Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 61-69

1961-1 C.B. 467

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

The retailers excise tax on jewelry and related items, imposed by section 4001 of the Internal Revenue Code of 1954, does not apply to certain identification tags which are designed to be worn for civil defense purposes and which conform to standards set forth by the Federal civil defense agency.

Revenue Ruling 57-146, C.B. 1957-1, 359, distinguished.

Full Text

Rev. Rul. 61-69

Advice has been requested whether the retailers excise tax on jewelry and related items, imposed by section 4001 of the Internal Revenue Code of 1954, applies to the articles described below. More specifically, the question is whether the described articles come within the scope of Revenue Ruling 57-146, C.B. 1957-1, 359.

Certain identification tags have been produced to conform to standards set forth by the Federal civil defense agency, which has urged that all civilians wear some form of permanent identification tags for use in case of an enemy attack or other disaster. These identification tags, as well as the chains or bracelets to which they are attached, are made of a nonprecious metal which has an extremely high melting point. They are designed to be worn permanently around the neck, the wrist, or the ankle.

These identification tags have indented or embossed thereon the name of the wearer and the name and address of the next of kin or other person to be notified in case of emergency. Usually, these tags show other information, such as the wearer's date of birth, religious affiliation, blood group and type, and other medical information. In some instances, there is indented or embossed on the reverse side of the tags some patriotic or religious symbol, sentiment, or tenet. These tags usually are obtained by a local parent-teacher association or other community group which resells the tags at cost.

Section 4001 of the Code imposes a retailers excise tax upon several categories of articles, including `all articles commonly or commercially known as jewelry, whether real or imitation,' and `articles made of, or ornamented, mounted or fitted with precious metals or imitations thereof.'

With respect to the first category enumerated above, section 48.4001-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that jewelry in general includes articles designed to be worn on the person or on apparel for the purpose of adornment and which in accordance with custom or ordinary usage are worn so as to be displayed, such as rings, chains, brooches, bracelets, cuff buttons, necklaces, earrings, beads, charms, pendants, etc. The tax is imposed on the sale of any such articles at retail, regardless of the substance of which made and without reference to their utilitarian value or purpose, unless for a purpose specifically exempted by law.

Revenue Ruling 57-146 holds that identification tags and bracelets, designed to be worn on the wrist, are considered to be articles worn for adornment and are subject to the retailers excise tax regardless of the substance of which they are made. The type of identification tag involved in that ruling consists of a chain attached to a metal disc on which is engraved only the name and address of the wearer. In accordance with the conclusion in that ruling, such tags and chains are considered to be articles designed to be worn for adornment, although they also provide some degree of identification.

However, the identification tags described in the instant case, which are specifically designed to be worn for civil defense purposes, are not considered to be designed to be worn for adornment. An identification tag will be regarded as designed to be worn for civil defense purposes provided that:

(a) at the time of sale for use or consumption, information in addition to the name and address of the wearer is indented or embossed thereon, but such information must be limited to the name and address of the wearer, the name and address of next of kin, the blood type or other medical information, and the religious affiliation of the wearer;

(b) the identification tag and chain conform to specifications issued by the Federal civil defense agency for such articles;

(c) no part of the chain or identification tag is made of, or ornamented, mounted or fitted with a precious metal or plated to a thickness of one one-hundred-thousandth of an inch or more with a precious metal or an alloy of such metal;

(d) no part of the chain or identification tag is made of, or ornamented, mounted or fitted with any of the stones enumerated in section 4001 of the Code, whether such stones are real or synthetic; and

(e) no part of the chain or identification tag is otherwise ornamented in any manner so that it may be worn as an article for adornment purposes. The mere incidental indenting or embossing of the tag with some patriotic or religious symbol, sentiment, or tenet would not be regarded as ornamentation or as exceeding the limitations set forth above regarding indenting and embossing.

Since the identification tags described in the instant case are designed to be worn for civil defense purposes in accordance with the above standards, it is held that they are not subject to the tax imposed by section 4001 of the Code when sold at retail.

Revenue Ruling 57-146 is hereby distinguished.