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Rev. Rul. 74-357 1974-2 C.B. 359

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Revenue Ruling 74-357

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Headnote

Tear gas gun, projectiles, and cartridges. A gun designed for use in firing tear gas projectiles which are discharged from the gun by an explosive is a firearm and its sale, and sale of the cartridges and projectiles which are sold ready for use with the gun, are subject to the manufacturers tax imposed by section 4181 of the Code.

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ISSUE

Advice has been requested as to the applicability of the manufacturers excise tax on firearms, imposed by section 4181 of the Internal Revenue Code of 1954, to sales of the articles described below.

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FACTS

A company manufactures a 1 1/2 inch caliber (37 mm) gun designed for use in firing tear gas projectiles and cartridges. The gun is about 29 inches long with a barrel length of 12 inches and weighs about 8 pounds. It is made of high-strength alloy, has a custom-fitted stock, and a front and rear sight. The projectiles and cartridges for the gun are manufactured and sold by the company ready for use and contain black gun powder as well as tear gas. The gun powder serves as the propellant for the projectiles and as the dispersing force for the tear gas contained in the cartridges.

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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 pistols, revolvers, firearms (other than pistols and revolvers) and to shells and cartridges at a different rate than the rate imposed on pistols and revolvers. Section 48.4181-2(c) of the Manufacturers and Retailers Excise Tax Regulations provides that the term “firearms” means any portable weapons, such as rifles, carbines, machine guns, shotguns, or fowling pieces, from which a shot, bullet, or other projectile may be discharged by an explosive. Section 48.4181-2(d) of the regulations provides that the term “shells” and “cartridges” include any combination of projectile, explosive, and container which is designed, assembled, and ready for use without further manufacture in firearms, including pistols and revolvers. The facts indicate that the gun described above is a portable weapon from which a shot or other projectile may be discharged by an explosive. Accordingly, such gun is a firearm within the meaning of the Code and regulations and sale thereof by the manufacturer is subject to the tax imposed by section 4181 of the Code at the rate applicable to firearms (other than pistols and revolvers). Furthermore, the tear gas projectiles and cartridges used in the gun meet the definition of shells and cartridges set forth in the regulations and are also subject to the tax imposed by section 4181 of the Code when sold by the manufacturer thereof.