Rev. Rul. 58-273

Advice has been requested whether a credit or refund of the excise tax on playing cards is allowable where the manufacturer sells playing cards, with Federal tax stamps affixed, to an agency of the United States, at a price which was established by the manufacturer for such cards based upon all elements of cost, including the cost of the tax stamps. The agency subsequently submits to the manufacturer a form prescribed for the withdrawal of articles from a factory, free of tax, for use of the United States.

Section 4451 of the Internal Revenue Code of 1954 imposes a tax upon every pack of playing cards containing not more than 54 cards, manufactured or imported and sold, or removed for consumption or sale, by a manufacturer.

Section 7510 of the Code, relating to the exemption from tax of domestic goods purchased for the United States, provides that the privilege existing by provision of law on December 1, 1873, or thereafter, of purchasing supplies of goods imported from foreign countries for the use of the United States, duty free, shall be extended, under such regulations as the Secretary of the Treasury or his delegate may prescribe, to all articles of domestic production which are subject to tax by provisions of the Internal Revenue Code of 1954.

Section 301.7510-1 of the Regulations on Procedure and Administration, relating to miscellaneous provisions, provides that for any regulations under section 7510 of the Code, the applicable regulations with respect to the various taxes should be consulted.

Article 22 of Regulations 66, relating to the tax on playing cards, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, states that the regulations governing the withdrawal of playing cards free of tax for use of the United States are prescribed in Regulations 34.

Regulations 34, governing the withdrawal of playing cards and other articles free of tax for use of the United States, sets forth definite procedures to be followed before tax-free cards may be removed from the factory for such use. Article 1 states that whenever a product within the scope of those regulations is purchased for the use of the United States and it is proposed to make withdrawals, tax free, from the place of manufacture, a requisition on Form 663 approved by the head of the institution or organization desiring the product must be filed with the Commissioner of Internal Revenue. Article 4 specifically states that all products withdrawn in advance of the receipt by the manufacturer of a permit will be held subject to tax.

There is no provision in the law or regulations which would permit a refund of tax paid with respect to playing cards removed from a factory with stamps affixed regardless of whether such cards are subsequently exported, sold for use of the United States, or for any other reason. Accordingly, it is held that where a manufacturer sells playing cards with Federal tax stamps affixed, he is not entitled to a credit or refund of the excise tax paid with respect to such cards, even though the cards were sold to an agency of the United States which subsequently submitted to the manufacturer a Form 663, Requisition for Withdrawal of Articles from Factory Free of Tax, for Use of the United States.