Rev. Rul. 74-286

Advice has been requested whether the company described below may be registered as a "wholesale distributor" in order to be treated as a producer of gasoline for purposes of the tax imposed by section 4081 of the Internal Revenue Code of 1954 on sales of gasoline by the producer or importer thereof, or by any producer of gasoline.

The company is engaged in the trade or business of purchasing gasoline and reselling such gasoline regularly in bulk quantities to producers, retailers, or users for delivery into their bulk storage tanks. The company does not maintain its own storage facilities but instructs its supplier to deliver the gasoline directly to its customers. The company takes title to the gasoline at the time of purchase from the supplier and retains title until the gasoline is delivered into the customers' tanks.

Section 4083 of the Code provides that the tax imposed by section 4081 shall not apply in the case of sales of gasoline to a producer of gasoline. Section 4082(a) defines the term "producer" to include, among other persons, a wholesale distributor.

Under the provisions of section 4082(d) of the Code, the term wholesale distributor includes any person who (1) sells gasoline to producers, retailers, or to users who purchase in bulk quantities for delivery into bulk storage tanks, and (2) elects to register, under section 4101, with respect to the tax imposed by section 4081.

Section 48.4082-1(e)1 of the Manufacturers and Retailers Excise Tax Regulations provides that the term wholesale distributor includes any person who (i) holds himself out to the public as being engaged in the trade or business of selling gasoline to producers of gasoline (including other wholesale distributors), to retailers of gasoline, or to users of gasoline who purchase in bulk quantities for delivery into bulk storage tanks; (ii) actually makes more than casual sales of gasoline to the persons described in (i); and (iii) has elected to be treated as a producer of gasoline.

Section 48.4101(b) of the regulations provides that the application for registry (Form 637) must include a statement setting forth in detail, in the case of a wholesale distributor of gasoline, a description of the storage facilities maintained by the distributor, and the percentage which his bulk sales of gasoline is expected to bear to his total sales of gasoline.

The specific question in the instant case is whether the company, although otherwise meeting the definition of a wholesale distributor under section 4082(d) of the Code and applicable regulations, is precluded from registering under section 4101 as a wholesale distributor because the company maintains no storage facilities for gasoline it purchases.

Although section 48.4101-1(b) of the regulations requires a wholesale distributor to furnish information regarding storage facilities maintained by it, neither this section of the regulations nor section 4082 of the Code requires a person to maintain a storage facility in order to qualify as a wholesale distributor of gasoline. Thus, the lack of storage facilities, in and of itself, does not prevent a person from qualifying as a wholesale distributor of gasoline. However, where a person, who otherwise qualifies as a wholesale distributor, lacks such facilities, it would be necessary to determine that he actually takes title to and resells the products in bulk quantities delivered to his customers in order to be treated as a producer of gasoline within the meaning of section 4082.

Accordingly, the company in the instant case is not precluded from registering even though it lacks storage facilities, inasmuch as it meets the requirements of the Code and regulations in order to qualify and register as a wholesale distributor.