Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 64-16

1964-1 C.B. 576

IRS Headnote

Tobacco products of domestic manufacture may not be removed from the factory, without payment of tax, for sale or delivery to diplomatic officers of foreign countries or to personnel of foreign embassies for consumption in the United States.

Revenue Ruling 54-371, C.B. 1954-2, 389, superseded.

Full Text

Rev. Rul. 64-16 /1/

Advice has been requested whether diplomatic officers of foreign countries or personnel of foreign embassies are entitled to purchase or receive tax-exempt tobacco products of domestic manufacture for consumption in the United States.

Section 5703(a) of the Internal Revenue Code of 1954 provides, in part, that the manufacturer of tobacco products shall be liable for the taxes imposed thereon by section 5701 of the Code. Section 5703(b) of the Code provides, in part, that the taxes shall be determined at the time of removal of the tobacco products and paid on the basis of a return.

Revenue Ruling 296, C.B. 1953-2, 325 provides, in part, that ambassadors, ministers, and other duly accredited diplomatic representatives of foreign governments (1) are not required to pay Federal excise taxes, the legal incidence of which would otherwise fall upon them, and (2) if any such person purchases from the manufacturer thereof an article otherwise subject to a Federal excise tax on sales by manufacturers, or purchases from a retailer an article otherwise subject to a Federal excise tax on sales by retailers, the transaction will not be taxed. Consular officers of foreign governments, and other officers (other than diplomatic representatives), as well as agencies and commissions, of foreign governments are not required to pay Federal excise taxes, the legal incidence of which would otherwise fall upon them in respect of transactions arising in the performance of their official functions for which payment is made by the foreign government.

The tax imposed on tobacco products by section 5701 of the Code does not fall within the coverage of Revenue Ruling 296. The legal incidence of the tax is not on the consumer or on the sale to him but upon its manufacture. See Liggett & Myers Tobacco Co. v. United States , 299 U.S. 383 (1937), Ct. D. 1192, C.B. 1937-1, 332. In addition, section 5704 of the Code, which sets forth the exemptions from tax on tobacco products, makes no provision for the exemption of diplomatic officers or personnel of foreign embassies in the United States. Accordingly, tobacco products of domestic manufacture may not be removed from the factory, without payment of tax, for sale or delivery to foreign diplomatic officers or to personnel of foreign embassies in the United States.

Revenue Ruling 54-371, C.B. 1954-2, 389, is hereby superseded.

/1/ Prepared pursuant to Revenue Procedure 62-24, C.B. 1962-2, 489.