Rev. Ruling 66-128
Cigars or Cigarettes Sold to Diplomats
Advice has been requested
whether cigars and cigarettes may be removed from an export warehouse,
without payment of tax, for sale or delivery to diplomatic officers of
foreign countries or
Revenue Ruling 296, C.B. 1953-2, 325, as amplified by Revenue Ruling 63-150, C.B. 1963-2, 477, provides in part, that ambassadors, ministers, and other duly accredited diplomatic representatives of foreign governments (1) are not required to pay Federal excise taxes, the legal incidence of which would otherwise fall upon them, and (2) if any such person purchases from the manufacturer thereof an article otherwise subject to a Federal excise tax on sales by manufacturers, or purchases from a retailer an article otherwise subject to a Federal excise tax on sales by retailers, the transaction will not be taxed. Consular officers of foreign governments, and other officers (other than diplomatic representatives), as well as agencies and commissions, of foreign governments are not required to pay Federal excise taxes, the legal incidence of which would otherwise fall upon them in respect of transaction arising in the performance of their official functions for which payment is made by the foreign government.
The tax imposed on cigars and cigarettes by section 5701 of the Internal Revenue Code of 1954 does not fall within the coverage of Revenue Ruling 296. The legal incidence of the tax is not on the consumer or on the sale to him, but upon its manufacture. See Liggett & Myers Tobacco Co. v. United States, 299 U.S. 383 (1937). Ct. D. 1192, C.B. 1937-1, 332. Moreover, section 5704 of the Code, which sets forth the exemptions from tax on cigars and cigarettes does not provide an exemption for diplomatic officers or personnel of foreign embassies in the United States. Accordingly, cigars and cigarettes of domestic manufacture may not be removed from a domestic factory or an export warehouse, without payment of tax, for sale or delivery to foreign diplomatic officers or to personnel of foreign embassies in the United States.
In addition, the exemptions from tax and duty in the Tariff Schedules of the United States (Schedule 8, Part 2, Subpart C - Personnel of Foreign Governments and International Organizations; Distinguished Visitors) are limited to articles which are imported into the United States. Therefore, these exemptions in the Tariff Schedules are not applicable to removals of cigars and cigarettes from a domestic factory or export warehouse.
Revenue Ruling 65-138, C.B. 1965-1, 604, is hereby superseded.
26 U.S.C. 5704; 27 CFR 290.64