[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: 26CFR48.6416(b)(1)-3]

[Page 203-204]
 
                       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 O--Refunds and Other Administrative Provisions of Special 
            Application to Retailers and Manufacturers Taxes
 
Sec. 48.6416(b)(1)-3  Readjustment for local advertising charges.

    (a) In general. If a manufacturer has paid the tax imposed by 
chapter 32 on the price of any article sold by the manufacturer and 
thereafter has repaid

[[Page 204]]

a portion of the price to the purchaser or any subsequent vendee in 
reimbursement of expenses for local advertising of the article or any 
other article sold by the manufacturer which is taxable at the same rate 
under the same section of chapter 32, the reimbursement will be 
considered a price readjustment constituting an overpayment which the 
manufacturer may claim as a credit or refund. The amount of the 
reimbursement may not, however, exceed the limitation provided by 
section 4216(e)(2) and Sec. 48.4216(e)-2, determined as of the close of 
the calendar quarter in which the reimbursement is made or as of the 
close of any subsequent calendar quarter of the same calendar year in 
which it is made. The term ``local advertising'', as used in this 
section, has the same meaning as prescribed by section 4216(e)(4) and 
includes generally, advertising which is broadcast over a radio station 
or television station, or appears in a newspaper or magazine, or is 
displayed by means of an outdoor advertising sign or poster.
    (b) Local advertising charges excluded from taxable price in one 
year but repaid in following year--(1) Determination of price 
readjustments for year in which charge is repaid. If the tax imposed by 
chapter 32 was paid with respect to local advertising charges that were 
excluded in computing the taxable price of an article sold in any 
calendar year but are not repaid to the manufacturer's purchaser or any 
subsequent vendee before May 1 of the following calendar year, the 
subsequent repayment of those charges by the manufacturer in 
reimbursement of expenses for local advertising will be considered a 
price readjustment constituting an overpayment which the manufacturer 
may claim as a credit or refund. The amount of the reimbursement may 
not, however, exceed the limitation provided by section 4216(e)(2) and 
Sec. 48.4216(e)-(2), determined as of the close of the calendar quarter 
in which the reimbursement is made or as of the close of any subsequent 
calendar quarter of the same calendar year in which it is made.
    (2) Redetermination of price readjustments for year in which charge 
was made. If the tax imposed by chapter 32 was paid with respect to 
local advertising charges that were excluded in computing the taxable 
price of an article sold in any calendar year but are not repaid to the 
manufacturer's purchaser or any subsequent vendor before May 1 of the 
following calendar year, the manufacturer may make a redetermination, in 
respect of the calendar year in which the charge was made, of the price 
readjustments constituting an overpayment which the manufacturer may 
claim as a credit or refund. This redetermination may be made by 
excluding the local advertising charges made in the calendar year that 
became taxable as of May 1 of the following calendar year.

[T.D. 8043, 50 FR 32026, Aug. 8, 1985]