[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR48.4073-3]

[Page 115-116]
 
                       TITLE 26--INTERNAL REVENUE
 
                  CHAPTER I--INTERNAL REVENUE SERVICE,
                       DEPARTMENT OF THE TREASURY
                               (Continued)
 
PART 48--MANUFACTURERS AND RETAILERS EXCISE TAXES--Table of Contents
 
 Subpart H--Motor Vehicles, Tires, Tubes, Tread Rubber, and Taxable Fuel
 
Sec. 48.4073-3  Exemption of tread rubber used for recapping nonhighway tires.

    (a) Sold direct by manufacturer for nontaxable use. The tax does not 
apply to the sale of tread rubber by the manufacturer to any person for 
use by that person otherwise than in the recapping or retreading of 
tires of the type used on highway vehicles. In determining whether tread 
rubber is sold for a taxable or nontaxable use, the type of vehicle on 
which the recapped or retreaded tire is to be used, or the actual or 
intended use of the recapped or retreaded tire, is immaterial. The 
controlling factor is whether the tire resulting from the recapping or 
retreading is of a type that is used otherwise than on a highway 
vehicle. For definition of ``tires of the type used on highway 
vehicles'', see paragraph (c) of Sec. 48.4072-1.
    (b) Sales for resale for nontaxable use. No sale of tread rubber may 
be made tax free for resale even though it is known at the time of the 
sale that the tread rubber will be resold for use otherwise than in the 
recapping or retreading of tires of the type used on highway vehicles. 
However, where the tread rubber is resold for such use, the manufacturer 
who paid the tax on a sale of the tread rubber may secure a refund or 
credit in accordance with the provisions of section 6416(b)(2) and 
Sec. 48.6416(b)-2.
    (c) Evidence required to establish exemption. (1) To establish the 
right to sell tread rubber tax free under section 4073(c), the 
manufacturer must obtain from the purchaser and retain in its

[[Page 116]]

possession a properly executed exemption certificate.
    (2) Where only occasional sales of tread rubber for exempt use are 
made to a purchaser, a separate exemption certificate should be 
furnished for each order. However, where sales are regularly and 
frequently made to a purchaser for exempt use, a certificate covering 
all purchases during the period not to exceed 12 calendar quarters is 
acceptable. The certificates and proper records of invoices, orders, 
etc., relative to tax-free sales must be kept for inspection by the 
district director as provided in section 6001 and the regulations in 
Subpart Q.
    (d) Acceptable form of exemption certificate. The following form of 
exemption certificate is acceptable for the purposes of this section and 
must be adhered to in substance:

                          Exemption Certificate

    (For use by persons who purchase tread rubber from the manufacturer, 
producer, or importer thereof for use otherwise than in recapping or 
retreading tires of the type used on highway vehicles (section 4073(c) 
of the Internal Revenue Code).)

(Date) __________, 19____

    I, the undersigned, certify that I am the purchaser, or the (Title) 
______ of (Name of purchaser if other than the undersigned) __________ 
who is the purchaser of: ____ The tread rubber specified in the 
accompanying order or contract, or ____ All tread rubber specified in 
contracts or orders entered into or placed with (Name of seller) ______ 
for the period commencing ______ and ending ______ (period not to exceed 
12 calendar quarters), and that such tread rubber will not be used in 
the recapping or retreading of tires of the type used on highway 
vehicles, but will be used for the following purposes:

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

    The undersigned understands that if the tread rubber is used for the 
recapping or retreading of tires of the type used on highway vehicles, 
or is sold or otherwise disposed of, such fact must be promptly reported 
to the manufacturer. The undersigned also understands that the 
fraudulent use of this certificate for the purpose of securing this 
exemption will subject the undersigned or any other party making such 
fraudulent use to a fine of not more than $10,000, or to imprisonment 
for not more than 5 years, or both, together with costs of prosecution. 
The purchaser also understands that the purchaser must be prepared to 
establish by satisfactory evidence the purpose for which the tread 
rubber was used.

(Signature)_____________________________________________________________
(Address)_______________________________________________________________

    (e) Exemption certificate not obtained prior to filing of 
manufacturer's excise tax return. If the sale is otherwise exempt but 
the exemption certificate is not obtained prior to the time the 
manufacturer files a return covering taxes due for the period during 
which the sale was made, the manufacturer must include the tax on the 
sale in its return for that period. However, if the certificate is later 
obtained, a claim for refund of the tax paid on the sale may be filed, 
or a credit for the amount may be taken upon a subsequent return, as 
provided by section 6416(b)(2) and Sec. 48.6416(b)-2.

(Secs. 4071(b), 4071(c), 4073(c), and 7805, Internal Revenue Code of 
1954. (80 Stat. 331, 26 U.S.C. 4071(b); 68A Stat. 482, 26 U.S.C. 
4071(c); 70 Stat. 389, 26 U.S.C. 4073(c); 68A Stat. 917, 26 U.S.C. 
7805))

[T.D. 7809, 47 FR 6007, Feb. 10, 1982]