74 S T A T. ]
PUBLIC LAW 8 6 - 7 8 1 - S E P T. 14, 1960
Public Law 86-781 AN ACT Relating to the treatment of charges for local advertising for purposes of determining the manufacturers sale price.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 4216 of the Internal Revenue Code of 1954 (relating to definition of price for purposes of the manufacturers excise tax) is amended by adding at the end thereof the following new subsection:
September 14, 1960 [H. R. 12536]
M an uf a c turers e x c i s e taxes. A d V erti sing charges. 26 USC 4216.
" (f) EXCLUSION OF I.KX!AL ADVERTISING CHARGE FROM SALE PRICE.—
" (1) EXCLUSION.—In determining, for purposes of this chapter, the price for which an article is sold, there shall be excluded a charge for local advertising (as defined in paragraph (4)) to the extent that such charge— " (A) does not exceed 5 percent of the price for which the article is sold (as determined under this section by excluding any charge for local advertising), " (B) is a separate charge made when the article is sold, and " (C) is intended to be refunded to the purchaser or any subsequent vendee in reimbursement of costs incurred for local advertising. I n the case of any such charge (or portion thereof) which is not so refunded before the first day of the fifth calendar month following the calendar year during which the article was sold, the exclusion provided by the preceding sentence shall cease to apply as of such first day. "(2)
AGGREGATE AMOUNT W^HICH MAY BE EXCLUDED.—In
case of articles upon the sale of which tax was imposed under the same section of this chapter— " (A) The sum of (i) the aggregate of the charges for local advertising excluded under paragraph (1), plus (ii) the aggregate of the readjustments for local advertising under section 6416(b)(1) (relating to credits or refunds for price readjustments), shall not exceed " (B) 5 percent of the aggregate of the prices (determined under this section by excluding all charges for local advertising) at which such articles were sold in sales on which tax was imposed by such section of this chapter. The preceding sentence shall be applied to each manufacturer, producer, and importer as of the close of each calendar quarter, taking into account the items specified in subparagraphs (A) and (B) for such calendar quarter and preceding calendar quarters in the same calendar year. " (3)
No ADJUSTMENT FOR OTHER ADVERTISING CHARGES.—Except
to the extent provided by paragraphs (1) and (2), no charge or expenditure for advertising shall serve, for purposes of this section or section 6416(b)(1), as the basis for an exclusion from, or as a readjustment of, the price of any article. " (4) LOCAL ADVERTISING DEFINED.—For purposes of this section and section 6416(b)(1), the term 'local advertising' means only advertising which— " (A) is initiated or obtained by the purchaser or any subsequent vendee, " (B) names the article for which the price is determinable under this section and states the location at which Such article may be purchased at retail, and " (C) is broadcast over a radio station or television station or appears in a newspaper."