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Title 26 — Internal Revenue CodeRelease 119-73not60

§4223 Special Rules Relating to Further Manufacture

Title 26 › Subtitle Subtitle D— Miscellaneous Excise Taxes › Chapter 32— MANUFACTURERS EXCISE TAXES › Subchapter G— Exemptions, Registration, Etc. › § 4223

Last updated Apr 5, 2026|Official source

Summary

A manufacturer who gets an article sold or resold to them tax-free for use in making something else is treated as the manufacturer of that article. If that manufacturer later becomes liable for tax and the tax is based on the article’s price (or, if the tax is on use, the price in section 4218(c)), the article is treated as sold at the price he charged. He can instead choose, and must prove to the Secretary, to treat it as sold at either the price he paid for it or the price charged by the original maker, producer, or importer.

Full Legal Text

Title 26, §4223

Internal Revenue Code — Source: USLM XML via OLRC

(a)For purposes of this chapter, a manufacturer or producer to whom an article is sold or resold free of tax under section 4221(a)(1) for use by him in further manufacture shall be treated as the manufacturer or producer of such article.
(b)If the manufacturer or producer referred to in subsection (a) incurs liability for tax under this chapter on his sale or use of an article referred to in subsection (a) and the tax is based on the price for which the article is sold, the article shall be treated as having been sold by him—
(1)at the price for which the article was sold by him (or, where the tax is on his use of the article, at the price referred to in section 4218(c)); or
(2)if he so elects and establishes such price to the satisfaction of the Secretary—
(A)at the price for which the article was sold to him; or
(B)at the price for which the article was sold by the person who (without regard to subsection (a)) is the manufacturer, producer, or importer of such article.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 4223, act Aug. 16, 1954, ch. 736, 68A Stat. 495, related to exemption of articles manufactured or produced by Indians, prior to repeal by Pub. L. 85–859, § 119(a). See section 4225 of this title.

Amendments

1984—Subsec. (b)(1). Pub. L. 98–369 substituted “4218(c)” for “section 4218(e)”. 1976—Subsec. (b) Pub. L. 94–455 struck out “or his delegate” after “Secretary”. 1960—Subsec. (b)(1). Pub. L. 86–418 substituted “section 4218(e)” for “section 4218(d)”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1984 AmendmentAmendment by Pub. L. 98–369 effective, except as otherwise provided, as if included in the provisions of the Highway Revenue Act of 1982, title V of Pub. L. 97–424, to which such amendment relates, see section 736 of Pub. L. 98–369, set out as a note under section 4051 of this title.

Effective Date

of 1960 AmendmentAmendment by Pub. L. 86–418 applicable only with respect to bicycle tires and tubes sold by the manufacturer, producer, or importer thereof on or after the first day of the first month which begins more than 10 days after April 8, 1960, see section 4 of Pub. L. 86–418, set out as a note under section 4221 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 4223

Title 26 — Internal Revenue Code

Last Updated

Apr 5, 2026

Release point: 119-73not60