Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 64-80

1964-1 C.B. 386

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

A `card proving' machine which edits and balances coded information previously punched on data cards and which accumulates data and sorts the data cards into desired patterns is a combination punch card and sorting machine within the meaning of section 4191 of the Internal Revenue Code of 1954. An `output typewriter' and a `card punch' machine, which are auxiliary machines for the card proving machine, are a typewriter and a card punch machine, respectively, within the meaning of section 4191 of the Code. Therefore, the manufacturer's sales of the card proving machine, the output typewriter, and the card punch machine are subject to the manufacturers excise tax imposed by that section.

Full Text

Rev. Rul. 64-80

Advice has been requested whether the manufacturer's sales of the articles described below are subject to the manufacturers excise tax imposed by section 4191 of the Internal Revenue Code of 1954.

A manufacturer produces and sells a `card proving' machine which combines in one unit the functions of editing and balancing coded information previously punched on data cards together with the functions of accumulating data and sorting the data cards into any desired pattern. The edited and sorted cards are then ready for further processing as `input data' in other equipment.

The manufacturer also produces and sells an `output typewriter' and a `card punch' machine which are used as auxiliary equipment for the card proving machine. These two machines are designed to be connected to this card proving machine by means of cables for simultaneous operation. The output typewriter is used to produce summary output information in the form of typewitten reports. The output typewriter does not have a keyboard that can be manually operated; therefore, it cannot be used by a person to perform normal typing functions. The card punch machine is used for summary punching and performs the same functions as the output typewriter, except that the output is a punched card.

Section 4191 of the Code imposes a tax upon the sale by the manufacturer, producer, or importer of certain enumerated articles (including in each case parts or accessories of such articles sold on or in connection therewith, or with the sale thereof). Also taxed under this section of the Code are combinations of any of the articles enumerated therein. Among the articles enumerated are card punch machines, punch card machines, sorting machines, and typewriters.

The card proving machine described above performs such functions as to be deemed a combination punch card and sorting machine within the meaning of section 4191 of the Code. Therefore, it is held that the manufacturer's sales of this card proving machine are subject to the manufacturers excise tax imposed by that section.

The output typewriter and the card punch machine, even though auxiliary equipment for the card proving machine, are a typewriter and a card punch machine, respectively, within the meaning of section 4191 of the Code. Therefore, it is further held that the manufacturer's sales of these articles are subject to the manufacturers excise tax imposed by that section.