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unless such owner is the artist, shall make monthly return under oath to the collector for the district in which his principal place of business is located, stating as to each article sold for any such owner the name and address of such owner, the date and amount of the sale, and a brief description of the article.

CREDITS AND REFUNDS

[See Law, Section 1310, (a) and (b), page 373, Tax Book, Part II.]

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¶ 1327.

Credits and refunds.-[Same as Art. 41,

FRACTIONAL PART OF CENT

Art. 36. Fractional part of cent.-[See Law, Sec. 1313, page 375, Tax Book, Part II.]

PENALTIES

[See Law, Sections 903, 905, 1308 and 1319, Part II, of the Prentice-Hall Tax Book.]

¶ 1328. Art. 37. Penalties.-[See Section 3176 of the United States Revised Statutes as amended by Section 1317 of the Revenue Act of 1918 on page 379, Part II, of the Prentice-Hall Tax Book.]

AUTHORITY FOR REGULATIONS

1329. Section 1309. That the Commissioner, with the approval of the Secretary, is hereby authorized to make all needful rules and regulations for the enforcement of the provisions of this act.

¶ 1330. Art. 38. Promulgation.-In pursuance of the statute the foregoing regulations are hereby made and promulgated and all rulings inconsistent herewith are hereby revoked.

Approved May 2, 1919:

J. H. MOYLE,

DANIEL C. ROPER,

Commissioner of Internal Revenue.

Acting Secretary of the Treasury.

Relating to the

TAX ON SOFT DRINKS, ICE CREAM AND SIMILAR ARTICLES SOLD AT SODA FOUNTAINS OR

SIMILAR PLACES OF BUSINESS

Under the

REVENUE ACT OF 1918

PART I

TAX ON SOFT DRINKS, ICE CREAM AND
SIMILAR ARTICLES

SOFT DRINKS COMPOUNDED OR MIXED AT THE
PLACE OF BUSINESS, AND ICE CREAM

[See Law, Sec. 630, page 331, Tax Book, Part II.]

¶ 1331. Article 1. Effective date.-The tax is upon soft drinks compounded or mixed at the place of business and upon ice cream, ice-cream sundæs, and similar articles sold at soda fountains, ice-cream parlors, and similar places of business on or after May 1, 1919.

¶ 1332. Art. 2. Who is a vendor. For the purpose of the tax and as used in these regulations, the term "vendor" means an individual, partnership, association, or corporation engaged in the business of selling any of the articles enumerated in Section 630 to a purchaser for consumption. Thus, a vendor may be a manufacturer, jobber, wholesaler, retailer, trustee in bankruptcy, receiver or peddler.

¶ 1333. Art. 3. Rate of tax.-The tax is measured by the price for which the drink or food is sold. It is on the actual sales price at the rate of 1 cent for each 10 cents or fraction thereof of the amount paid for any of the articles mentioned in Section 630. Each sale for 10 cents or less is taxed 1 cent, and every sale for over 10 cents is taxed 1 cent for each 10 cents or fraction thereof of the price. The tax is upon the whole amount of the price paid by the purchaser. When several articles are the subject of a single sale, the total price paid is the unit for computing the tax. Thus, if the purchaser orders two sodas at the same time, each selling for 15 cents, the tax is 3 cents, and not 4 cents. If, however, he buys one soda for 15 cents, the tax is 2 cents, and if he purchases another 15-cent drink the tax is 2 cents on the second sale. Any means by which separate purchasers pool their orders for the purpose

be carefully guarded against by the vendor, for its employment subjects the purchaser and the vendor (if he connives at it) to the penalties provided in Section 1308 of the act. See Articles 15-17..

1334. Art. 4. Place of business.-The tax is upon the price of certain commodities "paid to any person conducting a soda fountain, ice-cream parlor, or other similar place of business." The words "other similar place of business" refer primarily to the character of the business transacted rather than to any physical resemblance to the place where such business is done. Whether a person selling the above-described articles is conducting a place of business similar to a soda fountain or icecream parlor is a question dependent on the facts in each particular case. Sales of soft drinks, ice cream, and similar articles by individuals or organizations, such as religious, educational or charitable societies, on special occasions only, as church festivals, social parties, etc., are not taxable; such sales in stands and booths at agricultural fairs, racing parks, public exhibitions, circuses, shows and similar places are taxable. The distinction is between sales made by a person conducting a place of business, even though temporarily, and merely incidental sales which can not properly be considered "business." Sales of soft drinks, ice cream, and similar articles of food or drink are not taxable when made in the regular course of business at a hotel, restaurant, cafeteria, lunch room, house, unless such articles are sold separate and apart from meals. Any sales of soft drinks, ice cream, and similar articles sold from a soda fountain are taxable, even though sold as a part of a meal.

sold

or club

1335. Art. 5. Consumption at place of business.-The above section provides that the tax shall be levied upon the sale of "soft drinks, ice cream, ice-cream sodas, sundæs, or other similar articles of food or drink, when . for consumption in or in proximity to such places of business." When any of the specified articles are sold in such containers or under such conditions as to indicate that they would ordinarily be consumed in or in proximity to the place of business, they are taxable. Sales of ice cream in cones are taxable. When ice cream or any similar article is sold under conditions which indicate that it usually would be consumed at or in proximity to the premises, the fact that the purchaser does not consume it there but carries it away does not render it free from tax. When soft drinks, ice cream, or similar articles of drink or food are sold, to be carried away for consumption at a place not in proximity to the place of business, such drink, ice cream, or food, being placed in containers of a kind ordinarily used to convey the articles indicated, the sales are not taxable.

1336. Art. 6. Beverages taxable.-In general, such beverages as are commonly known as soft drinks which are compounded or mixed at the fountain where sold are subject to the tax. Beverages sold at the fountain, ready for consumption, from a bottle or closed container on which a tax has been paid under Section 628 of the Revenue Act of 1918 are not subject to the tax.

1337. Art. 7. Articles taxable: Examples.-The following articles of food or drink are subject to tax within the meaning of Section 630 of the Revenue Act of 1918: all beverages when compounded or mixed at the fountain, such as orangeade, lemonade, pineapple juice, coca cola, root beer, moxie, phosphates, fruit and flavoring sirups compounded or mixed with plain or carbonated water, milk shakes in any form, malted milk shakes in any form, cream and egg shakes, ice cream, icecream sodas, ice-cream sundæs, ice-cream sandwiches, flavored ices, and all other similar drinks or foods not enumerated or specified under Articles 8 and 9. This list is not intended or considered to be complete, but merely illustrative of the class of articles subject to tax.

1338. Art. 8. Beverages not taxable: Examples.-There are certain drinks which are often sold at soda fountains, icecream parlors or similar places of business which are not regarded as soft drinks, ice-cream products or similar articles of drink or food within the meaning of Section 630 of the Revenue Act of 1918. Such beverages consist of such articles as hot beef tea, coffee (hot, cold, or iced), tea (hot, cold, or iced), buttermilk, milk, hot chocolate or cocoa, hot clam broth, hot clam bisque, hot tomato bisque and hot tomato bouillon. No tax applies on the sale of beverages or drinks, such as ginger ale, root beer, moxie, mineral water, etc., when served directly from a closed container, in which case the manufacturer's tax on such drinks has already been levied. See Section 628 of the Revenue Act of 1918. However, if any of the drinks or beverages herein mentioned are compounded or mixed with carbonated water, flavors, or other ingredient at the fountain, they are taxable.

1339. Art. 9. Beverages not taxable: Medicinal.-There are certain medicines, such as bromo seltzer, citrate of magnesia. rochelle salts, seidlitz powders, bicarbonate of soda, castor oil, epsom salts, and essence of pepsin, which are often sold at soda fountains, ice-cream parlors and similar places of business, which are not soft drinks or ice-cream products or similar articles of food or drink, and hence are not taxable.

ADMINISTRATIVE AND GENERAL PROVISIONS TAX PAID BY PURCHASER

[Sec. 630.]

*

Such tax shall be paid by the purchaser to the vendor at the time of the sale and shall be collected, returned, and paid to the United States by such vendor in the same manner as provided in section 502.

1340.-Art. 10. Payment of tax.-The tax is upon the sale and must be paid at the time of sale by the purchaser to the vendor.

1340a. Art. 11. Collection and return of tax.-The tax imposed must be paid by the purchaser to the vendor and the vendor must make return under oath, in duplicate, and pay the tax so collected to the collector of the district in which his principal place of business is located, on or before the last day of each month for the business done during the preceding month. Daily records shall be kept by the proprietors or their agents in charge, showing the number of sales (grouped according to amount of sale) and the tax paid thereon. The daily records of the proprietors or their agents, with copies of their monthly returns, shall be kept on file, in the places of business of such proprietors, in such manner as to be readily accessible to investigating internal revenue officers. In case the proprietor of a soda fountain, ice-cream parlor or similar place of business does not use an adequate cash register or check system from which daily and monthly records may be kept, a separate receptacle shall be used to retain the tax collected by the vendor from the purchaser. Such receptacle shall be so arranged or subdivided into compartments suitable for holding the different amounts of tax collected, in order to facilitate the compilation of the daily and monthly records of tax collection. [See Law, Sec. 1305, page 371, Tax Book, Part II.]

1341. Art. 12. Aids to collection of tax.-[Same as Art. 39, Reg. 47, ¶ 1164.]

MEDIUM OF PAYMENT OF TAX

[See Law, Sec. 1314, page 375, Tax Book, Part II.]

1342. Art. 13. Payment of tax by uncertified checks.[Same as Art. 1733, Reg. 45, ¶ 1011.]

¶ 1343. Art. 14. Procedure with respect to dishonored checks. [Same as Art. 1734, Reg. 45, ¶ 1012.]

PENALTIES

[See Law, Sec. 1308, page 372, Tax Book, Part II.]

1344. Art. 15. Penalty for nonpayment of tax.-[Same as

Art. 1114, Reg. 50.]

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