The following sales by the manufacturer are exempt from the manufacturers tax.
- Sale of an article to a state or local government for the exclusive use of the state or local government. This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. State is defined in Definitions under Fuel Taxes, in chapter 1.
- Sale of an article to a nonprofit educational organization for its exclusive use. This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Nonprofit educational organization is defined under Communications Tax in chapter 4.
- Sale of an article to a qualified blood collector organization. This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. Qualified blood collector organizations are defined under Communications Tax in chapter 4.
- Sale of an article for use by the purchaser as supplies for vessels. This exemption does not apply to the taxes on coal and vaccines. Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade.
- Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. This exemption does not apply to the tax on coal and tires. Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them.
- Sale of an article for export or for resale by the purchaser to a second purchaser for export. The article may be exported to a foreign country or to a possession of the United States. A vaccine shipped to a possession of the United States is not considered to be exported. If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax.
- Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U.S. jurisdiction in Alaska.
- For tire exemptions, see Internal Revenue Code section 4221(e)(2).
The following requirements must be met for a sale to be exempt from the manufacturers tax.taxmap/pubs/p510-036.htm#en_us_publink1000117215
The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. See the Form 637 instructions for more information. taxmap/pubs/p510-036.htm#en_us_publink1000117216
Registration is not required for:
- State or local governments,
- Foreign purchasers of articles sold or resold for export,
- The United States, or
- Parties to a sale of supplies for vessels and aircraft.
If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale.
For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. See Regulations section 48.4221-5(c) for the certificate requirements.
For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. See Regulations section 48.4221-4(d) for the certificate requirements. taxmap/pubs/p510-036.htm#en_us_publink1000117218
Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. See Regulations section 48.4221-3(d) for evidence that qualifies as proof of exportation. taxmap/pubs/p510-036.htm#en_us_publink1000117219
Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. See Regulations section 48.4221-2(c) for evidence that qualifies as proof of resale. taxmap/pubs/p510-036.htm#en_us_publink1000117220
The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. taxmap/pubs/p510-036.htm#en_us_publink1000117221
The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. The claim must set forth in detail the facts upon which the claim is based.taxmap/pubs/p510-036.htm#en_us_publink1000117222
A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person:
- Used or sold for use as supplies for vessels (except for coal and vaccines),
- Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines),
- Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines),
- Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or
- Used for further manufacture of another article subject to the manufacturers taxes (except for coal).
If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund.taxmap/pubs/p510-036.htm#en_us_publink1000117224
In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. taxmap/pubs/p510-036.htm#en_us_publink1000117225
To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information.
- The claimant sold the article at a tax-excluded price.
- The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article.
- The person has obtained the written consent of the ultimate vendor to make the claim.
The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax.
To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following.
- The name and address of the manufacturer and the date of payment.
- An identification of the article for which the credit or refund is claimed.
- The amount of tax paid on the article and the date on which it was paid.
- Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer.
- An identification of the second article.
For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. The statement must include the amount of tax paid, the date of payment, and the office to which it was paid.taxmap/pubs/p510-036.htm#en_us_publink1000117227
To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following.
- A description of the circumstances that gave rise to the price readjustment.
- An identification of the article whose price was readjusted.
- The price at which the article was sold.
- The amount of tax paid on the article and the date on which it was paid.
- The name and address of the purchaser.
- The amount repaid to the purchaser or credited to the purchaser's account.