Are there Federal Excise Tax-free sales that require IRS registration?

From an NTEA member For purposes of the Internal Revenue Code (IRC) Section 4051 Federal Excise Tax (FET), are there sales that require Internal Revenue Service (IRS) registration? If so, who needs to be registered — the seller or the purchaser — and how do you get such registration? Yes, there are sales that require IRS registration in order to be conducted on a tax-free basis for FET purposes. Depending on the type of sale, the seller only, or both the seller and the purchaser, generally will need to be registered. You register with the IRS by filing Form 637. The registration requirement applies to all Federal Excise Tax-free sales described in IRC Section 4221. These sales are: (1) Sales (or sales for resale) for use for further manufacture; (2) Sales (or sales for resale) for export; (3) Sales for use by the purchaser as supplies for vessels or aircraft; (4) Sales to a state or local government for its exclusive use; (5) Sales to a nonprofit educational organization for its exclusive use; and (6) Sales to a qualified blood collector organization for its exclusive use in collecting, storing and transporting blood. Generally, the seller must be registered with the IRS for each of these sales in order to conduct them on a Federal Excise Tax-free basis. See IRC Section 4222(a). (Note, there appears to be an exception to this seller registration requirement for tax-free sales for use as supplies for vessels or aircraft. See IRC Section 4222(b)(5) and Treasury Regulations Section 48.4222(b)-1(d), and confirm with a tax advisor.) In addition, the purchaser (and the second purchaser, if a sale for resale is permitted) also generally must be registered with the IRS, but there are a few exceptions. See IRC 4222(a) and (b). The purchaser is not required to be registered if the purchaser (a) is a state or local government, (b) is purchasing supplies for a vessel or aircraft, or (c) has a principal place of business not within the United States (in connection with an FET tax-free sale for export). See Treasury Regulations Section 48.4222(b)-1. However, in each of these cases in which a purchaser is not required to be registered, other documentation requirements apply. See Treasury Regulations Section 48.4222(b)-1. For example, for a sale to a state or local government, the government purchaser need not be registered, but must provide the seller with an exemption certificate in the form described by the Treasury Regulations (or a purchase order that contains the same information required by that exemption certificate). See Treasury Regulations Section 48.4221-5(c). In order to register with the IRS, a taxpayer needs to file Form 637, which is available at irs.gov. Simply type in “Form 637” in the search box, and the top responses should include both the form and additional information about the IRS registration program. Please note that for tax-free sales under IRC Section 4221 for purposes of FET, the taxpayer will need to: Be registered for activity “Q”, which refers to the first retail seller of certain heavy vehicles, and Provide the information required on the form specific to the Q activity. Once the IRS approves the application, the IRS will send the taxpayer a Letter of Registration, which will contain the taxpayer’s registration number, the activities for which that taxpayer is registered, and the effective date of the registration. The IRS also offers a registration status check for Form 637; if you would like to confirm whether a person or entity is validly registered with the IRS, you can input the registration number and activity letter into this status check. A taxpayer should not conduct any Federal Excise Tax-free sales under IRC Section 4221 prior to the effective date of any required registration(s). It is important to keep in mind that this article is only discussing the registration requirements for tax-free sales under IRC Section 4221. There are also several other requirements under IRC Section 4221 that must be satisfied in order to treat the sale as tax-free for purposes of FET. In addition, the statutory and regulatory provisions relating to IRC Section 4221 sales (including the registration requirements) are complicated, and FET is not always referenced as an applicable tax under some of these regulations. (Any omission of FET under these regulations is likely merely a ministerial overnight, because the IRS previously has issued rulings applying some of these IRC Section 4221 regulations to FET.) As always, taxpayers should consult their tax advisors prior to relying on any provisions (such as these IRC Section 4221 provisions) as a basis for treating a sale as tax-free for FET purposes.

Are there Federal Excise Tax-free sales that require IRS registration?

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