26 USC 4221 - Certain tax-free sales

U.S Code last checked for updates: Nov 22, 2024

§ 4221.

Certain tax-free sales

(a)

General rule

Under regulations prescribed by the Secretary, no tax shall be imposed under this chapter (other than under section 4121 or 4081) on the sale by the manufacturer (or under subchapter C of chapter 31 on the first retail sale) of an article—

(1)

for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture,

(2)

for export, or for resale by the purchaser to a second purchaser for export,

(3)

for use by the purchaser as supplies for vessels or aircraft,

(4)

to a State or local government for the exclusive use of a State or local government,

(5)

to a nonprofit educational organization for its exclusive use, or

(6)

to a qualified blood collector organization (as defined in section 7701(a)(49)) for such organization’s exclusive use in the collection, storage, or transportation of blood,

but only if such exportation or use is to occur before any other use. Paragraphs (4), (5), and (6) shall not apply to the tax imposed by section 4064. In the case of taxes imposed by section 4051 or 4071, paragraphs (4) and (5) shall not apply on and after October 1, 2028. In the case of the tax imposed by section 4131, paragraphs (3), (4), and (5) shall not apply and paragraph (2) shall apply only if the use of the exported vaccine meets such requirements as the Secretary may by regulations prescribe. In the case of taxes imposed by subchapter C or D, paragraph (6) shall not apply.

(b)

Proof of resale for further manufacture; proof of export

Where an article has been sold free of tax under subsection (a)—

(1)

for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture, or

(2)

for export, or for resale by the purchaser to a second purchaser for export,

subsection (a) shall cease to apply in respect of such sale of such article unless, within the 6-month period which begins on the date of the sale by the manufacturer (or, if earlier, on the date of shipment by the manufacturer), the manufacturer receives proof that the article has been exported or resold for use in further manufacture.

(c)

Manufacturer relieved from liability in certain cases

(d)

Definitions

For purposes of this section—

(1)

Manufacturer

(2)

Export

(3)

Supplies for vessels or aircraft

(4)

State or local government

(5)

Nonprofit educational organization

(6)

Use in further manufacture

An article shall be treated as sold for use in further manufacture if—

(A)

such article is sold for use by the purchaser as material in the manufacture or production of, or as a component part of, another article taxable under this chapter to be manufactured or produced by him; or

(B)

in the case of gasoline taxable under section 4081, such gasoline is sold for use by the purchaser, for nonfuel purposes, as a material in the manufacture or production of another article to be manufactured or produced by him.

(7)

Qualified bus

(A)

In general

The term “qualified bus” means—

(i)

an intercity or local bus, and

(ii)

a school bus.

(B)

Intercity or local bus

The term “intercity or local bus” means any automobile bus which is used predominantly in furnishing (for compensation) passenger land transportation available to the general public if—

(i)

such transportation is scheduled and along regular routes, or

(ii)

the seating capacity of such bus is at least 20 adults (not including the driver).

(C)

School bus

(e)

Special rules

(1)

Reciprocity required in case of civil aircraft

(2)

Tires

(A)

Tax-free sales

Under regulations prescribed by the Secretary, no tax shall be imposed under section 4071 on the sale by the manufacturer of a tire if—

(i)

such tire is sold for use by the purchaser for sale on or in connection with the sale of another article manufactured or produced by such purchaser; and

(ii)

such other article is to be sold by such purchaser in a sale which either will satisfy the requirements of paragraph (2), (3), (4), or (5) of subsection (a) for a tax-free sale, or would satisfy such requirements but for the fact that such other article is not subject to tax under this chapter.

(B)

Proof

(C)

Subsection (a)(1) does not apply

(3)

Tires used on intercity, local, and school buses

(Added Pub. L. 85–859, title I, § 119(a), Sept. 2, 1958, 72 Stat. 1282; amended Pub. L. 86–70, § 22(a), June 25, 1959, 73 Stat. 146; Pub. L. 86–344, § 2(b), Sept. 21, 1959, 73 Stat. 617; Pub. L. 86–418, § 1, Apr. 8, 1960, 74 Stat. 38; Pub. L. 86–624, § 18(e), July 12, 1960, 74 Stat. 416; Pub. L. 87–61, title II, § 205(a), June 29, 1961, 75 Stat. 126; Pub. L. 89–44, title II, § 208(d), title VIII, § 801(c), (d)(1), June 21, 1965, 79 Stat. 141, 158; Pub. L. 91–172, title I, § 101(j)(26), Dec. 30, 1969, 83 Stat. 529; Pub. L. 92–178, title IV, § 401(a)(3)(A), Dec. 10, 1971, 85 Stat. 531; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–227, § 2(b)(2), Feb. 10, 1978, 92 Stat. 12; Pub. L. 95–600, title VII, § 701(ff)(2)(A), Nov. 6, 1978, 92 Stat. 2924; Pub. L. 95–618, title II, §§ 201(c)(1), 232(a), 233(c)(1), (2), Nov. 9, 1978, 92 Stat. 3183, 3189, 3191, 3192; Pub. L. 96–222, title I, § 108(c)(5), Apr. 1, 1980, 94 Stat. 227; Pub. L. 97–424, title V, §§ 515(b)(1), 516(b)(2), Jan. 6, 1983, 96 Stat. 2181, 2183; Pub. L. 98–369, div. A, title VII, § 735(c)(8), July 18, 1984, 98 Stat. 983; Pub. L. 99–499, title V, § 521(d)(4), Oct. 17, 1986, 100 Stat. 1779; Pub. L. 99–514, title XVII, § 1703(c)(2)(C), Oct. 22, 1986, 100 Stat. 2776; Pub. L. 100–17, title V, § 502(b)(4), Apr. 2, 1987, 101 Stat. 257; Pub. L. 100–203, title IX, § 9201(b)(1), title X, § 10502(d)(4), Dec. 22, 1987, 101 Stat. 1330–330, 1330–444; Pub. L. 101–239, title VII, § 7841(d)(17), Dec. 19, 1989, 103 Stat. 2429; Pub. L. 101–508, title XI, §§ 11211(d)(3), 11221(b), (d)(1), (2), Nov. 5, 1990, 104 Stat. 1388–427, 1388–444; Pub. L. 102–240, title VIII, § 8002(b)(3), Dec. 18, 1991, 105 Stat. 2203; Pub. L. 103–66, title XIII, § 13161(b)(1), Aug. 10, 1993, 107 Stat. 452; Pub. L. 105–178, title IX, § 9002(b)(1), June 9, 1998, 112 Stat. 500; Pub. L. 105–206, title VI, § 6023(17), July 22, 1998, 112 Stat. 825; Pub. L. 108–357, title VIII, § 853(d)(2)(F), Oct. 22, 2004, 118 Stat. 1613; Pub. L. 109–59, title XI, § 11101(b)(1), Aug. 10, 2005, 119 Stat. 1944; Pub. L. 109–280, title XII, § 1207(b)(1)–(3)(A), Aug. 17, 2006, 120 Stat. 1070; Pub. L. 111–152, title I, § 1405(b)(1), Mar. 30, 2010, 124 Stat. 1065; Pub. L. 112–30, title I, § 142(d), Sept. 16, 2011, 125 Stat. 356; Pub. L. 112–102, title IV, § 402(d), Mar. 30, 2012, 126 Stat. 282; Pub. L. 112–140, title IV, § 402(c), June 29, 2012, 126 Stat. 403; Pub. L. 112–141, div. D, title I, § 40102(d)(1), July 6, 2012, 126 Stat. 845; Pub. L. 113–295, div. A, title II, § 221(a)(103)(B)(i), Dec. 19, 2014, 128 Stat. 4052; Pub. L. 114–94, div. C, title XXXI, § 31102(d)(1), Dec. 4, 2015, 129 Stat. 1727; Pub. L. 115–141, div. U, title IV, § 401(a)(221), Mar. 23, 2018, 132 Stat. 1194; Pub. L. 116–94, div. N, title I, § 501(b)(1), Dec. 20, 2019, 133 Stat. 3118; Pub. L. 117–58, div. H, title I, § 80102(d)(1), Nov. 15, 2021, 135 Stat. 1327.)

cite as: 26 USC 4221