Rev. Rul. 64-256

The Internal Revenue Service has been asked to reconsider Revenue Ruling 59-253, C.B. 1959-2, 246, concerning the procedure and evidence necessary for establishing the exemption from the retailers excise tax on sales of articles for export.

Under the provisions of section 4056 of the Internal Revenue Code of 1954, the retailers excise tax does not apply to the sale of any article for export and in due course so exported.

Section 320.21 of Regulations 51, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides that (a) to exempt from tax a sale for export it is necessary that two conditions be met, namely, (1) that the article be identified as having been sold for export and (2) that it be exported in due course, and (b) in order to establish exemption from tax in the case of the sale of a taxable article for export it is necessary that the retailer maintain adequate records and have in his possession documentary evidence showing that the article was so sold.

Revenue Ruling 59-253 holds that where a taxable article is sold for export and the purchaser wishes to take it abroad with him, delivery may not be made directly to the purchaser by the retailer selling the article, but must be made to the purser or other responsible official of the foreign-bound aircraft or vessel. The proof of exportation required is a statement signed by the purser or other responsible official of the foreign-bound aircraft or vessel to the effect that delivery was made to the purchaser outside the territorial limits of the United States.

Subsequent to the issuance of Revenue Ruling 59-253, the Service has become aware of the difficulties encountered by retailers in complying with the requirements of that ruling. In addition, attention has been directed to the burdens and responsibilities imposed upon many common carriers in accepting direct delivery of a package from the retailer.

In view of the foregoing, the Service has determined that in a situation where a taxable article is sold for export and the purchaser is departing from the United States via a common carrier for a foreign destination, delivery of the article may be made by the retailer directly to the purchaser, and the purchaser may carry the article with him aboard the foreign-bound aircraft or vessel. The article so sold must be placed in a wax-sealed package by the retailer prior to delivery to the purchaser. The sealed package is to be opened by the purchaser outside the territorial limits of the United States in the presence of an employee of the common carrier authorized to make certification of this fact.

To establish proof of exportation, a `Certificate of Exportation' is to be executed and returned to the retailer after opening of the sealed package. The Service will not furnish forms to be used as certificates of exportation. However, the certificates should be in a form substantially as follows:

CERTIFICATE OF EXPORTATION

Passenger's Name _ _

Address _ _

Ticket Number _ _

Date _ _ 19 _ _

I hereby certify:

that on the above date the above-named passenger,

(1) while on board _ _ proceeding from _ _ to _ _ or,

(2) immediately upon arrival at _ _ from _ _ via _ _ ; showed me a sealed package which (he) (she) had carried aboard described as _ _ ; that the wrappings of said package were undisturbed and sealed in wax with the imprint _ _ ; that outside the territorial limits of the United States of America said passenger broke the seal(s) and opened the package in my presence; that the package contained a sales slip purporting to be from _ _ and describing the contents of the package as _ _ ; and that the package contained an article(s) which appeared to be that (those) so described in said sales slip.

_ _

(Signature and title of employee)

I hereby certify that I am the passenger named above; that I purchased the above-described article(s) from _ _ which articles(s) was (were) wrapped and sealed in the above-described package by the vendor before delivery to me: that I opened the package for the first time outside the territorial limits of the United States of America; and that the article(s) has (have) not been and will not be used within the United States.

_ _

(Passenger's signature)

It is understood that the fraudulent use of this certificate to secure exemption will subject the guilty parties upon conviction to a fine of not more than $10,000, or to imprisonment for not more than five years, or both, together with costs of prosecution.

It is recognized that a retailer may not wish to make use of the procedures set forth herein in respect of his sales for export. Under such circumstances, delivery of the article sold for export may be made by the retailer directly to the common carrier. In this event, a statement of the carrier must be returned to the retailer certifying that (1) the article was received from the retailer for delivery to the designated purchaser, and (2) delivery of the article was made to the purchaser outside the territorial limits of the United States. See S.T. 936, C.B. 1949-1, 260, and S.T. 939, C.B. 1951-2, 216.

With respect to sales to aliens for export, where the amount of the retailers excise tax, if applied to a sales transaction with an individual purchaser, would not exceed $20, see Revenue Procedure 64-1, C.B. 1964-1 (Part 1), 640.

Revenue Ruling 59-253 is hereby revoked.