Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 70-548

1970-2 C.B. 265

IRS Headnote

Bamboo cane fishing poles, whether merely straightened, scraped and varnished, or whether also cut into sections and fitted with ferrules for easy joining, are not subject to the manufacturers tax on sporting goods; Revenue Ruling 58-425 revoked and Revenue Ruling 59-136 modified.

Full Text

Rev. Rul. 70-548

The Internal Revenue Service has reconsidered Revenue Ruling 58-425, C.B. 1958-2, 804, that relates to whether the manufacturers excise tax on sporting goods, imposed by section 4161 of the Internal Revenue Code of 1954, applies to sales of certain bamboo cane poles described therein.

In the first situation in Revenue Ruling 58-425, a company sells bamboo cane poles which it has straightened, scraped, and varnished. In the second situation, the company scrapes, varnishes, and cuts into sections bamboo cane poles and then attaches ferrules to the ends of the sections. That Revenue Ruling holds that sales of the poles described in the first situation are not subject to the manufacturers excise tax on "fishing rods" but that the poles described in the second situation are considered to be "fishing rods" and subject to the tax.

Section 4161 of the Code imposes a tax upon the sale by the manufacturer, producer, or importer of certain sporting goods, including fishing rods, creels, reels, and artificial lures, baits, and flies.

Subsequent to the publication of Revenue Ruling 58-425 the United States Courts of Appeals for the Fifth, Seventh, and Ninth Circuits considered whether poles virtually identical to those described in the second situation of the Revenue Ruling constitute taxable "fishing rods" within the meaning of section 4161 of the Code. The Ninth Circuit in Commerce-Pacific, Inc. v. United States 278 F. 2d 651 (1960), held that the District Court correctly decided that the jointed bamboo cane poles there in issue were taxable "fishing rods" within the meaning of section 4161 of the Code. The Fifth Circuit in Simmons v. United States, 308 F. 2d 938 (1962), held that the District Court erred in holding that substantially the same type of bamboo cane poles as those in Commerce-Pacific were taxable "fishing rods."

In the case of Norton Manufacturing Corporation v. United States, 409 F. 2d 902 (1969), the Seventh Circuit affirmed a District Court judgment that sales of bamboo cane poles, which have been straightened, scraped, varnished, cut into two or more sections with ferrules inserted thereon for easy joining, and fitted with one small wire loop for attaching a fishing line, are not subject to the tax imposed by section 4161 of the Code on sales of "fishing rods."

In view of the conflict in the foregoing decisions concerning the application of the manufacturers excise tax to the items described, the Service has reconsidered Revenue Ruling 58-425 in the light of the recent decision in the Norton case. Upon reconsideration it is held that the manufacturers excise tax imposed on fishing rods by section 4161 of the Code does not apply to sales of bamboo cane poles regardless of whether they are merely straightened, scraped, and varnished, or whether, in addition, they are cut into sections and fitted with ferrules or other means whereby they may be joined together. Furthermore, sales of segmented bamboo cane poles fitted with a wire loop for attaching a line, are likewise not subject to tax.

Revenue Ruling 58-425 is hereby revoked.

Revenue Ruling 59-136, C.B. 1959-1, 342, is hereby modified to delete the citation to  Revenue Ruling 58-425.