Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 58-47

1958-1 C.B. 422

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

The manufacturers excise tax on business machines imposed by section 4191 of the Internal Revenue Code of 1954 applies to check perforating machines and number perforating machines, but does not apply to such perforating machines as a fixed die machine, a receipting machine, and certain dating machines.

Full Text

Rev. Rul. 58-47

Advice has been requested concerning the applicability of the manufacturers excise tax on business machines to several types of perforating machines. The machines are described as follows:

(1) A check perforating machine designed to make perforations of three lines, with the word `paid' on the first line, the date on the second line, and the bank's `ABA' number or initials on the third line, or the third line drilled solid.

(2) Numbering machines, such as a straight line numbering machine; a model with fixed wording above or below the number; a model that provides a combination of dating and numbering which is used for perforating installment loan coupon books; and a model that provides a combination of dating and numbering on one line.

(3) A fixed die machine, which cannot date or number, used in canceling warehouse receipts, coupons and tickets; in marking and coding labels; and in voiding notes, bonds, and bills.

(4) A dating machine which is used for dating purposes only.

(5) A dating machine which has the date and, on either side thereof, a wide selector ring with ten inscriptions, such as `paid,' `void,' etc., with the wording and date to be shown all on one line.

(6) A receipting machine with two dating heads and a knife in the die, used for receipting utility and tax bills. The machine perforates the word `paid,' the date, and other wording, such as the name of the utility. With the exception of the date, all information is fixed in the die and cannot be changed.

(7) A code dating machine with wheels drilled for special code dating applications, particularly on perishable foods and drug items where the manufacturer wants a code date on the label to identify the date of shipment or manufacture.

(8) A single line dating machine with inserting keys which perforate above or below the date, the name of a person, or any special wording for dating or receipting purposes. The wording on the first or third line can be changed by inserting the proper key with the word or name desired.

(9) A dating machine with a two-line die which has the date, and above or below the date, the initials of a company or wording, such as `received,' `canceled,' `void,' `paid,' etc., used particularly in invoice dating, perforating the date on incoming mail, and also perforating revenue stamps.

Section 4191 of the Internal Revenue Code of 1954 imposes a tax on the sale by the manufacturer, producer, or importer of various business machines, including in each case parts and accessories of such articles sold on or in connection therewith, or with the sale thereof. Among the many types of machines included in the enumeration in that section are numbering machines and check writing, signing, canceling, perforating, cutting, and dating machines, and other check protector devices.

It is held that the perforating machines described in examples (1) and (2) above are, respectively, check perforating machines and numbering machines as contemplated by section 4191 of the Code and are subject to the manufacturers excise tax imposed by that section.

It is further held that the perforating machines described in examples (3) to (6), are not business machines for the purposes of the manufacturers excise tax imposed by section 4191 of the Code and are, therefore, not subject to the tax, unless the particular machine involved is suitable for numbering or check perforating purposes, in which event it is considered subject to the tax.

The perforating machines described in examples (7), (8) and (9) are also held to be not subject to the excise tax, provided the code dating machine, example (7), is not suitable for numbering; the single line dating machine with inserting keys, example (8), is not sold for or is not suitable for check perforating, canceling, etc.; and the dating machine, example (9), is not equipped with dies which perforate bank numbers, bank initials, or are drilled solid. If these machines are suitable for numbering or check perforating, or are so equipped, they are then numbering machines or check perforating machines within the meaning of section 4191 of the Code, and are accordingly subject to the excise tax imposed by that section.