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$ 1-11.102 Manufacturers excise taxes. § 1-11.102–1 Motor vehicles.
(a) A tax at the rates indicated below is imposed upon the following articles (including parts and accessories sold therewith) sold by a manufacturer, producer, or importer:
(1) Chassis and bodies of trucks, buses, truck and bus trailers, and semitrailers, and tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer10 percent; except that this tax does not apply to equipment designed for off-theroad use, such as certain military vehicles (including oxygen or bomb dollies), construction equipment, and equipment designed for use at mines, factories, railroad stations, and farms;
(2) Chassis and bodies of automobiles, and of trailers and semitrailers (other than house trailers) suitable for use with passenger automobiles-10 percent prior to June 22, 1965; 7 percent from June 22, 1965 through December 31, 1965; 6 percent from January 1, 1966 through March 15, 1966; 7 percent from March 16, 1966 through March 31, 1968; 2 percent from April 1, 1968 through December 31, 1968; 1 percent after December 31, 1968; and
(3) Parts or accessories for trucks and buses—when sold separately from a truck, bus, or other item taxable as indicated in subparagraph (1) of this paragraph-8 percent. Parts or accessories are defined to include any article
(i) The primary use of which is to improve, repair, replace, or serve as a component part of a truck or bus;
(ii) Designed to be attached to or used in connection with a truck or bus or to add to its utility or ornamentation; or
(iii) The primary use of which is in connection with a truck or bus whether or not essential to its operation or use. Spark plugs, storage batteries, leaf springs, coils, timers, and tire chains, which are suitable for use on or in connection with, or as component parts of, a taxable vehicle are treated as parts or accessories whether or not primarily adapted for such use. However, the term “parts or accessories" does not include tires or inner tubes. The tax on parts or accessories does not apply to any article sold for use (or for a single resale for use) as material in the manufacture of, or as a component part of, any article whether or not such article
is subject to a manufacturers excise tax. The contract price of supplies purchased by any agency shall not include an amount for the manufacturers excise tax on parts or accessories purchased for use in the manufacture of any article.
(b) Bodies are exempt from tax when sold by the manufacturer to a manufacturer of motor vehicles to be sold by the purchaser; however, a chassis manufacturer who purchases a body tax free is required to pay a tax on his sale of the completed vehicle as the manufacturer of both the chassis and the body. A manufacturer of motor vehicle chassis cannot sell such chassis tax free to manufacturers of motor vehicle bodies. $ 1-11.102–2 Tires and tubes.
(a) A tax at the rates indicated in subparagraphs (1) through (5) of this paragraph is imposed on the following supplies, made wholly or in part of rubber, including synthetic and substitute rubber, sold by a manufacturer, producer, or importer:
(1) Tires of the type used on highway vehicles, which includes motor vehicles which are highway vehicles, and vehicles of the type used with motor vehicles which are highway vehicles-10 cents per pound;
(2) Other tires, which are designed to fit the wheel of any type of vehicle capable of transporting a person or burden (other than laminated tires which consist wholly of scrap rubber from used tire casings with an internal metal fastening agent)-5 cents per pound;
(3) Inner tubes, which include any type of air container for pneumatic tires—10 cents per pound on total weight, including air valves and stems;
(4) Laminated tires (not of the type used on highway vehicles) which consist wholly of scrap rubber from used tire casings with an internal metal fastening agent-1 cent per pound; and
(5) Tread rubber, which includes any material commonly or commercially known as tread rubber or camelback of a type used in retreading or recapping tires—5 cents per pound. An exemption exists for the sale of tread rubber or camelback by a manufacturer to a purchaser for use by that purchaser other than for recapping or retreading tires of the type used on highway vehicles. In addition, if tread rubber, upon which the tax has been paid, is sold for use or is used other than for recapping or retreading tires of the type used on highway vehicles, the manufacturer is entitled to a refund or credit of the tax: Provided, That the credit under paragraph (b) of this section is not available. The contract price for supplies purchased by an agency will not include an amount for the manufacturers excise tax on tread rubber to the extent that this exemption or refund or credit is available to the manufacturer. In determining weight of taxable tires under subparagraphs (1) and (2) of this paragraph, metal rims or rim bases are excluded, but any other material or fastening device that forms a part of the tire is included. The tax imposed under subparagraphs (1) and (2) of this paragraph does not apply to tires which are not more than 20 inches in diameter and not more than 134 inches in cross section, if such tires are of all-rubber construction without fabric or metal reinforcement, nor does it apply to tires of extruded tiring with an internal wire fastening agent.
(b) The exemption for sales for further manufacture does not apply to taxable tires and tubes (see § 1–11.202). However, if tax-paid tires and tubes normally sold in connection with the sale by a manufacturer of a taxable motor vehicle are sold therewith, a credit against the tax on the motor vehicle is allowed to the extent of the motor vehicle tax rate applied to the manufacturers
ed to the manufacturers purchase price on the tires and tubes. The contract price for supplies purchased by any agency shall not include an amount for manufacturers excise tax on tires and tubes to the extent that this credit is available to the manufacturer. 8 1-11.102–3 Gasoline.
(a) A tax of 4 cents per gallon is imposed on gasoline sold by a producer or importer. Gasoline means all products commonly or commercially known or sold as gasoline which are suitable for use as a motor fuel. The tax does not apply to the sale of gasoline to a producer, which is defined to include a refiner, compounder, blender, or dealer who sells gasoline exclusively to producers of gasoline.
(b) Under section 6421 of the Internal Revenue Code, the ultimate purchaser of gasoline is entitled to a refund of 2 cents per gallon for gasoline used for certain nonhighway purposes. Agencies may, to the extent economically feasible, avail themselves of such refunds. Applications for refunds shall be in accordance with
pertinent requirements of the Internal Revenue Service. § 1-11.102–4 Lubricating oils.
(a) A tax of 6 cents per gallon is imposed on lubricating oil (other than cutting oils) sold by the manufacturer or producer unless sold to another manufacturer or producer of lubricating oils for resale. Lubricating oil means all oils which are either sold for use as a lubricant or are suitable for use as a lubricant. The tax applies unless
(1) The sale is exempt from tax under S1-11.202; or
(2) The oil has been determined by the Commissioner of Internal Revenue to be “seldom used as a lubricant” and is sold for a nonlubricating use; or
(3) The oil is sold as cutting oil under the procedure described in paragraph (c) of this section.
(b) The following oils have been determined by the Commissioner of Internal Revenue to be "seldom used as lubricant” and, thus, may be sold tax free: Castor oil, petroleum white oil of certain specifications, crude neatsfoot oil, transformer or insulating oil, and a certain product used as an additive to the fuel used in internal combustion engines.
(c) Oil sold as cutting oil is not subject to the tax if the manufacturer or producer follows one of three procedures set forth in this paragraph.
(1) Lubricating oils may be sold tax free by the manufacturer or producer as cutting oil in any case where:
(i) The manufacturer or producer packages the oil in containers of 5 gallons or less furnished by him and labeled by him to indicate use of the oil only in cutting and machining operations on metals;
(ii) Any advertising of the oil so packaged and labeled indicates that the oil is for use only in cutting and machining operations on metals; and
(iii) The oil so packaged and labeled is sold by the manufacturer or producer to a purchaser for such use by him or for resale by him for such use.
(2) Where the Commissioner of Internal Revenue has determined oil to be suitable for use as a lubricant only in cutting and machining operations on metals, the oil may be sold tax free by the manufacturer or producer as cutting oils, unless the manufacturer has definite knowledge, prior to or at the time of the sale, that the oil is not being purchased for use, or resale for use, in cutting and
machining operations on metals. Oils as Subpart 1-11.2—Exemptions From to which the Commissioner has made
Federal Excise Taxes such a determination may be sold tax free whether in bulk or otherwise. How § 1-11.200 Scope of subpart. ever, the Commissioner may require that This subpart sets forth the applicabilthe oil be specifically represented to the ity and scope of general exemptions, purchaser, whether by labeling or other credits, and refunds from the Federal wise, as being suitable for use only in
excise taxes outlined in Subpart 1-11.1, cutting and machining operations on and the policy governing when such exmetals.
emptions, credits, and refunds are to be (3) Lubricating oils which are sold for
claimed. Particular exemptions reuse, or for resale for use in cutting and stricted to a single tax are set forth in machining operations on metals, but Subpart 1-11.1 in the discussion of each which may not be sold tax free under one of the procedures described above, may be sold tax free, provided the manufac
§ 1–11.201 Retailers excise taxes. turer obtains from the purchaser a prop No retailers excise tax is imposed: erly executed cutting oil certificate. The (a) On the sale of special fuels for form set forth in § 1-11.501–3 shall be the exclusive use of any State, any utilized for this purpose.
political subdivision thereof, or the Dis(d) The ultimate purchaser of lubri trict of Columbia, or with respect to the cating oil (other than cutting oils, im use thereof by any of the foregoing. ported lubricating oils, or re-refined oil) (b) On the sale of special fuels for is entitled to a refund of 6 cents per gal
export or for shipment to a possession lon on oil purchased tax paid which is
of the United States (which for the used otherwise than as a lubricant in a
purpose of this exemption includes
Puerto Rico), and in due course so exhighway motor vehicle.
ported or shipped § 1-11.102–5 Fishing equipment.
(1) This exemption shall be utilized A tax of 10 percent is imposed upon
by purchasing on a tax-exclusive basis fishing equipment (including parts or ac
and furnishing the required proof of excessories sold therewith) sold by a manu
portation or shipment to a possession if:
(i) The purchase is substantial, and facturer, producer, or importer.
(ii) Exportation or shipment to a pos8 1-11.102–6 Firearms, shells, and car. session is intended to follow not more tridges.
than 6 months after title passes to the (a) A tax is imposed at the rate of 10
Government. percent upon pistols and revolvers; and
(2) To qualify for the exemption of
sales for export or for shipment to a at the rate of 11 percent on other fire
possessionarms, shells, and cartridges sold by a
(i) The supplies must be identified as manufacturer, producer, or importer. having been sold by the manufacturer The tax does not attach when such ar (if the tax is a retailers excise tax) for ticles are purchased with funds appro export or shipment to a possession. The priated for the Military Departments. words "for export or shipment to a pos
(b) Chapter 53A of the Internal Rev session" incorporated into or stamped on enue Code imposes a transfer tax and a
a contract or purchase order are accepttax on the manufacture of machineguns
able to the Internal Revenue Service as and certain other firearms. Transfer to,
evidence that the sale is for export or
for shipment to a possession. In solicior manufacture for, the United States is
tations and contracts, the terms of which specifically exempted.
imply that the supplies will be either § 1-11.103 Excise taxes on facilities and exported or shipped to a possession (e.g., services.
delivery to a port of embarkation or speChapter 33 of the Internal Revenue cial packing requirements for overseas Code imposes excise taxes on communi shipment) where the purchase is not cations and certain transportation of substantial and it is therefore desired to persons by air. In general, the tax is purchase on a Federal Excise tax-inclubased upon the amount paid for the sive basis, the solicitations and the conservice and is imposed upon the person tract should clearly state that proof of paying for the service.
export certificates will not be issued.
(ii) The supplies must be exported or shipped to a possession in due course. Proof of export or shipment will be furnished to the contractor in the form set forth in § 1-11.501-1.
(c) On the sale of special fuels to retailers for resale (sales by the United States, or any agency or instrumentality thereof, are not exempt unless specifically made exempt by statute).
(d) On the sale of special motor fuels for use or used in the propulsion of vessels of war or military aircraft of the type enumerated in § 1–11.202(d).
(e) On the sale of special fuels to a nonprofit educational organization or with respect to the use thereof by a nonprofit educational organization. [31 F.R. 6372, Apr. 27, 1966) § 1-11.202 Manufacturers excise taxes.
No manufacturers excise tax is imposed:
(a) On the sale of any article for use by the purchaser for further manufacture or for resale to a second purchaser in further manufacture. (An article shall be treated as sold for use in further manufacture if sold for use by the purchaser as material in the manufacture or production of, or as a component part of, another taxable article to be manufactured or produced. In the case of truck or bus parts and accessories it is not necessary that the produced article be a taxable article. This exemption does not apply to tires or inner tubes.);
(b) On the sale of any article for export, or for shipment to a possession of the United States (which for the purpose of this exemption includes Puerto Rico). This exemption shall be obtained only when the purchase is substantial and exportation or shipment to a possession is intended to follow not more than 6 months after title passes. For proper utilization of this exemption, see § 111.201(b);
(c) On the sale of any article for resale to a second purchaser for export. If articles upon which a manufacturers excise tax has been paid are resold by a dealer for export, or for shipment to a possession, the manufacturer is entitled to a credit or refund of the tax paid. If it is economically advantageous to do so, this credit or refund shall be utilized by purchase from a dealer on a tax-exclusive basis and execution of the required exemption certificate set forth in § 1-11.501-1;
(d) On sales of supplies for use as
fuel supplies, ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, including aircraft owned by the United States or by any foreign nation and constituting a part of the armed forces thereof, and guided missiles and pilotless aircraft owned or chartered by the United States. This exemption and the exemption from the retailers excise tax on special motor fuels (see § 1-11.201 (d) shall be utilized by purchasing on a tax-exclusive basis and furnishing the required exemption certificate (see § 111.501-2) only if :
(1) The purchase is substantial;
(2) The contracting officer determines at the time of the purchase that the supplies are intended for use in vessels of war or military aircraft; and
(3) The administrative burden of insuring that the supplies are used for exempt purposes does not make use of the exemption uneconomical. Administrative difficulties normally will not exist if the particular supply is suited exclusively for use in vessels or aircraft. If supplies upon which a manufacturers excise tax has been paid are sold by a dealer for any of the exempt uses enumerated above, the manufacturer is entitled to a credit or refund of the tax paid. If it is economically advantageous to do so, this credit or refund shall be utilized by purchase from a dealer on a tax-exclusive basis and execution of the required exemption certificate set forth in § 1-11.501–2;
(e) On the sale of any article for the exclusive use of a State or local government (including the District of Columbia); and
(f) On the sale of any article to a nonprofit educational organization for its exclusive use. [29 F.R. 10254, July 24, 1964, as amended at 31 F.R. 6372, Apr. 27, 1966) $ 1-11.203 Supplies and services for the
exclusive use of the United States. By virtue of action taken by the Secretary of the Treasury, pursuant to section 4293 of the Internal Revenue Code, exemption is available, and shall be obtained, to the extent indicated, from the following Federal excise taxes:
(a) Tax on communication services and facilities furnished directly to the United States (as distinguished from being furnished to a Government contractor) and paid for directly by the Gov
ernment. (Such exemption is obtained (c) Whenever there is any doubt as to without any exemption certificate); the availability of the Government's im
(b) Tax on transportation of persons munity or exemption from any State or for transportation furnished the United local tax, the matter shall be handled in States upon a Government transporta accordance with § 1-11.000(b). tion request. (Such exemption is obtainable by use of such transportation
Subpart 1-11.4—Contract Clauses request); and
§ 1-11.401 Fixed-price type contracts. (c) [Reserved] [29 F.R. 10254, July 24, 1964, as amended at
The clauses prescribed in this subpart 31 F.R. 6372, Apr. 27, 1966)
are for use in fixed-price type contracts
except those to be performed entirely Subpart 1-11.3—State and Local outside the United States, its possessions, Taxes
and Puerto Rico. § 1-11.301 General.
§ 1-11.401–1 Advertised and certain
negotiated contracts. As used in this section, the term “State and local taxes” includes taxes of the
(a) Use of clause. Except as provided several States, the District of Columbia,
in § 1-11.401–4, the clause set forth in the possessions of the United States, paragraph (c) of this § 1-11.401-1 shall Puerto Rico, and political subdivisions
be used in: thereof.
(1) All formally advertised contracts
except construction contracts; § 1-11.302 Applicability,
(2) All formally advertised construc(a) As a general rule, purchases made tion contracts when the contract price by the Government itself are exempt may reasonably be expected to exceed from State and local sales and use taxes;
ise taxes: $10,000; similarly, personal and real property are (3) Negotiated fixed-price type conexempt from State and local property tracts in excess of $10,000 where the contaxes when the property is both owned tracting officer is satisfied, because of and possessed by the Government. competition or otherwise, that the conThese exemptions shall be made use of tract price does not include any conto the fullest extent available when Goy tingency for State and local taxes; and ernment property is located in a state or
(4) At the discretion of the contractlocal tax jurisdiction, or when purchases ing officer in negotiated fixed-price type are made directly by the Government, contracts in excess of $2,500 but not in by asserting the Government's immunity excess of $10,000. from taxation of its property by States (b) Description. The clause provides and localities, and in case of purchases, that the contract price includes all appliby executing an approved tax exemption cable taxes. It provides for an increase certification.
or decrease in the contract price to com(b) However, when purchases are not pensate for changes in applicable Federal made by the Government itself, but by excise taxes or duties. It does not proa prime contractor of the Government vide for any adjustment in the contract or by a subcontractor under a prime con- price to compensate for changes in State tract, the right to an exemption of the or local taxes (but see § 1-11.401-4(b)). transaction from a sales or use tax may (c) Contract clause. not rest on the Government's immunity
FEDERAL, STATE, AND LOCAL TAXES from direct taxation by States and localities. It may rest instead on provisions
(a) Except as may be otherwise provided of the particular State or local law in
in this contract, the contract price includes
all applicable Federal, State, and local taxes volved, or in some cases, the transaction and duties. may not in fact be expressly exempt from (b) Nevertheless, with respect to any Fedthe tax. Similarly, when property is eral excise tax or duty on the transactions or owned by the Government, but the prop. property covered by this contract, if a statute, erty is in the possession of a contractor
court decision, written ruling, or regulation or subcontractor on tax day, situations
takes effect after the contract date, and may arise where States or localities be
(1) Results in the Contractor being re
quired to pay or bear the burden of any such lieve they may have the right to tax the
Federal excise tax or duty or increase in the property directly or to tax the contrac- rate thereof which would not otherwise have tor's or subcontractor's possession of, been payable on such transactions or propinterest in, or use of that property.
erty, the contract price shall be increased by