Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 63-25

1963-1 C.B. 223

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

For purposes of the manufacturers excise tax imposed by section 4151 of the Internal Revenue Code of 1954, the term `musical instruments' includes electric chord organs which have keys and chord buttons by which a person can play a wide variety of musical compositions, it being immaterial that the arrangements of such compositions are relatively simple in nature.

Full Text

Rev. Rul. 63-25

Advice has been requested concerning the applicability of the manufacturers excise tax on musical instruments to the sale of the electric chord organs described below.

A company manufactures and sells electric chord organs. These organs are produced in several sizes and in both portable and console models, although they are all basically alike in design and construction. Each organ has a keyboard and a set of so-called `chord buttons.'

The keyboard consists of blank and white keys arranged in the same manner as a piano keyboard. These organs have no more than 37 keys, and some of them have less. The chord buttons are grouped together in rows, and the number of buttons varies according to the number of major and minor chords which a particular organ is designed to produce.

All of the keys and buttons are connected to a series of reeds. In some organs, the reeds are made of metal, whereas, in other organs, they are made of plastic. Each organ is equipped with a blower, consisting of an electric motor and fan, which compresses air into a chamber in the housing of the organ. When any of the keys and buttons are depressed, the air escapes from the chamber and passes through the reeds connected to those keys and buttons, thereby causing the reeds to vibrate and to produce a musical sound. Thus, by de pressing the proper keys with the fingers of one hand and depressing the appropriate chord buttons with the fingers of the other hand, a person can play a musical composition, complete with both melody and harmony.

None of the electric chord organs described above have a range of more than three octaves, and some models have a range of only two octaves. Consequently, the complexity of the musical compositions which can be played on these organs is limited, and the compositions are usually arranged in a simple manner to conform to the number of keys and the corresponding number of chord buttons. In addition, the tone of those organs may vary somewhat in pitch.

These organs are sold in music stores and in music departments of department and appliance stores, and they are held out by the manufacturer as being designed for, capable of, and sold for, the rendition of a wide variety of musical compositions.

Section 4151 of the Internal Revenue Code of 1954 imposes a tax on the sale of musical instruments by the manufacturer, producer, or importer thereof.

Section 48.4151-1(d) of the Manufacturers and Retailers Excise Tax Regulations defines the term `musical instruments' to include all wind, reed, string, percussion or electronic instruments used to produce music, including but not limited to all types of pianos and organs, trombones, saxophones, violins, drums, xylophones, chimes, cymbals, bongos, castanets, maracas, claves, etc. The term does not include articles in the nature of toys or novelties which simulate musical instruments and which are unsuitable for use in playing musical compositions or in teaching music.

In order for an instrument to fall within the definition of a `musical instrument,' it is not necessary for it to be of absolutely true pitch or of such caliber as to constitute a solo instrument or one which can be used in ensemble playing, nor is it necessary that it be capable of playing music exactly as written by a composer. All that is necessary is that it be adequate for the rendition of musical compositions for pleasure or recreation with a reasonable degree of recognizability. The fact that the arrangements used are relatively simple is not material.

Although these tests may also, in a sense, be applicable to musical toys or novelties, there are differences in degree as well as additional factors to be considered, such as, for example, the purposes for which the articles are designed and sold. In this regard, it is significant that the electric chord organs in the instant case are held out by the manufacturer as being designed for, capable of, and sold for, the rendition of a wide variety of musical compositions.

Based upon all of the factors in the instant case, it is held that the electric chord organs described are musical instruments within the meaning of the law and regulations. Accordingly, the tax imposed by section 4151 of the Code applies to those organs when sold by the manufacturer.