Rev. Rul. 62-151

Advice has been requested concerning the applicability of the retailers excise tax on toilet preparations to retail sales of the articles described below.

A company sells at retail so-called `artificial fingernails,' which are fingernail coverings of the `press-on' type. They are made of a plastic material which has a pressure-sensitive adhesive back. They may by clear or colored. These articles are precut in the shape of fingernails, but they are of sufficient size that they may be trimmed to the size of the natural nails after having been applied by pressure.

The company also sells at retail another type of so-called `artificial fingernails,' consisting of a powder substance and a liquid substance. When these substances are mixed and applied to fingernails, the resultant mixture hardens to form a covering for the nails. This mixture is recommended for use to cover cracked or broken nails. Because of the hardening characteristic of this article, it is also recommended for use to reshape or `build on' fingernails for the purpose of enhancing the appearance of the wearer's hands.

Section 4021 of the Internal Revenue Code of 1954 imposes a tax upon the sale at retail of certain enumerated toilet articles, including `cosmetics,' and any other similar substance, article, or preparation, by whatsoever name known or distinguished, which are used or applied or intended to be used or applied for toilet purposes.

Section 320.50(a) of Regulations 51, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides that any article advertised or held out for toilet purposes, or for any purpose for which the articles enumerated in the law are customarily used, will be subject to the tax regardless of the name by which it may be known or distinguished. That section of the regulations also provides that the tax attaches to the sale by the retailer of any preparation which is used or applied or intended to be used or applied for toilet purposes or used in connection with the bath or care of the body, or applied to the clothing as a perfume or to the body as a toilet article.

Revenue Ruling 58-38, C.B. 1958-1, 376, sets forth a list of articles which have been held to be toilet substances, articles, or preparations subject to tax when sold at retail. Nail enamels, nail lacquers, and nail polishes (paste, powder, or liquid) are among the articles listed as taxable in that Revenue Ruling.

The fingernail coverings described above are sold for use in grooming the hands. They are intended for use in improving the appearance of the nails, thereby improving the appearance of the person. Consequently, these products are toilet articles or preparations classificable as `cosmetics' within the purview of section 4021 of the Code.

Accordingly, it is held that sales at retail of the articles described are subject to the retailers excise tax imposed by that section of the Code.

Under the authority contained in section 7805(b) of the Code, this Revenue Ruling will be applied only to sales made by retailers on and after November 1, 1962.