Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 64-20

1964-1 C.B. 580

IRS Headnote

A corporation, which acquires all of the capital stock of a manufacturing company which was thereafter dissolved, is considered the `manufacturer' within the intent of section 5705(a) of the Internal Revenue Code of 1954, and, as such, is entitled to file a claim for refund of the tax paid on tobacco products by the former company where such tobacco products are subsequently withdrawn from the market after acquisition by the successor corporation.

Revenue Ruling 57-121, C.B. 1957-1, 429, superseded.

Full Text

Rev. Rul. 64-20 /1/

Advice has been requested whether a corporation, which purchased all of the capital stock of a manufacturing corporation, after which the manufacturing corporation was dissolved, is entitled to file a claim for refund of the tax on tobacco products withdrawn from the market where the tax was paid on the tobacco products removed from its factory by the manufacturing corporation prior to its sale.

The tax was paid by X company on tobacco products produced in and removed from its factory. Subsequent thereto, all of the capital stock of X company was transferred to Y corporation and X company was formally dissolved, at which time the assets of X company were distributed to Y corporation. The tobacco products were withdrawn from the market by Y corporation after dissolution of X company, and Y corporation filed a claim for refund of the tax paid on the products.

Section 5705(a) of the Internal Revenue Code of 1954 provides, in part, that a refund of any tax imposed by chapter 52 thereof shall be made to the manufacturer on proof satisfactory to the Secretary of the Treasury or his delegate that the claimant manufacturer has paid the tax on tobacco products withdrawn by him from the market.

Section 270.283 of the Manufacture of Tobacco Products Regulations provides, in part, for the refund to the manufacturer of the tax on tobacco products withdrawn from the market by the manufacturer.

It is held that the phrase `that the claimant manufacturer * * * has paid the tax on tobacco products * * * withdrawn by him from the market,' contained in section 5705(a) of the Code, covers not only the corporate entity which manufactured the product but also a corporation into which the manufacturing corporation was merged, a new corporation resulting from the consolidation of another corporation with the manufacturing corporation, and a corporation which acquires all of the corporate stock of the manufacturing corporation which is thereafter dissolved, as well as the transfer by operation of law of the control of the manufacturing corporation, such as through bankruptcy, the appointment of a receiver, or by other court order.

Accordingly, a corporation which acquires all of the capital stock of the manufacturing company, which was thereafter formally dissolved, should be considered the `manufacturer' within the intent of section 5705(a) of the Code since that corporation is the successor to the manufacturing company and, therefore, is entitled to file claim for refund of tax on the tobacco products subsequently withdrawn from the market. On the other hand, if a corporation merely purchases the assets of a manufacturing company which continues in existence, then the purchasing corporation is not entitled to file a claim for refund of the tax on the tobacco products produced and removed by the manufacturing company prior to the sale of its assets.

Revenue Ruling 57-121, C.B. 1957-1, 429, is hereby superseded.

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