tering into a Type A agreement, the district director will furnish copies of Form 2701 upon request.

(2) Each Type A agreement (see paragraph (a) (2) (i) of this section) shall include the following:

(i) The name and address of the supplier, the identification number (if any) assigned to the supplier for use in connection with depositary receipts, and the title and address of the district director;

(ii) A description, in such detail as may be practicable, of all taxable articles to be supplied by the supplier directly to retailers to whom the agreement is to be effective;

(iii) A statement that the agreement is applicable to all taxable articles inventoried pursuant to subdivision (v) of this subparagraph and to all taxable articles supplied by the supplier directly to a retailer during the period for which the agreement is in effect with respect to such retailer, but is not applicable to any taxable article supplied during such period by the supplier to such retailer indirectly through a middleman or otherwise, or supplied from any other source;

(iv) (a) A provision designating the day on which the agreement shall become effective with respect to retailers who are house-to-house salesmen for whom the supplier, prior to such day, has been returning and paying retailers excise tax;

(b) A provision that the period for which the agreement shall be in effect with respect to articles supplied to a particular retailer who is a house-tohouse salesman, for whom the supplier has not previously returned and paid retailers excise tax, shall begin on the day designated by the supplier in an oral or written notice in which the supplier informs such retailer of the effect of such agreement with respect to such retailer;

(v) A provision (a) that the period for which the agreement shall be in effect with respect to articles supplied to a particular retailer who is not a houseto-house salesman shall begin on the day designated by the supplier in writing on such retailer's statement of consent pursuant to paragraph (d) of this section, and (b) that the agreement shall not be in effect with respect to such retailer unless such supplier obtains an inventory of all taxable articles specified in the agreement (exclusive of taxable articles

with respect to which liability for the retailers excise tax has been assumed by a person other than such retailer) which are held by the retailer at the first moment of such day, and which were supplied to the retailer by the supplier or by any other person;

(vi) A provision by which the supplier agrees to return and pay retailers excise tax, computed in accordance with the provisions of the agreement, on (a) all taxable articles inventoried pursuant to subdivision (v) of this subparagraph, as if sold at retail on the day for which inventoried, and (b) all taxable articles supplied by the supplier directly to a retailer during the period for which the agreement is in effect for such retailer, as if such articles were sold at retail on the day on which so supplied;

(vii) A provision setting forth the method to be used in arriving at the tax base which will be used in computing the amount of retailers excise tax for which the supplier is liable pursuant to the agreement;

(viii) A provision by which the supplier agrees that, in the event he has reason to believe that there are facts or circumstances which might warrant a change in the provisions of the agreement relating to the method to be used in arriving at the tax base, he will promptly and fully inform the district director in writing of such facts or circumstances;

(ix) A provision by which the supplier agrees that, except as may be otherwise provided in the agreement or in applicable law or regulations, the supplier shall file one return on Form 720 for each tax-return period, and shall deposit and pay the retailers excise tax due from him by reason of the agreement, in the same manner as if such tax were imposed by law on the supplier as a retailer;

(x) A provision by which the supplier agrees to file with each return on Form 720 a statement showing the amount and kind of tax included in the return for each retailer (other than a retailer who is a house-to-house salesman), and the name and address, of such retailer;

(xi) A provision by which the supplier agrees that, in rendering invoices of taxable articles with respect to which the supplier incurs liability under the agreement, he will show such tax as a separately identified amount;

(xii) A provision by which the supplier agrees that, upon request by any retailer (other than a retailer who is a house-to-house salesman) for whom the supplier pays retailers excise tax, the supplier will furnish to such retailer a written statement of the amounts of such tax paid, the dates of payment, and the district director to whom such payments were made; and

(xiii) Appropriate provision for termination of the period for which the agreement shall be in effect, if any provision is desired in addition to the provisions of the regulations in paragraph (f) of this section.

(3) Each Type B agreement (see paragraph (a) (2) (ii) of this section) shall include the following:

(i) The name and address of the supplier, the identification number (if any) assigned to the supplier for use in connection with depositary receipts, and the title and address of the district director;

(ii) A description of (a) each taxable article with respect to which the supplier agrees to return and pay retailers excise tax pursuant to the agreement and (b), each nontaxable article which will be' supplied with such taxable article for retail sale as a unit;

(iii) A description of the manner in which each taxable article will be labeled, packaged, or marketed to show clearly and visibly the name and address of the supplier and the fact that the retailers excise tax will be paid by the supplier;

(iv) A provision by which the supplier agrees to return and pay retailers excise tax on any taxable article described in the agreement, supplied by the supplier to any vendee at any time during the period for which the agreement is in effect, as if such article were sold at retail on the day on which so supplied;

(v) A provision setting forth the tax base, or the method to be used in arriving at the tax base, which will be used in computing the amount of retailers excise tax for which the supplier is liable pursuant to the agreement;

(vi) A provision by which the supplier agrees that, in the event he has reason to believe that there are facts or circumstances which might warrant a change in the provisions of the agreement relating to the tax base to be used,' he will promptly and fully inform the

district director in writing of such facts or circumstances;

(vii) A provision by which the supplier agrees that, except as may be otherwise provided in the agreement or in applicable law or regulations, the supplier shall file one return on Form 720 for each tax-return period, and shall deposit and pay the retailers excise tax due from him by reason of the agreement, in the same manner as if such tax were imposed by law on the supplier as a retailer;

(viii) Specification of the first day of the period for which the agreement shall be in effect; and

(ix) Appropriate provision for termination of the period for which the agreement shall be in effect, if any provision is desired in addition to the provisions of the regulations in paragraph (f) of this section.

(d) Consent of retailer. (1) A Type A agreement (see paragraph (a) (2) (i) of this section) shall be effective with respect to each retailer (i) who furnishes to the supplier a written statement of consent, in duplicate, in accordance with the provisions of this paragraph, and (ii) to whom the supplier returns the duplicate copy of such consent, on which the supplier, pursuant to subparagraph (3) of this paragraph, has entered the date on which the agreement becomes effective with respect to such retailer. The provisions of this paragraph have no application in the case of a retailer who is a house-to-house salesman.

(2) No particular form is prescribed for use in furnishing the written statement of consent. Such statement and the duplicate copy thereof shall be signed and dated by the retailer, and shall include the following:

(i) The names and addresses of the retailer and of the supplier, and the identification number (if any) assigned to the supplier for use in connection with depositary receipts;

(ii) An identification of the agreement under section 6011(c) of the Code between the supplier and the district director;

(iii) The retailer's consent to the return and payment by the supplier, pursuant to such agreement, of retailers excise tax with respect to (a) any taxable articles which are inventoried pursuant to paragraph (c) (2) (v) of this section, and (b) all taxable articles which are

supplied by the supplier directly to the retailer during the period for which the agreement is in effect with respect to such retailer;

(iv) A statement by the retailer that he will retain, as a record required by the regulations in this part, the duplicate copy of the statement of consent which is returned to him by the supplier and which shows the date on which the agreement becomes effective with respect to such retailer; and

(v) A statement of the retailer's understanding that he is relieved from the duty of making returns, deposits, and payments of retailers excise tax only to the extent that such duty is performed by the supplier pursuant to the agreement.

(3) After a retailer's written statement of consent is received by a supplier who has entered into a Type A agreement, the supplier shall enter on the original and duplicate thereof an additional statement, signed and dated by the supplier, specifying the first day of the period for which the agreement is in effect with respect to such retailer. The supplier shall return to the retailer the duplicate copy of the statement of consent in sufficient time so that the retailer will receive it before such first day. (For provisions relating to articles to be inventoried as of the first moment of such day, see paragraph (c) (2) (v) of this section.)

(e) Effect of agreement. (1) If, by reason of an agreement entered into pursuant to section 6011(c), a supplier is required to return and pay retailers excise tax, all provisions of law and regulations applicable in respect of retailers shall apply to the supplier, except as otherwise provided in the agreement.

(2) To the extent that a duty which otherwise would be imposed on a retailer is imposed on, and performed by, a supplier pursuant to an agreement under section 6011(c), the retailer shall not be required to perform such duty. Pursuant to section 6011(c) (1) (B) the retailer is not relieved from performance of any such duty which is not performed by the supplier.

(3) Retailers excise tax with respect to a taxable article will not be refunded or credited solely by reason of a difference between the actual retail selling price of such article and the tax base used in accordance with the terms of an agree

ment made pursuant to section 6011(c) and the regulations in this section. An assessment of such tax will not be made solely by reason of such a difference if such tax base is used in good faith. (For provisions relating to the tax base, see subparagraph (2) (vii) and (viii) and subparagraph (3) (v) and (vi) of paragraph (c) of this section.)

(4) See section 6416(a) (3) (B) and the regulations thereunder whereby, for purposes of certain credits or refunds, either the supplier or the retailer may be treated as the person who paid tax which is paid pursuant to an agreement under section 6011(c).

(f) Termination of agreement. (1) An agreement under section 6011(c), by its terms and conditions, may provide for the time and manner of termination of the period for which the agreement shall be in effect. Notwithstanding any such provision, or in the absence of any such provision, the Commissioner of Internal Revenue or the district director, if he believes that the continuation of an agreement will adversely affect the revenue or will result in administrative difficulties, may terminate the period for which such agreement is in effect, either with respect to all retailers or with respect to one or more designated retailers. Unless the Commissioner or the district director has reason to believe that a delay in any such termination will jeopardize the collection from the supplier of retailers excise tax computed in accordance with the agreement, the Commissioner or the district director shall, before any such termination, (i) send to the supplier a preliminary notice in writing of his intention to terminate, (ii) include in such notice a statement of the reason or reasons for the proposed termination, and (iii) give the supplier a period of 20 days after such notice is sent within which to show cause why such termination should not take effect. The termination of an agreement shall take effect at such time and in such manner as the Commissioner or the district director may state in writing to the supplier.

(2) Unless the period for which a Type B agreement is in effect terminates pursuant to the terms of such agreement, or is terminated pursuant to subparagraph (1) of this paragraph, such period shall terminate at such time as the supplier permanently ceases to supply any article described in such agree

ment which is so labeled, packaged, or marketed as to show that retailers excise tax with respect to such article will be paid by the supplier. Regardless of the manner in which the period for which a Type B agreement is terminated, the supplier shall at the time of termination notify the district director of such termination. Such notice shall not relieve the supplier from liability for such tax with respect to any article supplied pursuant to such agreement.

(3) Unless otherwise terminated as provided in subparagraph (1) of this paragraph, the period for which a Type A agreement entered into by a supplier is in effect with respect to a retailer may be terminated by the sending of a written notice by the supplier to the retailer, or by the retailer to the supplier. Such termination shall take effect at the close of the last day of the month following the month in which such notice is sent, but such notice shall not relieve the supplier from liability incurred with respect to articles supplied to such retailer on or before such last day. If, at the close of such last day, the agreement no longer is in effect with respect to any retailer, the period for which such agreement is in effect is wholly terminated. Promptly thereafter the supplier shall send written notice to the district director acknowledging the termination of such period and informing the district director of the date of termination.

(4) (1) If the period for which a Type A agreement is in effect with respect to a retailer (other than a house-to-house salesman) terminates for any reason, and if the supplier has reason to believe that after the last day of such period such retailer will continue to receive taxable articles either from such supplier or from any other person, the supplier shall furnish to such retailer on or before such last day a written statement which shall include the following:

(a) The name and address of the supplier and the name and address of the retailer;

(b) A description of the manner in which the retailer may identify any taxable articles with respect to which liability is incurred by the supplier (for example, by reference to invoice dates or numbers), as distinguished from taxable articles with respect to which liability is not incurred by the supplier; and

(c) Notice to the retailer that a copy of the statement will be furnished to the Internal Revenue Service.

The statement required by this subdivision may be combined, in appropriate circumstances, with the statement furnished by a supplier to a retailer pursuant to subparagraph (3) of this paragraph.

(ii) If a supplier is required by subdivision (1) of this subparagraph to furnish a written statement to a retailer, the supplier shall furnish a copy of such statement to the district director, preferably as an attachment to the first return on Form 720 filed by the supplier after such written statement is furnished to the retailer.

(g) Effect on other authorizations to suppliers. (1) In the case of any supplier who, prior to January 1, 1961, has been making returns and payments of tax for one or more retailers under conditions permitted by the Internal Revenue Service, other than pursuant to an agreement under section 6011(c) or an authorization referred to in subparagraph (2) of this paragraph, such permission is terminated as of December 31, 1960, unless, prior to January 1, 1961, such supplier makes application, pursuant to paragraph (b) of this section, to enter into an agreement. If the district director does not enter into such agreement with the supplier, the supplier, in accordance with written notice by the district director, shall discontinue making such returns and payment of tax.

(2) The regulations in this section do not affect any authorization by a taxpayer whereby any person, as agent for such taxpayer under an acceptable power of attorney which has been filed with the Internal Revenue Service, makes a return on Form 720 for a taxreturn period in the name of such taxpayer and includes in such return all taxes required to be reported by such taxpayer in such return for such period.

(h) Effect of repeal of tax by Excise Tax Reduction Act of 1965. (1) The Excise Tax Reduction Act of 1965 repeals all retailers excise taxes imposed by chapter 31 of the Code (other than the tax imposed by section 4041 with respect to diesel fuel and special motor fuel) with respect to articles sold on or after June 22, 1965. Therefore, notwithstanding the provisions of any agreement

entered into by a district director and a supplier pursuant to the provisions of section 6011 (c) and this section, the supplier shall not be liable for a tax under chapter 31 of the Code upon an article which is covered by the agreement and which is supplied by the supplier on or after June 22, 1965. In addition, any tax paid or payable by the supplier on any such article supplied (whether by the supplier or any other person) before June 22, 1965, will be treated as an overpayment of tax giving rise to a claim for credit or refund, if— (i) The article is held for sale on the first moment of June 22, 1965, by a retailer and has not been used, and

(ii) The supplier has either reimbursed the retailer for the amount of the tax or has obtained the written consent of the retailer to the allowance of the credit or refund to the supplier. No interest shall be allowed with respect to any amount of tax credited or refunded as a result of this paragraph. Section 6416 shall not apply to any amount which is treated as an overpayment under this paragraph.

(2) For purposes of this paragraph, in the case of a type B agreement, the term "retailer" includes any person who holds the article unused for resale (for example, a wholesale distributor or jobber).

(3) An article is deemed to be held by a retailer as of the date of the invoice of such article to the retailer or, in the absence of an invoice, as of the date of the delivery of such article to the retailer or to the carrier for delivery to the retailer.

(4) (1) Evidence of articles held for sale as described in subparagraph (1)(i) of this paragraph must be in the form of an inventory statement which may be made by the supplier, retailer, or a duly authorized representative of either. Such inventory statement must be kept in the supplier's records and made available for inspection by internal revenue' officers. The inventory statement shall set forth by type or size (or by some other suitable means of identification) the quantity of the articles which are covered by the agreement and held by the retailer as of the first moment of June 22, 1965. The person authorized to take the inventory must certify, under penalties of perjury, that to the best of his knowledge and belief the inventory statement is true and correct.

(ii) Either evidence that the supplier has reimbursed the retailer or the written consent of the retailer, as required by subparagraph (1)(ii) of this paragraph, must be kept in the supplier's records and made available for inspection by internal revenue officers. With respect to a reimbursement, such evidence must show the date, amount, and manner of the reimbursement to the retailer. The reimbursement of the retailer may be made, at the supplier's option, in cash, by check, or by a credit to the retailer's account as maintained by the supplier. The amount which may be credited to such account may not exceed the undisputed debit balance due at the time the credit is made. However, reimbursement may be made, at the retailer's option (with the concurrence of the supplier), in merchandise.

(5) The supplier shall include on his return on Form 720 for the quarter ended June 30, 1965, his total tax liability incurred for such quarter under the section 6011(c) agreements, without reduction for any amounts treated as overpayments of tax under this paragraph. Either credit on a return on Form 720 or refund on Form 843, or a combination thereof, may be claimed for such overpayments. The credit taken on the return shall not exceed the amount of the total tax shown on the return, reduced by the amount of the depositary receipts accompanying the return and other credits claimed on the return. A claim for credit or refund with respect to any article held by the retailer must be made within the period of limitations provided by section 6511(a). A supplier claiming a credit on Form 720 or a refund on Form 843 must attach to the return or refund claim a statement setting forth

(i) That he has in his possession and available for inspection by internal revenue officers the evidence required by subparagraph (4) of this paragraph;

(ii) That the amount of tax for which the credit or refund is being claimed has either been paid or is reported on the return on which the credit is claimed;

(iii) That he has not and will not claim a credit or refund on another return or form for any amount of tax claimed on such Form 720 or Form 843; and

(iv) The amount and date of each previous or concurrent claim for credit