CREDITS OR REFUNDS OF CERTAIN TAXES.

SEC. 163. CREDITS OR REFUNDS OF CERTAIN TAXES. (a) General Rules.—Subsections (a), (b), and (c) of section 6416 (credits or refunds of certain taxes on sales and services) are amended to read as follows: “(a) Condition to Allowance.— “(1) General rule.— No credit or refund of any overpayment of tax imposed by section 4231 (4), (5), or (6) (cabarets, etc.), chapter 31 (retailers taxes), or chapter 32 (manufacturers taxes) shall be allowed or made unless the person who paid the tax establishes, under regulations prescribed by the Secretary or his delegate, that he— “(A) has not included the tax in the price of the article, admission, or service with respect to which it was imposed and has not collected the amount of the tax from the person who purchased such article, admission, or service; “(B) has repaid the amount of the tax— “(i) in the case of any tax imposed by chapter 31 (other than the tax imposed by section 4041 (a) (1) or (b) (1)), to the purchaser of the article, “(ii) in the case of any tax imposed by chapter 32 and the tax imposed by section 4041 (a) (1) or (b) (1) (diesel and special motor fuels), to the ultimate purchaser of the article, or “(iii) in the case of any tax imposed by section 4231 (4), (5), or (6) (cabarets, etc.) to the person who paid for the admission, refreshment, service, or merchandise; 72 Stat. 1307 “(C) in the case of an overpayment under subsection (b) (2), (b) (3) (C) or (D), or (b) (4) of this section— “(i) has repaid or agreed to repay the amount of the tax to the utimate vendor of the article, or “(ii) has obtained the written consent of such ultimate vendor to the allowance of the credit or the making of the refund; or “(D) has filed with the Secretary or his delegate the written consent of the person referred to in subparagraph (B) (i), (ii), or (iii), as the case may be, to the allowance of the credit or the making of the refund. “(2) Exceptions.— This subsection shall not apply to— “(A) the tax imposed by section 4041 (a) (2) or (b) (2) (use of diesel and special motor fuels), and “(B) an overpayment of tax under paragraph (1), (3) (A) or (B), or (5) of subsection (b) of this section. “(3) Special rules.— For purposes of this subsection— “(A) any tax collected under section 4231 (6) from a concessionaire and paid to the Secretary or his delegate shall be treated as paid by the concessionaire; “(B) if tax under chapter 31 was paid by a supplier pursuant to an agreement under section 6011 (c), either the person who (without regard to section 6011 (c)) was required to return and pay the tax or the supplier may be treated as the person who paid the tax; “(C) in any case in which the Secretary or his delegate determines that an article is not taxable, the term ‘ultimate purchaser’ (when used in paragraph (1) (B) (ii) of this subsection) includes a wholesaler, jobber, distributor, or retailer who, on the 15th day after the date of such determination, holds such article for sale; but only if claim for creditor refund by reason of this subparagraph is filed on or before the day for filing the return with respect to the taxes imposed under chapter 32 for the first period which begins more than 60 days after the date of such determination; and “(D) in applying paragraph (1) (C) to any overpayment under paragraph (2) (F), (3) (C) or (D), or (4) of subsection (b), the term ‘ultimate vendor’ means the ultimate vendor of the other article. “(b) Special Cases in Which Tax Payments Considered Overpayments.—Under regulations prescribed by the Secretary or his delegate, credit or refund (without interest) shall be allowed or made in respect of the overpayments determined under the following paragraphs: “(1) Price readjustments.—If the price of any article in respect of which a tax, based on such price, is imposed by chapter 31 or 32, is readjusted by reason of the return or repossession of the article or a covering or container, or by a bona fide discount, rebate, or allowance, the part of the tax proportionate to the part of the price repaid or credited to the purchaser shall be deemed to be an overpayment. The preceding sentence shall not apply in the case of an article in respect of which tax was computed under section 4223 (b) (2); but if the price for which such article was sold is readjusted by reason of the return or repossession of the article, the part of the tax proportionate to the part of such price repaid or credited to the purchaser shall be deemed to be an overpayment. “(2) Specified uses and resales.— The tax paid under chapter 32 (or under section 4041 (a) (1) or (b) (1)) in respect of 72 Stat. 1308 any article shall be deemed to be an overpayment if such article was, by any person— “(A) exported (except in any case to which subsection (g) applies); “(B) used or sold for use as supplies for vessels or aircraft; “(C) sold to a State or local government for the exclusive use of a State or local government; “(D) sold to a nonprofit educational organization for its exclusive use; “(E) resold to a manufacturer or producer for use by him as provided in subparagraph (A) or (B) of paragraph (3); “(F) in the case of a tire, inner tube, or receiving set, resold for use as provided in subparagraph (C) or (D) of paragraph (3) and the other article referred to in such subparagraph is by any person exported or sold as provided in such subparagraph; “(G) in the case of a liquid taxable under section 4041, sold for use as fuel in a diesel-powered highway vehicle or as fuel for the propulsion of a motor vehicle, motorboat, or airplane, if (i) the vendee used such liquid otherwise than as fuel in such a vehicle, motorboat, or airplane or resold such liquid, or (ii) such liquid was (within the meaning of paragraphs (1), (2), and (3) of section 6420 (c)) used on a farm for farming purposes; “(H) in the case of a liquid in respect of which tax was paid under section 4041 at the rate of 3 cents a gallon, used during any calendar quarter in vehicles while engaged in furnishing scheduled common carrier public passenger land transportation service along regular routes; except that (i) this subparagraph shall apply only if the 60 percent passenger fare revenue test set forth in section 6421 (b) (2) is met with respect to such quarter, and (ii) the amount of such overpayment for such quarter shall be an amount determined by multiplying 1 cent for each gallon of liquid so used by the percentage which such person’s tax-exempt passenger fare revenue (as defined in section 6421 (d) (2)) derived from such scheduled service during such quarter was of his total passenger fare revenue (not including the tax imposed by section 4261, relating to the tax on transportation or persons) derived from such scheduled service during such quarter; “(I) in the case of a liquid in respect of which tax was paid under section 4041 (a) (1) at the rate of 3 cents a gallon, used or resold for use as a fuel in a diesel-powered highway vehicle (i) which (at the time of such use or resale) is not registered, and is not required to be registered, for highway use under the laws of any State or foreign country, or (ii) which, in the case of a diesel-powered highway vehicle owned by the United States, is not used on the highway; except that the amount of any overpayment by reason of this subparagraph shall not exceed an amount computed at the rate of 1 cent a gallon; “(J) in the case of a liquid in respect of which tax was paid under section 4041 (b) (1) at the rate of 3 cents a gallon, used or resold for use otherwise than as a fuel for the propulsion of a highway vehicle (i) which (at the time of such use or resale) is registered, or is required to be registered, for highway use under the laws of any State or foreign 72 Stat. 1309 country, or (ii) which, in the case of a highway vehicle owned by the United States, is used on the highway; except that the amount of any overpayment by reason of this subparagraph shall not exceed an amount computed at the rate of 1 cent a gallon; “(K) in the case of any article taxable under section 4061 (b) (other than spark plugs and storage batteries), used or sold for use as repair or replacement parts or accessories for farm equipment (other than equipment taxable under section 4061 (a)); “(L) in the case of tread rubber in respect of which tax was paid under section 4071 (a) (4), used or sold for use otherwise than in the recapping or retreading of tires of the type used on highway vehicles (as defined in section 4072 (c)), unless credit or refund of such tax is allowable under subsection (b) (3); “(M) in the case of gasoline, used or sold for use in production of special motor fuels referred to in section 4041 (b); “(N) in the case of lubricating oil, used or sold for non-lubricating purposes; “(O) in the case of lubricating oil in respect of which tax was paid at the rate of 6 cents a gallon, used or sold for use as cutting oils (within the meaning of section 4092 (b)); except that the amount of such overpayment shall not exceed an amount computed at the rate of 3 cents a gallon; “(P) in the case of any musical instrument taxable under section 4151, sold to a religious institution for exclusively religious purposes; “(Q) in the case of unexposed motion picture film, used or sold for use in the making of newsreel motion picture film. “(3) Tax-paid articles used for further manufacture, etc.— If the tax imposed by chapter 32 has been paid with respect to the sale of any article by the manufacturer, producer, or importer thereof to a second manufacturer or producer, such tax shall be deemed to be an overpayment by such second manufacturer or producer if— “(A) in the case of any article other than an article to which subparagraph (B), (C), or (D) applies, such article is used by the second manufacturer or producer as material in the manufacture or production of, or as a component part of, another article taxable under chapter 32 manufactured or produced by him; “(B) in the case of— “(i) a part or accessory taxable under section 4061 (b), “(ii) a radio or television component taxable under section 4141, or “(iii) a camera lens taxable under section 4171, such article is used by the second manufacturer or producer as material in the manufacture or production of, or as a component part of, any other article manufactured or produced by him; “(C) in the case of— “(i) a tire or inner tube taxable under section 4071, or “(ii) an automobile radio or television receiving set taxable under section 4141, such article is sold by the second manufacturer or producer on or in connection with, or with the sale of, any other article manufactured or produced by him and such other article is by any person exported, sold to a State or local government 72 Stat. 1310 for the exclusive use of a State or local government, sold to a nonprofit educational organization for its exclusive use, or used or sold for use as supplies for vessels or aircraft; or “(D) in the case of a radio receiving set or an automobile radio receiving set— “(i) such set is used by the second manufacturer or producer as a component part of any other article manufactured or produced by him, and “(ii) such other article is by any person exported, sold to a State or local government for the exclusive use of a State or local government, sold to a nonprofit educational organization for its exclusive use, or used or sold for use as supplies for vessels or aircraft. For purposes of subparagraphs (A) and (B), an article shall be treated as having been used as a component part of another article if, had it not been broken or rendered useless in the manufacture or production of such other article, it would have been so used. “(4) Tires, inner tubes, and automobile radio and television receiving sets.— If— “(A) (i) a tire or inner tube taxable under section 4071, or automobile radio or television receiving set taxable under section 4141, is sold by the manufacturer, producer, or importer thereof on or in connection with, or with the sale of, any other article manufactured or produced by him, or “(ii) a radio receiving set or an automobile radio receiving set is used by the manufacturer thereof as a component part of any other article manufactured or produced by him; and “(B) such other article is by any person exported, sold to a State or local government for the exclusive use of a State or local government, sold to a nonprofit educational organization for its exclusive use, or used or sold for use as supplies for vessels or aircraft, any tax imposed by chapter .32 in respect of such tire, inner tube, or receiving set which has been paid by the manufacturer, producer, or importer thereof shall be deemed to be an overpayment by him. “(5) Return of certain installment accounts.— If— “(A) tax was paid under section 4053 (b) (1) or 4216 (e) (1) in respect of any installment account, “(B) such account is, under the agreement under which the account was sold, returned to the person who sold such account, and “(C) the consideration is readjusted as provided in such agreement, the part of the tax paid under section 4053 (b) (1) or 4216 (e) (1) proportionate to the part of the consideration repaid or credited to the purchaser of such account shall be deemed to be an overpayment. This subsection shall apply in respect of an article only if the exportation or use referred to in the applicable provision of this subsection occurs before any other use, or, in the case of a sale or resale, the use referred to in the applicable provision of this subsection is to occur before any other use. “(c) Credit for Tax Paid on Tires, Inner Tubes, or Radio or Television Receiving Sets.—If tires, inner tubes, or automobile radio or television receiving sets on which tax has been paid under chapter 32 are sold on or in connection with, or with the sale of, another article taxable under chapter 32, there shall (under regulations prescribed by the Secretary or his delegate) be credited (without interest) against 72 Stat. 1311 the tax imposed on the sale of such other article, an amount determined by multiplying the applicable percentage rate of tax for such other article by— “(1) the purchase price (less, in the case of tires, the part of such price attributable to the metal rim or rim base) if such tires or inner tubes were taxable under section 4071 (relating to tax on tires and inner tubes) or, in the case of automobile radio or television receiving sets, if such sets were taxable under section 4141; or “(2) if such tires, inner tubes, or automobile radio or television receiving sets were taxable under section 4218 (relating to use by manufacturer, producer, or importer), the price (less, in the case of tires, the part of such price attributable to the metal rim or rim base) at which such or similar tires, inner tubes, or sets are sold, in the ordinary course of trade, by manufacturers, producers, or importers thereof, as determined by the Secretary or his delegate. The credit provided by this subsection shall be allowable only in respect of the first sale on or in connection with, or with the sale of, another article on the sale of which tax is imposed under chapter 32.” (b) Effective Date.—Section 6416 (b) of the Internal Revenue Code of 1954, as amended by this Act, shall apply only with respect to articles exported, sold, or resold, as the case may be, on or after the effective date specified in section 1 (c) of this Act. (c) Accounting Procedures; Meaning of Terms.—Section 6416 is amended by adding at the end thereof the following new subsections: “(g) Automobiles, etc.—Under regulations prescribed by the Secretary or his delegate, subsection (b) (2) (A) shall apply, in the case of any article subject to the tax imposed by sections 4061 (a), 4111, 4121, and 4141, only if the article with respect to which the tax was paid was sold by the manufacturer, producer, or importer for export after receipt by him of notice of intent to export or to resell for export. “(h) Accounting Procedures for Like Articles.—Under regulations prescribed by the Secretary or his delegate, if any person uses or resells like articles, then for purposes of this section the manufacturer, producer, or importer of any such article may be identified, and the amount of tax paid under chapter 32 in respect of such article may be determined— “(1) on a first-in-first-out basis, “(2) on a last-in-first-out basis, or “(3) in accordance with any other consistent method approved by the Secretary or his delegate. “(i) Meaning of Terms.—For purposes of this section, any term used in this section has the same meaning as when used in chapter 31, 32, or 33, as the case may be.” (d) Technical Amendments.— (1) Section 6415 (a) (credits or refunds to persons who collected certain taxes) is amended by adding at the end thereof the following: “For purposes of this subsection, in the case of any payment outside the United States in respect of which tax is imposed under paragraph (1), (2), or (3) of section 4231, the person who paid for the admission or for the use of the box or seat shall be considered the person from whom the tax was collected.” (2) Section 6420 (c) (3) (A) (gasoline used on farms) is amended by striking out “section 6416 (b) (2) (C) (ii)” each place it appears and inserting in lieu thereof “section 6416 (b) (2) (G) (ii)” 72 Stat. 1312 (3) Section (5421 (i) (gasoline used for certain non-highway purposes) is amended (A) by striking out “section 6416 (b) (2) (J) and (K)” and inserting in lieu thereof “section 6416 (b) (2) (I) and (J)”, and (B) by striking out “section 6416 (b) (2) (L)” and inserting in lieu thereof “section 6416 (b) (2) (H)”. (e) Certain Radio Receiving Sets and Radio and Television Components.—If— (1) a radio receiving set, an automobile radio receiving set, or a radio or television component was (before any other use) used as a component part of any other article, and (2) such other article was (before any other use) by any person exported, or sold to a State or local government for the exclusive use of a State or local government, then any tax imposed by chapter 32 of the Internal Revenue Code of 1954 (or the corresponding provisions of prior revenue law) in respect of such set or component which has been paid shall be deemed to have been an overpayment, by the manufacturer, producer, or importer of such other article, at the time paid. No credit or refund shall be allowed or made under this subsection unless the manufacturer, producer, or importer of such other article establishes to the satisfaction of the Secretary of the Treasury or his delegate that he did not include the amount of the tax in the price of such other article (and has not collected the amount of the tax from the purchaser of such other article), that the amount of the tax has been repaid to the ultimate purchaser of such other article, or that he has obtained the written consent of such ultimate purchaser to the allowance of the credit or the making of the refund. No interest shall be allowed or paid in respect of any such overpayment.