Rev. Rul. 72-482

Advice has been requested whether the payment provided by section 6418(a) of the Internal Revenue Code of 1954 for tax paid on manufactured sugar under section 4501(a) is allowable for sugar used under the circumstances described below.

A company manufactures an insecticide that is sprayed on livestock to protect the livestock from flies and other insects. The insecticide contains beet sugar in order to lure the insects to the insecticide. The tax imposed on the sale of manufactured sugar by section 4501(a) of the Code has been paid with respect to the sugar used in the manufacture of the insecticide. The company asks whether it is entitled to the payment provided by section 6418(a) of the Code, based on its use of tax-paid sugar in manufacturing the insecticide.

Section 4501(a) of the Code imposes a tax upon manufactured sugar manufactured in the United States. The tax is payable with respect to manufactured sugar which has been sold, or used in the production of other articles, by the manufacturer.

Section 6418(a) of the Code provides that upon the use of any manufactured sugar, or article manufactured therefrom, as livestock feed, or in the production of livestock feed, there shall be paid by the Secretary or his delegate to the person so using such manufactured sugar, or article manufactured therefrom, the amount of any tax paid under section 4501 with respect thereto.

Although the elimination of flies and other insects promotes livestock development, there is no provision in the law for refund or payment of sugar tax for tax-paid sugar used in the manufacture of insecticides intended for use on livestock. Accordingly, it is held that the company is not entitled to the payment provided by section 6418(a) of the Code.