur before any other use. Paragraphs (4), (5), and (6) shall not apply to the tax imposed by section 4064. In the case of taxes imposed by section 4051, or 4071, paragraphs (4) and (5) shall not apply on and after October 1, 2016 . In the case of the tax imposed by section 4131, paragraphs (3), (4), and (5) shall not apply and paragraph (2) shall apply only if the use of the exported vaccine meets such requirements as the Secretary may by regulations prescribe. In the case of taxes imposed by subchapter A of chapter 31, paragraphs (1), (3), (4), and (5) shall not apply. In the case of taxes imposed by subchapter C or D, paragraph (6) shall not apply. In the case of the tax imposed by section 4191, paragraphs (3), (4), (5), and (6) shall not apply.(b) Proof of resale for further manufacture; proof of export Where an article has been sold free of tax under subsection (a)— (1) for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture, or (2) for export, or for resale by the purchaser to a second purchaser for export, subsection (a) shall cease to apply in respect of such sale of such article unless, within the 6-month period which begins on the date of the sale by the manufacturer (or, if earlier, on the date of shipment by the manufacturer), the manufacturer receives proof that the article has been exported or resold for use in further manufacture. (c) Manufacturer relieved from liability in certain cases In the case of any article sold free of tax under this section (other than a sale to which subsection (b) applies), and in the case of any article sold free of tax under section 4001(c), 4001(d), or 4053(6), if the manufacturer in good faith accepts a certification by the purchaser that the article will be used in accordance with the applicable provisions of law, no tax shall thereafter be imposed under this chapter in respect of such sale by such manufacturer.
(d) Definitions For purposes of this section— (1) Manufacturer The term “manufacturer” includes a producer or importer of an article, and, in the case of taxes imposed by subchapter A or C of chapter 31, includes the retailer with respect to the first retail sale.
(2) Export The term “export” includes shipment to a possession of the United States; and the term “exported” includes shipped to a possession of the United States.
(3) Supplies for vessels or aircraft The term “supplies for vessels or aircraft” means fuel supplies, ships’ stores, sea stores, or legitimate equipment on vessels of war of the United States or of any foreign nation, vessels employed in the fisheries or in the whaling business, or vessels actually engaged in foreign trade or trade between the Atlantic and Pacific ports of the United States or between the United States and any of its possessions. For purposes of the preceding sentence, the term “vessels” includes civil aircraft employed in foreign trade or trade between the United States and any of its possessions, and the term “vessels of war of the United States or of any foreign nation” includes aircraft owned by the United States or by any foreign nation and constituting a part of the armed forces thereof.
(4) State or local government The term “State or local government” means any State, any political subdivision thereof, or the District of Columbia.
(5) Nonprofit educational organization The term “nonprofit educational organization” means an educational organization described in section 170(b)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.
(6) Use in further manufacture An article shall be treated as sold for use in further manufacture if— (A) such article is sold for use by the purchaser as material in the manufacture or production of, or as a component part of, another article taxable under this chapter to be manufactured or produced by him; or (B) in the case of gasoline taxable under section 4081, such gasoline is sold for use by the purchaser, for nonfuel purposes, as a material in the manufacture or production of another article to be manufactured or produced by him. (7) Qualified bus (A) In general The term “qualified bus” means— (i) an intercity or local bus, and (ii) a school bus. (B) Intercity or local bus The term “intercity or local bus” means any automobile bus which is used predominantly in furnishing (for compensation) passenger land transportation available to the general public if— (i) such transportation is scheduled and along regular routes, or (ii) the seating capacity of such bus is at least 20 adults (not including the driver). (C) School bus The term “school bus” means any automobile bus substantially all the use of which is in transporting students and employees of schools. For purposes of the preceding sentence, the term “school” means an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are carried on.
(e) Special rules (1) Reciprocity required in case of civil aircraft In the case of articles sold for use as supplies for aircraft, the privileges granted under subsection (a)(3) in respect of civil aircraft employed in foreign trade or trade between the United States and any of its possessions, in respect of aircraft registered in a foreign country, shall be allowed only if the Secretary of the Treasury has been advised by the Secretary of Commerce that he has found that such foreign country allows, or will allow, substantially reciprocal privileges in respect of aircraft registered in the United States. If the Secretary of the Treasury is advised by the Secretary of Commerce that he has found that a foreign country has discontinued or will discontinue the allowance of such privileges, the privileges granted under subsection (a)(3) shall not apply thereafter in respect of civil aircraft registered in that foreign country and employed in foreign trade or trade between the United States and any of its possessions.
(2) Tires (A) Tax-free sales Under regulations prescribed by the Secretary, no tax shall be imposed under section 4071 on the sale by the manufacturer of a tire if— (i) such tire is sold for use by the purchaser for sale on or in connection with the sale of another article manufactured or produced by such purchaser; and (ii) such other article is to be sold by such purchaser in a sale which either will satisfy the requirements of paragraph (2), (3), (4), or (5) of subsection (a) for a tax-free sale, or would satisfy such requirements but for the fact that such other article is not subject to tax under this chapter. (B) Proof Where a tire has been sold free of tax under this paragraph, this paragraph shall cease to apply unless, within the 6-moth period which begins on the date of the sale by him (or, if earlier on the date of the shipment by him), the manufacturer of such tire receives proof that the other article referred to in clause (ii) of subparagraph (A) has been sold in a manner which satisfies the requirements of such clause (ii) (including in the case of a sale for export, proof of export of such other article).
(C) Subsection (a)(1) does not apply Paragraph (1) of subsection (a) shall not apply with respect to the tax imposed under section 4071 on the sale of a tire.
(3) Tires used on intercity, local, and school buses Under regulations prescribed by the Secretary, the tax imposed by section 4071 shall not apply in the case of tires sold for use by the purchaser on or in connection with a qualified bus.
Codification
Section 1207(b)(1)–(3)(A) of Pub. L. 109–280, which directed the amendment of section 4221 without specifying the act to be amended, was executed to this section, which is section 4221 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. See 2006 Amendment notes below.
Prior Provisions
A prior section 4221, act Aug. 16, 1954, ch. 736, 68A Stat. 495, related to exemption for articles taxable as jewelry, prior to repeal by Pub. L. 85–859, § 119(a).
Amendments
2012—Subsec. (a). Pub. L. 112–141 substituted “
Pub. L. 112–140, §§ 1(c), 402(c), temporarily substituted “
Pub. L. 112–102 substituted “
2011—Subsec. (a). Pub. L. 112–30 substituted “
2010—Subsec. (a). Pub. L. 111–152 inserted at end of concluding provisions “In the case of the tax imposed by section 4191, paragraphs (3), (4), (5), and (6) shall not apply.”
2006—Subsec. (a). Pub. L. 109–280, § 1207(b)(2), (3)(A), in concluding provisions, substituted “Paragraphs (4), (5), and (6)” for “Paragraphs (4) and (5)” and inserted at end “In the case of taxes imposed by subchapter C or D, paragraph (6) shall not apply.” See Codification note above.
Subsec. (a)(6). Pub. L. 109–280, § 1207(b)(1), added par. (6). See Codification note above.
2005—Subsec. (a). Pub. L. 109–59 substituted “2011” for “2005” in concluding provisions.
2004—Subsec. (a). Pub. L. 108–357 substituted “or 4081” for “, 4081, or 4091” in introductory provisions.
1998—Subsec. (a). Pub. L. 105–178 substituted “2005” for “1999” in concluding provisions.
Subsec. (c). Pub. L. 105–206 substituted “4053(6)” for “4053(a)(6)”.
1993—Subsec. (c). Pub. L. 103–66 substituted “4001(d)” for “4002(b), 4003(c), 4004(a)”.
1991—Subsec. (a). Pub. L. 102–240 substituted “1999” for “1995” in concluding provisions.
1990—Subsec. (a). Pub. L. 101–508, § 11221(b), substituted “subchapter A or C of chapter 31” for “section 4051” in introductory provisions and inserted at end “In the case of taxes imposed by subchapter A of chapter 31, paragraphs (1), (3), (4), and (5) shall not apply.”
Pub. L. 101–508, § 11211(d)(3), substituted “1995” for “1993” in concluding provisions.
Subsec. (c). Pub. L. 101–508, § 11221(d)(1), substituted “section 4001(c), 4002(b), 4003(c), 4004(a), or 4053(a)(6)” for “section 4053(a)(6)”.
Subsec. (d)(1). Pub. L. 101–508, § 11221(d)(2), substituted “taxes imposed by subchapter A or C of chapter 31” for “the tax imposed by section 4051”.
1989—Subsec. (c). Pub. L. 101–239 struck out “or 4083” after “4053(a)(6)”.
1987—Subsec. (a). Pub. L. 100–203, § 10502(d)(4), substituted “(other than under section 4121, 4081, or 4091) on the sale by the manufacturer” for “(other than under section 4121 or section 4081 (at the Highway Trust Fund financing rate)) on the sale by the manufacturer” in introductory text.
Pub. L. 100–203, § 9201(b)(1), inserted at end “In the case of the tax imposed by section 4131, paragraphs (3), (4), and (5) shall not apply and paragraph (2) shall apply only if the use of the exported vaccine meets such requirements as the Secretary may by regulations prescribe.”
Pub. L. 100–17 substituted “1993” for “1988”.
1986—Subsec. (a). Pub. L. 99–514, as amended by Pub. L. 99–499, § 521(d)(4)(B), in introductory text, inserted “or section 4081 (at the Highway Trust Fund financing rate)” after “section 4121” as the probable intent of Congress, notwithstanding directory language that the insertion be made before “section 4121”, and substituted “or 4071” for “4071, or 4081 (at the Highway Trust Fund financing rate)” in last sentence.
Pub. L. 99–499, § 521(d)(4)(A), inserted “(at the Highway Trust Fund financing rate)” after “4081” in last sentence.
1984—Subsec. (a). Pub. L. 98–369, § 735(c)(8)(A), inserted “(or under section 4051 on the first retail sale)”.
Subsec. (c). Pub. L. 98–369, § 735(c)(8)(B), substituted “section 4053(a)(6)” for “section 4063(a)(6) or (7), 4063(b), 4063(e),”.
Subsec. (d)(1). Pub. L. 98–369, § 735(c)(8)(C), inserted “, and, in the case of the tax imposed by section 4051, includes the retailer with respect to the first retail sale”.
Subsec. (d)(6). Pub. L. 98–369, § 735(c)(8)(D)(i), struck out provision at end that for purposes of subparagraph (B), the rebuilding of a part or accessory which is exempt from tax under section 4063(c) shall not constitute the manufacture or production of such part or accessory.
Subsec. (d)(6)(A). Pub. L. 98–369, § 735(c)(8)(D)(ii), (iv), struck out “(other than an article referred to in subparagraph (B))” after “such article”, and inserted “or” at end.
Subsec. (d)(6)(B), (C). Pub. L. 98–369, § 735(c)(8)(D)(i), (iii), redesignated subpar. (C) as (B) and struck out former subpar. (B) which related to parts or accessories taxable under former section 4061(b) of this title.
Subsec. (e)(2). Pub. L. 98–369, § 735(c)(8)(E), (F), struck out “and tubes” from heading, and in text struck out “or inner tube” and “or tube”, as the case may be, after “tire” wherever appearing.
Subsec. (e)(3) to (6). Pub. L. 98–369, § 735(c)(8)(G), added par. (3), struck out par. (4) which related to bicycle tires or tubes sold to bicycle manufacturers in general, the definition of a bicycle tire, and proof, struck out par. (5) which related to tires, tubes and tread rubber used on intercity, local, and school buses, and struck out par. (6) which related to bus parts and accessories.
1983—Subsec. (a). Pub. L. 97–424, § 516(b)(2), inserted provision that, in the case of taxes imposed by section 4051, 4071, or 4081, pars. (4) and (5) shall not apply on and after
Subsec. (c). Pub. L. 97–424, § 515(b)(1), substituted “or 4083” for “4083, or 4093” after “4063(e),”.
1980—Subsec. (e)(6). Pub. L. 96–222 inserted provisions respecting selling by a purchaser or a second purchaser.
1978—Subsec. (a). Pub. L. 95–618, § 201(c)(1), inserted provision that paragraphs (4) and (5) not apply to the tax imposed by section 4064.
Pub. L. 95–227 inserted “(other than under section 4121)” after “this chapter”.
Subsec. (c). Pub. L. 95–600 substituted “4063(b), 4063(e),” for “4063(b),”.
Subsec. (d)(7). Pub. L. 95–618, § 233(c)(2), added par. (7).
Subsec. (e)(5). Pub. L. 95–618, § 233(c)(1), substituted provisions relating to the applicability of the taxes imposed by section 4071(a)(1) and (3) in the case of tires or inner tubes for tires sold for use by the purchaser on or in connection with a qualified bus and the tax imposed by section 4071(a)(4) in the case of tread rubber sold for use by the purchaser in the recapping or retreading of any tire to be used by the purchaser on or in connection with a qualified bus for provisions relating to the applicability of the tax imposed by section 4061(a) to a bus sold to any person for use exclusively in transporting students and employees of schools operated by State or local governments or by nonprofit educational organizations.
Subsec. (e)(6). Pub. L. 95–618, § 232(a), added par. (6).
1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.
1971—Subsec. (c). Pub. L. 92–178 inserted reference to section 4063(a)(6) or (7).
1969—Subsec. (d)(5). Pub. L. 91–172 substituted “section 170(b)(1)(A)(ii)” for “section 503(b)(2)”.
1965—Subsec. (d)(6)(B). Pub. L. 89–44, § 208(d)(1), struck out “a radio or television component taxable under section 4141, or a camera lens taxable under section 4171,”.
Subsec. (d)(6). Pub. L. 89–44, § 801(c), inserted sentence providing that for purpose of subpar. (B), the rebuilding of a part or accessory which is exempt from tax under section 4063(c) shall not constitute the manufacture or production of such part or accessory.
Subsec. (e)(2). Pub. L. 89–44, § 208(d)(2)–(5), struck out reference to automobile receiving sets from catchline and wherever appearing in subpars. (A) to (C), and reference to tax imposed under section 4141 of this title from subpars. (A) and (C).
Subsec. (e)(3). Pub. L. 89–44, § 208(d)(6), struck out par. (3) which related to musical instruments sold for religious use.
Subsec. (e)(5). Pub. L. 89–44, § 801(d)(1), added par. (5).
Subsec. (f). Pub. L. 89–44, § 208(d)(7), struck out subsec. (f) which related to sales of mechanical pencils and pens for export.
1961—Subsec. (d)(6)(C). Pub. L. 87–61 added subpar. (C).
1960—Subsec. (d)(4). Pub. L. 86–624 substituted “any State, any political subdivision thereof, or the District of Columbia” for “any State, Hawaii, the District of Columbia, or any political subdivision of any of the foregoing”.
Subsec. (e)(4). Pub. L. 86–418 added par. (4).
1959—Subsec. (d)(4). Pub. L. 86–70 struck out “Alaska,” before “Hawaii”.
Subsec. (d)(5). Pub. L. 86–344 included in definition of “nonprofit educational organization” a school operated as an activity of certain organizations exempt from the income tax and having a regular situs, faculty, curriculum and student body.
Effective Date Of Amendment
Amendment by Pub. L. 112–141 effective
Amendment by Pub. L. 112–140 to cease to be effective on
Amendment by Pub. L. 112–140 effective
Amendment by Pub. L. 112–102 effective
Amendment by Pub. L. 112–30 effective
Amendment by Pub. L. 111–152 applicable to sales after
Amendment by Pub. L. 109–280 effective
Amendment by Pub. L. 108–357 applicable to aviation-grade kerosene removed, entered, or sold after
Amendment by Pub. L. 103–66 effective
Amendment by section 11221(b), (d)(1), (2) of Pub. L. 101–508 effective
Pub. L. 100–647, title I, § 1017(c)(5),
Amendment by section 9201(b)(1) of Pub. L. 100–203 effective
Amendment by section 10502(d)(4) of Pub. L. 100–203 applicable to sales after
Amendment by Pub. L. 99–514 applicable to gasoline removed (as defined in section 4082 of this title as amended by section 1703 of Pub. L. 99–514) after
Amendment by Pub. L. 99–499 effective
Amendment by Pub. L. 98–369 effective, except as otherwise provided, as if included in the provisions of the Highway Revenue Act of 1982, title V of Pub. L. 97–424, to which such amendment relates, see section 736 of Pub. L. 98–369, set out as a note under section 4051 of this title.
Amendment by section 515(b)(1) of Pub. L. 97–424 applicable to articles sold after
Amendment by Pub. L. 96–222 effective as if included in the provision of the Energy Tax Act of 1978, Pub. L. 95–618, to which such amendment relates, see section 108(c)(7) of Pub. L. 96–222, set out as a note under section 48 of this title.
Amendment by section 201(c)(1) of Pub. L. 95–618 applicable with respect to 1980 and later model year automobiles, see section 201(g) of Pub. L. 95–618, set out as an Effective Date note under section 4064 of this title.
Pub. L. 95–618, title II, § 232(c),
Amendment by section 233(c)(1), (2) of Pub. L. 95–618 effective on first day of first calendar month which begins more than 10 days after
Pub. L. 95–600, title VII, § 701(ff)(3),
Amendment by Pub. L. 95–227 applicable with respect to sales after
Amendment by Pub. L. 92–178 applicable with respect to articles sold on or after the day after
Amendment by Pub. L. 91–172 effective on
Amendment by section 208(d) of Pub. L. 89–44 applicable with respect to articles sold on or after
Amendment by section 801(c), (d)(1) of Pub. L. 89–44 applicable with respect to articles sold on or after
Amendment by Pub. L. 87–61 applicable only in the case of gasoline sold on or after
Amendment by Pub. L. 86–624 effective on
Pub. L. 86–418, § 4,
Amendment by Pub. L. 86–344 effective
Amendment by Pub. L. 86–70 effective
Effective Date
Section effective on first day of first calendar quarter which begins more than 60 days after