Rev. Rul. 56-569

The Internal Revenue Service has been asked whether microfilm reproductions of canceled stock certificates bearing canceled documentary tax stamps may be made and retained and the original documents destroyed.

Section 113.150 of Regulations 71 provides, in part, that all instruments, memoranda, books, or other documents to which documentary stamps have been affixed and canceled in payment of stamp taxes shall be maintained and preserved for at least four years from the time of the related transaction.

Section 113.159 of Regulations 71, dealing with claims for redemption, provides, in part, that stamps sought to be redeemed must be submitted with the claim, or if it is impracticable to remove the stamps from the instruments to which they are attached, they must be presented to an internal revenue representative, who shall write on the face of the stamps the words `claim for refund filed,' and attach to the claim a statement showing that such endorsement has been made.

Under section 3312 of the Internal Revenue Code of 1939, assessment of documentary stamp taxes for which liability was incurred prior to January 1, 1955, may be made at any time within four years after the taxes become due. After four years, but not more than five years, suit may be instituted by the Government without assessment to recover any taxes alleged to be due but which are unpaid. With respect to stamp taxes incurred on and after January 1, 1955, section 6501 of the 1954 Code provides that assessment of such taxes, or suit without assessment, may be made at any time within three years after the taxes become due.

In general, the only acceptable proof that documentary stamp tax liability has been satisfied by the affixing and canceling of stamps is by producing the stamps themselves. This is particularly true in the case of claims for redemption where a claim may not be allowed regardless of its merits unless the stamps involved are submitted with the claim or submitted to an internal revenue officer for endorsement.

Accordingly, canceled stock certificates having, or required to have, canceled documentary stamps affixed thereto, may not be destroyed during the statutory periods within which assessment may be made of any taxes for which liability has been incurred and, as a matter of protection to the taxpayer in the case of taxes incurred under the 1939 Code, should not be destroyed before the expiration of the five-year period during which suit may be instituted.

Title 18, U.S.C., Sec. 474, 62 Stat. 706, makes it a criminal offense to print, photograph, or in any other manner make or execute any engraving, photograph, print, or impression in the likeness of any obligation or other security of the United States. Title 18, U.S.C., Sec. 8, 62 Stat. 685, defines an `obligation or other security of the United States' to include stamps and other representatives of value issued under any Act of Congress.

The Acting Secretary of the Treasury on January 15, 1940, authorized the reproduction of canceled United States internal revenue stamps under certain specified conditions. Title 31, Chapter IV, Part 402, Section 402.1, Code of Federal Regulations. Section 402.1 reads as follows:

Sec. 402.1. Reproductions authorized . Authority is hereby given to make, hold and dispose of black and white reproductions of canceled United State internal revenue stamps: Provided , That such reproductions are made, held and disposed of as a part of and in connection with the making, holding, and disposition, for lawful purposes, of the reproductions of the documents to which such stamps are attached.

The Service will interpose no objection to (1) the destruction of canceled stock certificates where the stamp tax liabilities involved were incurred prior to the statutory limitation periods referred to above and (2) the microfilming of such documents prior to destruction. The microfilming of stock certificates with canceled stamps attached, after the expiration of such periods, for the purpose of having a permanent record of the documents, is not in violation of the statute relating to the reproduction of stamps.

The ruling herein is distinguishable from Revenue Ruling 56-232, C.B. 1956-1, 715, relating to the photographing of special (occupational) tax stamps, in that such special tax stamps are not issued to be attached to any document.