Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 60-21

1960-1 C.B. 404

IRS Headnote

The American Municipal Association, a federation of municipalities and state associations of municipalities, comes within the scope of the exemptions from certain excise taxes provided by sections 4055, 4221(a)(4), and 4292 of the Internal Revenue Code of 1954, to the same extent and in the same manner as a separate municipality would be as a political subdivision of a State or Territory of the United States.

Full Text

Rev. Rul. 60-21

Advice has been requested whether the American Municipal Association comes within the scope of the exemption from certain Federal excise taxes provided with respect to transactions with states and local governmental units.

The American Municipal Association is a federation of municipalities and state associations of municipalities. Any city of a given population, the capital city of any state, and any state association of municipalities may become a member of the federation upon application and payment of the prescribed annual dues. The functions of this federation include its acting as an agency for the cooperation of municipalities and state associations in research on municipal government and its administration; the holding of annual and other conventions for the discussion of current municipal affairs; furnishing of services to its members in order that assistance may be rendered such members in performing their functions; and the safeguarding of interests, rights, and privileges of municipalities.

Section 4055 of the Internal Revenue Code of 1954 provides that the retailers excise taxes will not apply to the sale of any article for the exclusive use of any State, Territory of the United States, or any political subdivision of the foregoing, or the District of Columbia. Section 4221(a)(4) of the Code, as redesignated and amended by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, C.B. 1958-3, 92, provides that the manufacturers excise taxes will not apply to the sale of any article to a State or local government for the exclusive use of a State or local government.

Section 4292 of the Code provides that no tax shall apply to payments received for communication and transportation services and facilities furnished to the Government of any State, Territory of the United States, or to any political subdivision of the foregoing, or the District of Columbia.

These State and local governmental exemptions apply to the Federal excise taxes tabulated below along with the applicable sections of the regulations which prescribe the manner of establishing the right to the exemptions. Those regulations issued under the 1939 Code have been made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47.

   Tax                   Exemption section    Applicable regulations

                             of Code

(1) Retailers............ Sec. 4055.......... Regs. 51, Sec. 320.20.

                                              Regs. 119, Sec. 324.30.

(2) Manufacturers........ Sec. 4221(a)(4).... Regs. 44, Sec. 314.24.

                                              Regs. 46, Sec. 316.24.

(3) Communications....... Sec. 4292.......... Regs. 42, Sec. 130.44.

                                              Sec. 42.4292-1 of the

                                                 Facilities and

(4) Transportation of     Sec. 4292..........    Services Excise Tax

     persons.                                    Regulations.

It is held that the American Municipal Association is entitled to the benefits of the several statutory exemptions, as set forth above, to the same extent and in the same manner as a separate municipality would be as a political subdivision of a State or Territory of the United States. See Rev. Rul. 58-156, C.B. 1958-1, 389, which relates to state associations of municipalities.