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Rev. Rul. 72-215 1972-1 C.B. 339

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Revenue Ruling 72-215

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Headnote

An individual who purchases a foreign-made firearm from a foreign vendor and has a licensed importer clear it through customs for him is the “importer” for purposes of the manufacturers tax imposed by section 4181 of the Code.

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ISSUE

Advice has been requested concerning application of the manufacturers excise tax imposed by section 4181 of the Internal Revenue Code of 1954, where a firearm is imported under the circumstances described below.

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FACTS

A, an individual resident of the United States, purchased a foreign-made firearm from a foreign vendor for his personal use and made payment directly to the vendor. Under the provisions of the Gun Control Act of 1968, Public Law 90-618, C.B. 1968-2, 749, it is unlawful for any nonlicensed person to import or bring a firearm into the United States, but a federally licensed firearms importer or dealer is authorized to import firearms for nonlicensed persons. However, a licensed firearms dealer is not entitled to import firearms for sale or distribution in the United States. To conform with the law, A engaged X corporation, a licensed firearms importer, to obtain the required import license, to clear the firearm through customs, and to pay the customs duty and other incidentals. X then billed A for the customs duty, the incidental items, and a fee for X’s services. Under these circumstances, the following questions are presented:
  1. Who is the actual “importer” of the firearm for purposes of the manufacturers excise tax imposed by section 4181 of the Code?
  2. If A is the importer, has he “incidentally” imported the firearm for his personal use within the meaning of section 48.4218-2(b) of the Manufacturers and Retailers Excise Tax Regulations so that he is not liable for the tax on his use of the firearm?

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LAW AND ANALYSIS

Section 4181 of the Code imposes a tax upon the sale by the manufacturer, producer, or importer of firearms, shells, and cartridges. Section 4218(a) of the Code provides that if any person manufactures, produces, or imports an article (other than specified articles not involved here) and uses it (otherwise than as material in the manufacture or production of, or as a component part of, another taxable article), then he is liable for manufacturers excise tax in the same manner as if the article were sold by him. Section 48.4218-2(b) of the regulations provides that the tax on use of a taxable article does not attach in cases where an individual incidentally manufactures, produces, or imports a taxable article for his personal use or causes a taxable article to be manufactured, produced, or imported for his personal use. Revenue Ruling 69-393, C.B. 1969-2, 206, states that an “importer” within the meaning of section 4181 of the Code is the person who as principal and not as agent arranges for, or is the inducing and efficient cause of the firearms being brought into the United States for the purposes of sale or use by him. To make such a determination, it is necessary to look to the substance of a transaction to determine whether a nominal importer actually functions as a typical import-merchant, or merely serves in a representative capacity, being charged only with the responsibility for bringing articles into the United States pursuant to a contract between the parties involved.

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HOLDING

In answer to the first question, X did not assume any of the risks of a typical import-merchant. Rather, X merely handled the importation of A’s firearm into the United States for A and received a fee for performing such services. Accordingly, it is held that A is the “importer” of the firearm for purposes of the manufacturers excise tax imposed by section 4181 of the Code. With respect to the second question, as used in the regulations, the term “incidentally … imports” refers to a combination of circumstances in which the importation is incidental or consequent to another purpose for acquiring the article. The term does not include any situation where use of a foreign-made article in the United States is the reason for acquiring the article. The transaction described above does not reflect any primary purpose to which the importation could be ascribed as “incidental.” Therefore, in answer to the second question, it is held that the firearm was not “incidentally” imported, as that term is used in section 48.4218-2(b) of the regulations. Accordingly, the tax imposed by section 4181 of the Code applies to A’s use of the imported firearm. See Revenue Ruling 65-317, C.B. 1965-2, 422, which holds that automobiles imported by residents of the United States under described conditions are not “incidentally” imported within the meaning of section 48.4218-2(b) of the regulations.