machinery, in the manufacture of automobiles, is not used as inaterial in the manufacture or production of, or as a component part of, the automobile, inasmuch as the oil or gasoline is not part of the automobile when sold by the manufacturer but was consumed in the manufacturing process.

§ 40.4220-2 Registration for tax-free sales and resales.

(a) Registration and exemption certificate required. No article subject to tax under chapter 32 of the Code may be sold tax free under section 4220 and § 40.4220-1 unless the vendor and the vendee have each registered with the district director for the district in which is located his principal place of business (or if he has no principal place of business in the United States, with the Director of International Operations, Internal Revenue Service, Washington 25, D.C.) and unless an exemption certificate, as prescribed in § 40.4220-3 or § 40.4220-4, as the case may be showing the registration number of the vendee is obtained by the vendor.

(b) Registration eligibility and procedure. (1) Any person may be granted a registration certificate upon application to the district director for his district, or the Director of International Operations, as the case may be, if he qualifies—

(i) As a manufacturer, producer, or importer of articles taxable under chapter 32 of the Code;

(ii) As a manufacturer or producer of articles not taxable under such chapter 32 who purchases automobile parts or accessories, refrigerators components, radio or television components, or camera lenses, for use as material in the manufacture or production of, or as component parts of, such nontaxable articles; or

(iii) As a vendee with an established place of business reselling articles taxable under chapter 32 of the Code for use by his vendee as material in the further manufacture or production of another article under the conditions set forth in paragraph (a) or (b) of § 40.4220-1.

(2) Each person making application for a registration number must attach to his application a statement showing in detail the nature of his business, the

articles produced or sold by him, and in the case of a vendee purchasing for resale, the type of business conducted by the manufacturers or producers to whom the articles purchased tax free will be resold.

(3) District directors or the Director of International Operations, as the case may be, shall issue certificates of registry and assign registration numbers to all persons whose applications are approved.

(4) A jobber, dealer, or other vendee purchasing for resale who does not establish that he is in the business of selling articles direct to manufacturers or producers for use in further manufacture under the conditions set forth in paragraph (a) or (b) of § 40.4220-1 may not purchase tax free under section 4220 and will not be granted a registration certificate.

(c) Cancellation of registration. The district director or the Director of International Operations, as the case may be, is authorized to cancel a registration certificate and to deny the right to sell or purchase articles tax free in any case when he is satisfied that the registrant is not a bona fide manufacturer, producer, or importer or a vendee reselling direct to manufacturers as provided in paragraph (a) or (b) of § 40.4220-1, or when tax-free sales or purchases are being made for purposes not authorized by the law and the regulations in this part.

(d) Prior registration. Any person— (1) Who has previously been issued a certificate of registry under the regulations promulgated under corresponding provisions of the Internal Revenue Code of 1939 or prior revenue laws authorizing him either to sell or purchase articles tax free for use in further manufacture of other articles, or for resale for such use, and

(2) Whose prior certificate of registry has not been canceled,

need not register again under the provisions of the regulations in this subpart, and shall use the registration number so assigned to him on exemption certificates prescribed by the regulations in this subpart.

(e) Other registrations. Registration of producers or importers of gasoline or manufacturers or producers of lubricating oil pursuant to section 4101 constitutes compliance with the registration

requirement prescribed in the regulations promulgated under section 4220. § 40.4220-3 Evidence of tax-free sales to manufacturers.

(a) Exemption certificates. To establish the right to exemption under section 4220 with respect to a taxable article (other than a tire, inner tube, or automobile radio or television set) sold for use by the purchaser as material in the manufacture or production of, or as a component part of, another article, the manufacturer, producer, or importer must obtain from his vendee and retain in his possession a properly executed exemption certificate in the form prescribed in paragraph (d) of this section.

(b) Sales without certificates. If a sale is otherwise exempt from tax under section 4220 but the exemption certificate is not obtained prior to the time the manufacturer, producer, or importer files a return covering excise taxes for the period during which the sale was made, the manufacturer, producer, or importer must include the tax on such sale in his return for that period. However, if the certificate is later obtained, a claim for refund of the tax paid on such sale may be filed on Form 843, or a credit taken upon a subsequent return, in accordance with the provisions of section 6402 (a) and 6416 (a).

(c) Frequency of certificates. Where only occasional sales are made to a purchaser for further manufacture, a separate exemption certificate should be furnished for each order. However, where sales are regularly or frequently made to a purchaser for further manufacture, a certificate covering all orders for a specified period not to exceed 4 calendar quarters will be acceptable. Such certificates and proper records of invoices, orders, etc., relative to tax-free sales must be readily accessible for inspection by internal revenue officers and retained as provided in section 6001. If the records with respect to any sale claimed to be tax free do not include a proper certificate, with supporting invoices and such other evidence as may be necessary to establish the exempt character of the sale, the tax is payable on such sale.

(d) Form of certificate. The following form of exemption certificate will be acceptable for purposes of this section and must be adhered to in substance:

is a manufacturer or producer and holds certificate of registry No. issued by the District Director of Internal Revenue at and that the article or articles specified in the accompanying order or contract will be used by the undersigned as material in the manufacture or production of, or as a component part of, an article or articles taxable under chapter 32 of the Internal Revenue Code to be manufactured or produced by the undersigned, or if the articles specified in the accompanying order or contract are automobile parts or accessories, refrigerator components, radio or television components, or camera lenses, they will be used by him as material in the manufacture or production of, or as component parts of, any article or articles to be manufactured or produced by the undersigned.

It is understood that for all the purposes of chapter 32 of the Internal Revenue Code the undersigned will be considered the manufacturer or producer of the articles to which this certificate relates and (except as otherwise provided by law) must pay tax on the resale or use, otherwise than as specified above, of such articles. The undersigned understands that the fraudulent use of this certificate for the purpose of securing this exemption will subject him and all guilty parties to revocation of the privilege of purchasing tax free and to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution. The purchaser also understands that he must be prepared to establish by satisfactory evidence the purpose for which the article or articles purchased under this certificate were used.

(Signature) (Address)

§ 40.4220-4 Evidence of tax-free sales for resale to manufacturers.

(a) In general. To establish the right to exemption under section 4220 with respect to a taxable article (other than a tire, inner tube, or automobile radio or television set) sold by the manufacturer,

producer, or importer thereof to any person (either a jobber, dealer, or another manufacturer or producer) for resale, without change in form, direct to a manufacturer or producer for use by him as material in the manufacture or production of, or as a component part of, another article, it is necessary that

(1) The manufacturer, producer, or importer obtain from his vendee (hereinafter referred to as dealer) and retain in his possession a properly executed exemption certificate in the form prescribed in paragraph (g) of this section; and

(2) The manufacturer, producer, or importer obtain from the dealer evidence that the article has been so resold by the dealer.

If a

(b) Sales without certificate. sale is otherwise exempt from tax under section 4220 but the exemption certificate from the dealer is not obtained prior to the time the manufacturer, producer, or importer files a return covering excise taxes for the period during which the sale was made, the manufacturer, producer, or importer must include the tax on such sale in his return for that period. However, if the certificate is later obtained and the condition prescribed in paragraph (c) of this section is met, a claim for refund of the tax paid on such sale may be filed on Form 843, or a credit taken upon subsequent return, in accordance with the provisions of sections 6402(a) and 6416(a).

(c) Additional evidence required. Evidence that the article has been resold by the dealer as required under paragraph (a) (2) of this section shall be either

(1) A certificate as prescribed in paragraph (d) of § 40.4220-3 obtained by the dealer from his vendee showing that such vendee purchased the article for further manufacture as authorized in paragraph (a) or (b) of § 40.4220-1 and not for resale, or

(2) A statement by the dealer that he has obtained from his vendee, and has in his possession, such a certificate. The certificate required by paragraph (a) (1) of this section suspends liability for the payment of the tax by the manufacturer, producer, or importer on the sale of such article for the period specified in paragraph (d) of this section.

(d) Suspension of liability. If, prior to the date of filing his excise tax return for the period immediately following the

tax-return period in which the tax-free sale was made to the dealer, the manufacturer, producer, or importer has not received the evidence referred to in paragraph (c) of this section, then the temporary suspension of liability for the payment of the tax ceases. The manufacturer, producer, or importer in such case shall include the tax on the sale of such article in his return for the period in which the temporary suspension of tax liability expired. If the evidence referred to in paragraph (c) of this section is later obtained, a claim for refund of the tax paid may be filed on Form 843, or a credit taken upon a subsequent return, in accordance with the provisions of sections 6402(a) and 6416(a).

(e) Only one intervening sale permitted. The exemption for resale is permitted only where there is not more than one intervening sale between the manufacturer, producer, or importer of the article and the manufacturer or producer purchasing it for further manufacture. If a manufacturer, producer, or importer sells an article to a dealer for resale for further manufacture and such article is sold by the dealer other than for use by his purchaser in further manufacture, the tax must be paid by the manufacturer, producer, or importer who made the sale to the dealer. However, in such case the manufacturer or producer who used the article for further manufacture may claim credit or refund as provided in section 6416(b) (3).

(f) Frequency of certificates. Where only occasional sales are made to a dealer for resale to a purchaser for further manufacture, a separate exemption certificate should be furnished for each order. However, where sales are regularly or frequently made to a dealer for resale to a purchaser for further manufacture, a certificate covering all orders for a specified period not to exceed 4 calendar quarters will be acceptable. Such certificates and proper records of invoices, orders, etc., relative to tax-free sales must be readily accessible for inspection by internal revenue officers and retained as provided in section 6001. If the records with respect to any sale claimed to be tax free do not include a proper certificate, with supporting invoices and such other evidence as may be necessary to establish the exempt character of the sale, the tax is payable on such sale.

(g) Form of certificate. The following form of exemption certificate will be

acceptable for purposes of this section' and must be adhered to in substance:

EXEMPTION CERTIFICATE

(To support tax-free sales of taxable articles by the manufacturer, producer, or importer thereof for resale for use in the manufacture of other articles (section 4220 (1) or (2) of the Internal Revenue Code).)

19-

(Date) The undersigned certifies that he himself, or the

(Name of purchaser if other than of which he is

undersigned)

(Title)

is in the business of selling direct to manufacturers or producers of articles and holds certificate of registry No.. issued by the District Director of Internal Revenue at and that the article or articles specified in the accompanying order or contract will be resold by the undersigned for use by his vendee as material in the manufacture or production of, or as a component part of, an article or articles taxable under chapter 32 of the Internal Revenue Code to be manufactured or produced by the vendee of the undersigned, or if the articles specified in the accompanying order or contract are automobile parts or accessories, refrigerator components, radio or television components, or camera lenses, they will be resold by the undersigned only for use by the vendee of the undersigned as material in the manufacture or production of, or as component parts of, any article or articles to be manufactured or produced by the vendee of the undersigned.

The undersigned understands that the fraudulent use of this certificate for the purpose of securing exemption will subject him and all guilty parties to revocation of the privilege of purchasing tax free and to a fine of not more than $10,000 or to imprisonment for not more than 5 years, or both, together with costs of prosecution. The purchaser also understands that he must be prepared to establish by satisfactory evidence the person or persons to whom and the purpose for which the article or articles purchased under this certificate were resold.

(Signature)

(Address)

§ 40.4220-5 Information to be shown on invoices.

When taxable articles are sold tax free as provided in section 4220, it will be necessary that the invoices with respect to such articles indicate that they were sold tax free under exemption certificates.

§ 40.4220-6 Liability of purchasing

manufacturer.

A manufacturer or producer who purchases an article tax free under an exemption certificate for use in the manufacture or production of another article shall be considered the manufacturer or producer of the article so purchased, and is liable for tax on his use or resale of the article unless the exempt character of the use or resale is established.

§ 40.4220-7 Duty of vendor to ascertain use of exemption certificate.

A manufacturer, producer, importer, or dealer making a sale under an exemption certificate must use reasonable diligence to satisfy himself that the use of the certificate is warranted by law. If the original vendor has knowledge at the time of his sale that the article sold by him is not intended for use or resale as specified in the certificate given by the vendee, the original vendor is liable for the tax and is not relieved of liability by the exemption certificate. § 40.4220-8

Other tax-free sales.

For provisions relating to other taxfree sales of articles, see

(a) Section 4222, relating to sales for use as supplies for certain vessels and airplanes;

(b) Section 4224, relating to articles sold for the exclusive use of a State or local government; and

(c) Section 4225, relating to sales for export;

as in effect prior to January 1, 1959.

General definitions and use of terms. 41.0-8 Scope of regulations.

Subpart B-Tax on Use of Certain Highway
Motor Vehicles

41.4481 Statutory provisions; imposition of tax.

41.4481-1 Imposition of tax. 41.4481-2 Persons liable for tax. 41.4481-3 Registration.

defini

41.4482(a) Statutory provisions; tions; highway motor vehicle. 41.4482(a)-1 Definition of highway motor vehicle. 41.4482 (b)

Statutory provisions; definitions; taxable gross weight. 41.4482(b)-1 Definition of taxable gross weight.

41.4482 (c) Statutory provisions; definitions; other definitions; State, year, and use and taxable period. 41.4482(c)-1 Definition of State, taxable period and use.

41.4483 Statutory provisions; exemptions. 41.4483-1 State and local governmental exemption.

41.4483-2 Exemption for certain transittype buses.

41.4483-3 Application of exemptions. 41.4484 Statutory provisions; cross refer

ence.

41.4484-1 Administrative provisions. Subpart C-Administrative Provisions of Special Application to Tax on Use of Certain Highway Motor Vehicles

41.6001 Statutory provisions; notice or regulations requiring records, statements, and special returns. 41.6001-1 Records.

41.6011 (a) Statutory provisions; general requirement of return, statement, or list; general rule. 41.6011 (a)-1 Returns.

41.6071 (a) Statutory provisions; time for filing returns and other documents; general rule.

41.6071 (a)-1 Time for filling returns. 41.6081 (a) Statutory provisions; extension

of time for filing returns; general rule. 41.6081 (a)-1 Extension of time for filing returns.

41.6091 Statutory provisions; place for filing returns or other documents. 41.6091-1 Place for filing returns. 41.6101 Statutory provisions; period covered by returns or other documents. 41.6101-1 Period covered by returns. 41.6109 Statutory provisions; identifying

numbers.

51-051 0-66-2

11

Sec. 41.6109-1 Employer identification numbers. 41.6151 (a) Statutory provisions; time and place for paying tax shown on returns. 41.6151 (a)-1 Time and place for paying tax.

41.6156 Statutory provisions; installment payments of tax on use of highway motor vehicles.

41.6156-1 Installment payments of tax on use of highway motor vehicle. 41.6161 (a) (1) Statutory provisions; extension of time for paying tax.

41.6161 (a) (1)-1 Extension of time for paying tax.

41.6302 (b) Statutory provisions; mode or time of collection; discretionary method. 41.6302 (b)-1 Method of collection. 41.7701 Statutory provisions; definitions. 41.7805 Statutory provisions; rules and reg

(a) In general. The regulations in this part are designated "Highway Motor The Vehicle Use Tax Regulations". regulations relate to the tax imposed by subchapter D of chapter 36 of the Internal Revenue Code of 1954 and to certain related administrative provisions of subtitle F of such Code. Subchapter D of chapter 36 imposes an excise tax on the use of certain highway motor vehicles on the public highways in the United States.

(b) Division of regulations. The regulations in this part are divided into three subparts. Subpart A contains provisions relating to the arrangement and numbering of the sections of the regulations in this part, general definitions and use of terms, and scope of the regulations. Subpart B relates to the provisions of the Code set forth in subchapter D of chapter 36 thereof (Tax on Use of Certain Vehicles). Subpart C relates to selected provisions of subtitle F of the Code (Procedure and Administration) which have special application to the tax imposed by subchapter D of chapter 36 of the Code.

(c) Arrangement and numbering. Each section of the regulations in Subparts B and C of this part is preceded by