Rev. Rul. 56-166

Section 5801 of the Internal Revenue Code of 1954 provides that on first engaging in business, and thereafter on or before the first day of July of each year, every importer, manufacturer, and dealer in firearms shall pay a special (occupational) tax at the rate specified therein. Section 5811 of the Code provides that there shall be levied, collected, and paid, a tax at the rate specified therein on firearms transferred in the United States. Section 2(a) of the Federal Firearms Act, 15 U.S.C. 902(a), makes it unlawful for any manufacturer or dealer, except a manufacturer or dealer having a license issued under section 3 thereof, to transport, ship, or receive any firearm or ammunition in interestate or foreign commerce. A question has arisen with respect to the application of these laws in the case of person engaged in the business of selling firearms which remain in customs bond. Held, the transfer tax on firearms imposed under section 5811 of the Code is not applicable to the constructive transfer of firearms in customs territory. However, the transfer of legal title to firearms is equivalent to a sale thereof and any person engaged, within the United States, in the business of selling firearms held or stored in customs territory, or in transit through such territory, (1) incurs liability under section 5801 of the Code for the special (occupational) tax as a dealer in firearms and (2) must be properly licensed as an importer (manufacturer) or dealer under section 3(a) of the Federal Firearms Act, 15 U.S.C. 903, 52 Stat. 1251, if such firearms are transported, shipped, or received in interstate or foreign commerce under customs bond.