Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 58-36

1958-1 C.B. 420

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

A company which purchases unexposed microfilm in lengths of more than one hundered and fifty feet and resells such film in one hundred-foot reels is liable for the manufacturers excise tax under the provisions of section 4172 of the Internal Revenue Code of 1954 with respect to such sales.

Full Text

Rev. Rul. 58-36

Advice has been requested concerning the applicability of the manufacturers excise tax to sales of unexposed microfilm under the circumstances described below.

A company modifies a standard 16 millimeter movie camera in such a way that it is used by banks, hotels, market operators, and others to microfilm invoices, checks, and similar items. The company purchases in bulk from film manufacturers large quantities of a special type of microfilm. Since the camera uses a maximum load of 100 feet of film, the company cuts the microfilm in 100-foot lengths and winds it on reels for sale to its customers.

Section 4171 of the Internal Revenue Code of 1954 imposes a tax upon sales by the manufacturer, producer, or importer of unexposed photographic film in rolls (including motion picture film). Section 4172 of the Code provides that any person who acquires unexposed photographic film not subject to tax and sells such unexposed film in form and dimensions subject to tax (or in connection with a sale cuts such film to form and dimensions subject to tax) shall for the purposes of section 4171 be considered the manufacturer of the film so sold by him.

Section 4173(3) of the Code provides that the tax imposed under section 4171 shall not apply to X-ray film, unperforated microfilm, film more than one hundred and fifty feet in length, or film more than twenty-five feet in length and more than thirty millimeters in width.

Since the bulk film purchased by the company is in lengths of more than one hundred and fifty feet, sales of such film by the manufacturer thereof are not subject to the tax. However, the 100-foot foot reels of film which are resold by the purchasing company are in form and dimensions which are subject to the tax. Therefore, it is held that, under the provisions of section 4172 of the Code, the sales of such film by that company are subject to the manufacturers excise tax.