Rev. Rul. 64-4

Advice has been requested whether sales of gasoline to the organization described below for use in its aircraft are subject to the manufacturers excise tax imposed by section 4081(a) of the Internal Revenue Code of 1954. If the tax applies, further advice has been requested whether the organization is entitled to the payment authorized under the provisions of section 6421(a) of the Code with respect to gasoline used for certain nonhighway purposes.

A nonprofit charitable organization, the primary purpose of which is to provide air ambulance service the times of public or private emergency, purchases gasoline for use in its aircraft. The organization's services include providing air transportation of ill or injured persons to medical centers, air transportation of medical supplies, and air transportation of community residents in times of public disaster. The organization offers its services `free-of-charge' to those persons who are unable to pay and at cost to those persons who are able to pay.

Aside from its earnings, the organization receives funds which are donated, devised, or bequeathed by the general public. The organization has been granted exemption from the Federal income tax as a charitable organization which meets the requirements of section 501(c)(3) of the Code.

Section 4081 of the Code imposes a tax at the rate of four cents a gallon on gasoline sold by the producer or importer thereof, or by any producer of gasoline.

Under the provisions of section 6421(a) of the Code, if gasoline is used otherwise than as a fuel in a highway vehicle which (at the time of such use) is registered, or is required to be registered, for highway use under the laws of any State or foreign country, the Secretary of the Treasury or his delegate shall pay (without interest) to the ultimate purchaser of such gasoline and amount equal to two cents for each gallon of gasoline so used on which tax was paid at the rate of four cents a gallon.

Although section 4221(a)(5) of the Code provides an exemption from the manufacturers excise taxes with respect to sales of taxable articles for the exclusive used of `nonprofit educational organizations,' there is no provision of the statute which grants exemption from such taxes with respect to nonprofit charitable organizations.

Accordingly, it is held that, in the absence of a statutory exemption, the manufacturers excise tax imposed by section 4081(a) of the Code applies to the sale by the producer or importer of gasoline to the organization described above. However, under the provisions of section 6421(a) of the Code, the organization, as the ultimate purchaser of gasoline used for nonhighway purposes, may obtain a payment of two cents for each gallon of gasoline used in its aircraft on which the tax was paid at the rate of four cents a gallon.