[Code of Federal Regulations]
[Title 27, Volume 2]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 27CFR53.98]

[Page 178-179]
 
            TITLE 27--ALCOHOL, TOBACCO PRODUCTS AND FIREARMS
 
 CHAPTER I--ALCOHOL AND TOBACCO TAX AND TRADE BUREAU, DEPARTMENT OF THE 
                                TREASURY
 
PART 53_MANUFACTURERS EXCISE TAXES_FIREARMS AND AMMUNITION--Table of Contents
 
     Subpart J_Special Provisions Applicable to Manufacturers Taxes
 
Sec.  53.98  Computation of tax on leases and installment sales.

    (a) Leases. When a taxable article is leased by a manufacturer, 
producer, or importer, liability for tax is incurred, except as provided 
by section 4217(b) of the Code and Sec.  53.104, on each payment made 
with respect to such lease. Tax is payable on each lease payment as long 
as the article is leased by the manufacturer, producer, or importer. The 
tax payable with respect to each lease payment is a percentage of each 
payment based on the rate of tax, if any, in effect on the date the 
lease payment is due. If the article is subsequently sold by the 
manufacturer, producer, or importer, the tax applies also to such sale, 
without regard to the tax paid when the article was leased. For 
definition of the term ``lease'', see Sec.  53.103.
    (b) Installment sales. When a taxable article is sold under an 
installment payment contract with title reserved in the seller, or under 
a conditional sale contract, chattel mortgage arrangement or other 
arrangement creating a security interest with payments to be made in 
installments, tax shall be computed and paid on each payment made by the 
purchaser. The tax payable with each payment is a percentage of each 
payment based on the rate of tax, if any, in effect on the date the 
payment is due. The part of each payment that is subject to tax is that 
portion of the payment equal to the percentage of the total portion of 
the payment equal to the percentage of the total charge for the article 
that is subject to tax. For example, if the

[[Page 179]]

total charge for the article is $1,000, and of the total amount charged 
only 90 percent thereof, or $900, is subject to tax by reason of 
exclusions, then only 90 percent of the installment payment is subject 
to tax. If the tax base is a constructive sale price computed under 
section 4216(b) of the Code that is less than the actual sale price of 
the article, the portion of each payment subject to tax is the 
percentage of such payment equal to the percentage that the constructive 
sale price bears to the actual sale price. For example, if an article is 
sold at retail for $100, and the constructive sale price for such an 
article computed under the provisions of section 4216(b)(1)(A) of the 
Code is $75, the percentage which the constructive sale price bears to 
the actual sale price is 75 percent. Accordingly, only 75 percent of 
each installment payment is subject to tax.
    (c) Sales on credit. Where articles are sold on credit under 
conditions other than those specified in paragraph (b) of this section, 
the entire tax shall be reported and paid with the return covering the 
period in which the sale is made, even though the price may not be paid 
to the manufacturer, producer, or importer until a later date, or not 
paid at all.