Internal Revenue Service
Revenue Ruling sm

Rev. Rul. 69-530

1969-2 C.B. 260

IRS Headnote

A demonstrator's expenses and commissions paid by a manufacturer in connection with sales of taxable articles constitute part of the manufacturer's selling price and are not a "price readjustment" that gives rise to a credit or refund; S.T. 678 superseded.

Full Text

Rev. Rul. 69-530 /1/

A manufacturer sells articles that are subject to an ad valorem manufacturers excise tax imposed under Chapter 32 of the Internal Revenue Code of 1954. In connection with sales to dealers, the manufacturer furnishes the dealers free of charge, someone to demonstrate the articles, and pays all of the demonstrator's expenses plus a commission equal to a certain percentage on all resales of articles made by the dealer during the demonstrator's stay.

Held, the demonstrator's expenses and commissions paid by the manufacturer constitute a part of the manufacturer's selling expense and are not a "price readjustment" within the meaning of section 6416(b)(1) of the Code. Accordingly, the payment of such expenses does not give rise to a right to credit or refund of manufacturers excise tax. See section 48.6416(b)-1(b) of the Manufacturers and Retailers Excise Tax Regulations, which provides that commissions to agents, or allowances, payments, or adjustments made to persons other than the manufacturer's vendee are not considered as effectuating price readjustments under any circumstances.

S.T. 678, C.B. XII-I, 415 (1933), is hereby superseded since the position set forth therein is restated under current law in this Revenue Ruling.

/1/ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.