Internal Revenue Service
Revenue Ruling
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smRev. Rul. 63-17
1963-1 C.B. 221
Caution: Obsoleted by Rev. Rul. 69-227
IRS Headnote
For purposes of the manufacturers excise tax on electric, gas, and oil appliances of the household type, imposed by section 4121 of the Internal Revenue Code of 1954, electric coffee urns which have a yield capacity of 50 cups or less are considered to be `articles of the household type,' unless a manufacturer, producer, or importer establishes that a particular urn does not have an actual, practical, commercial fitness, or is not specifically designed and constructed, for household use.
Revenue Ruling 58-490, C.B. 1958-2, 788, superseded.
Full Text
Rev. Rul. 63-17
The Internal Revenue Service has been asked to establish an administrative test for determining the applicability of the manufacturers excise tax on certain `articles of the household type' to sales of electric coffee urns.
Section 4121 of the Internal Revenue Code of 1954 imposes a tax on the sale by the manufacturer, producer, or importer of certain articles of the household type, including `Electric, gas, or oil appliances of the type used for cooking, warming, or keeping warm food or beverages for consumption on the premises.'
Section 48.4121-2(a) of the Manufacturers and Retailers Excise Tax Regulations defines the term `articles of the household type' to include all articles enumerated in section 4121 which have an actual, practical, commercial fitness, or are specifically designed and constructed, for household use.
Section 48.4121-2(c) of the regulations provides that the term `Electric, gas, or oil appliances of the type used for cooking, warming, or keeping warm, food or beverages for consumption on the premises' includes any type of appliance operated by, or for which the heat is generated by, electricity, gas, or oil, which is used to cook, warm, or keep warm, food or beverages for consumption on the premises. `Coffee makers' are among the articles listed in the regulations as examples of articles subject to tax under this classification.
The Service has held in Revenue Ruling 58-490, C,B. 1958-2, 788, that a `buffet' size coffee urn having a capacity of from 12 to 24 cups, primarily designed and sold for domestic use, is an `article of the household type' and, therefore, is subject to the manufacturers excise tax imposed by section 4121 of the Code. However, that Revenue Ruling Further states that a `party' size coffee percolator (making from 20 to 50 cups) and a `king' size automatic percolator (making from 24 to 72 cups of coffee) are considered to be primarily designed and sold by the manufacturer for other than household use and are not subject to the tax. That Revenue Ruling, however, does not relate to the taxability of coffee urns having maximum capacities in excess of 24 cups but less than 50 cups.
In recent years the marketing trend has changed relative to the sales of those electric coffee urns having a maximum capacity in excess of 24 cups but not in excess of 50 cups. The sales promotional efforts of the manufacturers of these urns are now being significantly directed toward the domestic or household market. This is borne out by the fact that these urns are now being held out by the manufacturers thereof for use in households for home gatherings, such as for parties, for barbecues, for buffets, for receptions, and for use in recreation rooms.
Electric coffee urns in excess of 50-cup maximum capacity generally are of a sturdier construction and utilize a glass gauge level indicator. In comparison, those urns of 50-cup maximum capacity or less generally are of a lighter construction and do not utilize the glass gauge indicators which are usually associated with commercial type coffee urns. Moreover, the general style and appearance of the urns which have a capacity of 50 cups or less indicate that they are designed for household use.
There is some difference of opinion among the manufacturers in the industry regarding the meaning of the term `cup size.' Although a `cup' is generally considered to be five ounces, there is some deviation from this measurement. Furthermore, although the capacity is usually measured by the `yield' of brewed coffee, there is some use of a water `input' measurement.
Since there is a definite trend toward the manufacture and sale of electric coffee urns of larger capacities specifically for household use, the Service hereby establishes an administrative test for presumptively determining the taxability of electric coffee urns. Under this test, any electric coffee urn having a yield capacity of 50 cups or less will be presumed to be of the household type and, therefore, subject to the manufacturers excise tax imposed by section 4121 of the Code. For purposes of this test, a 50-cup yield capacity will be considered equal to a 250-ounce yield capacity or a 300-ounce input capacity. In accordance with this presumption of taxability, the tax will be imposed upon all electric coffee urns coming within the foregoing test, unless the manufacturer, producer, or importer establishes to the satisfaction of the Service that a particular urn does not have an actual, practical, commercial fitness, or is not specifically designed or constructed, for household use.
Under the authority contained in section 7805(b) of the Code, the test established by this Revenue Ruling will not be applied to sales made by manufacturers, producers, or importers before April 1, 1963.
Revenue Ruling 58-490 is hereby superseded.