Rev. Rul. 58-102

Advice has been requested whether the retailers excise tax imposed by section 4001 of the Internal Revenue Code of 1954 applies to sales of (1) a small metal ornament made in the shape of a Christmas tree and (2) a corsage or boutonniere consisting of artificial flowers made of fabrics or plastics.

The metal ornament made in the shape of a Christmas tree is approximately three inches high, two and one-fourth inches wide at the base, has various colored miniature bulbs on its front, and is equipped with a clasp for the purpose of attaching it to a lapel, dress, coat, or other wearing apparel. It was designed as a Christmas season decoration and may also be attached to Christmas wreaths and packages.

The corsage or boutonniere consists of artificial flowers of fabrics or plastics made to resemble natural flowers. The arrangement also contains artificial leaves and is equipped with a metal clasp for the purpose of attaching it to an article of wearing apparel.

Section 4001 of the ode imposes a tax upon certain articles sold at retail, including all articles commonly or commercially known as jewelry, whether real or imitation.

Section 320.30 of Regulations 51, made applicable to the 1954 Code by virtue of Treasury Decision 6091, C.B. 1954-2, 47, provides that the tax attaches to the sale by the retailer of all articles commonly or commercially known as jewelry, whether real or imitation, regardless of the substance of which made. Section 320.31 of Regulations 51 defines jewelry as follows:

Jewelry in general includes articles designed to be worn on the person or apparel for the purpose of adornment and which in accordance with custom or ordinary usage are worn so as to be displayed, such as rings, chains, brooches, bracelets, cuff buttons, necklaces, earrings, beads, etc. The tax is imposed on the sale of any such articles at retail, regardless of the substance of which made and without reference to their utilitarian value or purpose, unless for a purpose specifically exempted by law.

Corsages and boutonnieres which are made of natural flowers do not fall within the classification of jewelry and are not subject to the retailers excise tax, even though they may be equipped with pins or clasps for attaching them to wearing apparel. The same conclusion must be reached with respect to corsages and boutonnieres made of fabrics or plastics in imitation of natural flowers. The term `imitation' means an artificial likeness of natural flowers in size, color and design. Since these corsages and boutonnieres are designed to be worn as substitutes for natural flowers, they obviously are not articles commonly or commercially known as jewelry.

Jewelry, on the other hand, which is made in a variety of styles, shapes and sizes, may include designs and patterns of flowers, trees, etc. Such articles are not made as, or regarded as, imitations of flowers, trees, etc., nor are they intended to be worn as substitutes for the natural objects. These articles fall within the classification of jewelry regardless of the material of which they are made.

Accordingly, it is held that a miniature Christmas tree made of metal is an article of costume jewelry and is subject to the tax when sold at retail, while a corsage or boutonniere consisting of artificial flowers made of fabrics or plastics is not taxable.