Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 59-65

1959-1 C.B. 51

Caution: Superseded by Rev. Rul. 73-465

IRS Headnote

The tax imposed by the State of Georgia by section 2 of the Georgia Retailers' and Consumers' Sales and Use Tax, Georgia Laws, 1951, 360, effective April 1, 1951, is a tax imposed upon the dealers who engage in the business of selling tangible personal property at retail in the State of Georgia. Such tax is deductible by the dealer under section 23(c) of the Internal Revenue Code of 1939, or section 164(a) of the Internal Revenue Code of 1954, whichever is applicable. Where the dealers collect the tax from the vendees, the total amounts so collected are includible in their gross income for Federal income tax purposes.

Revenue Ruling 55-139, C.B. 1955-1, 277, is revoked, and I.T. 4058, C.B. 1951-2, 22, reinstated.

Full Text

Rev. Rul. 59-65

In view of the decision of the Supreme Court of Georgia in the case of T. V. Williams, State Revenue Commissioner v. Bear's Den, Inc., 104 S.E. (2d) 230, reconsideration has been given to Revenue Ruling 55-139, C.B. 1955-1, 277, which modified I.T. 4058, C.B. 1951-2, 22, relating to the tax imposed by the State of Georgia under section 2 of the Georgia Retailers' and Consumers' Sales and Use Tax Act, Georgia Laws, 1951, 360, approved on February 20, 1951, effective April 1, 1951.

Revenue Ruling 55-139, supra, holds that the Georgia Retailers' and Consumers' Sales and Use Tax is a tax imposed upon the purchaser or consumer and is paid by such taxpayer as a tax and, therefore, is deductible under section 23(c)(1) of the Internal Revenue Code of 1939, corresponding to section 164(a) of the Internal Revenue Code of 1954, regardless of whether or not it is imposed with respect to property used in a trade or business. The Revenue Ruling further provides that, since the dealers are agents of the state for collection purposes, amounts collected by them as tax and paid to the state are not includible in their gross income.

The conclusion reached in Revenue Ruling 55-139, supra, was based upon an interpretation of section 12(a) of the Act. There is, however, an apparent conflict between sections 2 and 12(a) of the Act. Section 2 of the Act imposes the retail sales tax on the dealer, whereas section 12(a) of the Act provides, in part, as follows:

Notwithstanding any other provision, it is the purpose and intent of the Act that the tax imposed hereunder is, in fact, a levy on the purchaser or consumer * * * and the levy on the dealers as specified is merely as agent of the State for collection of the said tax.

The conflict between sections 2 and 12(a) of the Act was resolved by the recent decision in Williams v. Bear's Den, Inc., supra. In the course of its opinion, the court stated:

From a review of the whole act, we are of the opinion that it was the intent and purpose of the legislature to levy the tax against the dealer. The levy of the tax is against him and the responsibility of collecting the tax on each sale from the purchaser and remitting to the Commissioner is solely upon him. * * * Sec. 12(a) of the act is merely descriptive of the relationship between the dealer and the purchaser to be that as agent for the State in the collection of the tax imposed upon the dealer and passed on to the purchaser.

Accordingly, it is held that the tax imposed by the State of Georgia by section 2 of the Georgia Retailers' and Consumers' Sales and Use Tax, Georgia Laws, 1951, 360, approved February 20, 1951, effective April 1, 1951, is a tax imposed upon dealers who engage in the business of selling tangible personal property at retail in the State of Georgia. Such tax is deductible by the dealer under section 23(c)(1) of the Internal Revenue Code of 1939 or section 164(a) of the Internal Revenue Code of 1954, whichever is applicable. Where the dealers collect the tax from the vendees, the total amounts so collected are includible in their gross income for Federal income tax purposes.

Revenue Ruling 55-139, C.B. 1955-1, 277, is revoked, and I.T. 4058, C.B. 1951-2, 22, is reinstated.