Rev. Rul. 62-32

Advice has been requested whether the retailers excise tax on jewelry and related items applies to sales at retail of the article described below.

A retailer sells a `glove holder' which is designed to hold ladies' gloves to keep them from being lost. It consists of a clip made of nonprecious metal in the form of a miniature glove with a small chain attached. The chain is used to fasten the article to a handbag. Neither the clip nor the chain is made of, or ornamented, mounted or fitted with precious metals or imitations thereof. Moreover, the article is not ornamented with any of the stones enumerated in section 4001 of the Internal Revenue Code of 1954.

Section 4001 of the Code imposes a tax upon the sale at retail of `all articles commonly or commercially known as jewelry, whether real or imitation.' That section also imposes a tax upon the sale at retail of `articles made of, or ornamented, mounted or fitted with precious metals or imitations thereof.'

Section 48.4001-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that jewelry in general includes articles designed to be worn on the person or on apparel for the purpose of adornment and which in accordance with custom or ordinary usage are worn so as to be displayed. Sections 48.4001-2(b) of the regulations provides that jewelry also includes certain other articles if they are made of, or ornamented, mounted or fitted with, any of the stones enumerated in section 4001 whether such stones are real or synthetic.

Section 48.4001-4(a) of the regulations provides that the tax imposed by section 4001 of the Code applies to the sale at retail of articles (as distinguished from those articles commonly or commercially known as jewelry as described in section 48.4001-2) which are made of, or ornamented, mounted or fitted with, precious metals or imitations thereof. Section 48.4001-4(b) of the regulations provides that the term `precious metals' includes platinum, gold, silver, and other metals of similar or greater value. The term `imitations thereof' includes (i) alloys of precious metals, and (ii) platings of precious metals and platings of alloys of such metals, provided such platings are one one-hundred-thousandth of an inch or more in thickness.

Glove holders are not considered to be `articles commonly or commercially known as jewelry,' within the meaning of section 48.4001-2(a) of the regulations. However, glove holders which are made of, or ornamented, mounted or fitted with precious metals or imitations thereof are subject to the retailers excise tax under the provisions of section 48.4001-4(a) of the regulations. Since the glove holder in the instant case is made entirely of nonprecious metal, it does not come within the scope of section 48.4001-4(a) of the regulations.

Accordingly, it is held that the retailers excise tax imposed by section 4001 of the Code does not apply to the sale at retail of the glove holder which is described above.