Rev. Rul. 61-22

Advice has been requested whether the tax stamps for use in payment of the excise tax on packs of playing cards, imposed by section 4451 of the Internal Revenue Code of 1954, may be affixed by manufacturers in foreign countries prior to shipment of the playing cards to the United States.

A domestic company imports playing cards which are manufactured in X, Y , and Z foreign countries. For purposes of convenience, the company desires to purchase tax stamps in the United States and send them to the various foreign manufacturers to affix to the packs of playing cards at the factory just before shipment of the cards to the United States. X foreign country imposes an excise tax on playing cards imported into that country but does not permit stamps in payment of the tax to be affixed outside the country. Y foreign country imposes a tax on imported playing cards but does not require tax stamps or any other evidence of tax payment to be affixed to the packs of playing cards. Z foreign country imposes no excise tax on playing cards.

Section 4451 of the Code imposes a tax of 13 cents per pack upon every pack of playing cards containing not more than 54 cards, manufactured or imported, and sold, or removed for consumption or sale, by a manufacturer. This tax is in addition to any import duties imposed on such articles of foreign manufacture.

Section 4456 of the Code provides for the sale of stamps to importers of playing cards, who are required to affix the stamps to imported playing cards.

Article 19 of Regulations 66, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, was amended by Treasury Decision 6212, C.B. 1956-2, 1004. Insofar as pertinent here, Article 19(d) of Regulations 66, as amended, provides that stamps in payment of the tax on imported playing cards may be affixed to such cards in the foreign country in which manufactured, provided the laws of such foreign country grant a like privilege in respect of playing cards manufactured in the United States and exported to such country.

Accordingly, in the case of a foreign country which imposes a stamp tax on playing cards, the privilege of affixing United States tax stamps to playing cards by a manufacturer in that country who intends to ship such cards to the United States depends upon the matter of reciprocity of privileges between the United States and the foreign country. Since X foreign country does not grant a like privilege to United States playing card manufacturers who intend to ship cards to that country, it is held that stamps in payment of the excise tax imposed by section 4451 of the Code may not be affixed by manufacturers in that foreign country to playing cards which are to be imported into the United States.

However, since Y foreign country does not require that tax stamps or any other evidence of tax payment be affixed to playing cards manufactured in the United States and exported to that country, and since Z foreign country imposes no excise tax on playing cards, the matter of reciprocity of privileges between the United States and those countries is not determinative with respect to playing cards to be imported into the United States from those countries. Accordingly, it is held that tax stamps may be affixed to playing cards by manufacturers in Y and Z foreign countries prior to shipment of the playing cards to the United States.