Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 64-65

1964-1 C.B. 384

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

An electronic scoring machine which performs limited adding or accumulating operations in the course of its overall function of grading test papers is not an adding, calculating, or computing machine within the meaning of section 4191 of the Internal Revenue Code of 1954. Therefore, it is not subject to the manufacturers excise tax imposed by that section.

Full Text

Rev. Rul. 64-65

Advice has been requested whether the electronic scoring machine described below is subject to the manufacturers excise tax imposed by section 4191 of the Internal Revenue Code of 1954.

A company manufacturers an electronic machine designed to score (or grade) specially prepared test papers quickly and accurately. The machine `reads' blocks filled in by pencil on the papers. It can score 50 true-false or multiple choice question and answer sheets per minute by comparing the answers thereon with the correct answers marked on a master form placed in the machine. It marks each wrong answer and prints the total number of missed questions on each sheet. The machine automatically feeds, grades, marks, and stacks the test papers. It provides the total of all questions missed by the entire group being tested.

Section 4191 of the Code imposes a tax upon the sale by the manufacturer, producer, or importer, of certain enumerated articles and combinations thereof, including `adding machines,' `calculating machines,' and `computing machines.'

Although the electronic scoring machine, in the course of its overall function of grading test papers, is capable of adding or a accumulating in a very limited manner certain figures derived from its operations, it is not regarded as an adding, calculating, or computing machine within the meaning of section 4191 of the Code. Furthermore, it does not come within the scope of any of the other articles enumerated in that section.

Accordingly, it is held that the electronic scoring machine described above is not subject to the manufacturers excise tax imposed by section 4191 of the Code.