Treasury Regulations · 26 CFR

§ 48.4221-5. Tax-free sale of articles to State and local governments for their exclusive use.

In effect eCFR current as of October 15, 2026

Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).

Regulation under 26 U.S.C. § 4221

Cite as 26 CFR § 48.4221-5

At a glance

Read from the text and its source citation. Not part of the regulation.

Status: In the current eCFR
Issued: March 31, 1978 by T.D. 7536
Last amended: March 14, 1996 by T.D. 8659
Issued under: 26 U.S.C. § 4221
Length: 852 words · about 4 min to read
Defines: 1 term
Cross-references: cites 4 Code sections and 0 regulations; cited by 2

¶(a) In general. An article (excluding an automobile subject to tax under section 4064) subject to tax under Chapter 32 of the Code may be sold tax free by the manufacturer, pursuant to section 4221(a)(4) and this section, to a State or local government for the exclusive use of such State or local government. See paragraph (b) of this section for the meaning of the term “State or local government”. An article may be sold tax free by the manufacturer under this paragraph only in those cases where the sale is made directly to a State or local government for its exclusive use. Accordingly, no sale may be made tax free to a dealer for resale to a State or local government for its exclusive use, even though it is known at the time of sale by the manufacturer that the article will be so resold. A sale of an article to a State or local government for resale is not considered to be a sale for the “exclusive use” of the State or local government, within the meaning of section 4221(a)(4), and, therefore, such sales may not be made tax free. Such sales are not exempt regardless of whether the resales are made to government employees, or the fact that the article is an item of equipment the employee is required to possess in carrying out his duties. For example, pistols or revolvers may not be sold tax free to a State or local government for resale to its police officers. See section 6416(b)(2)(C), and paragraph (b)(3) of § 48.6416(b)-2, for the circumstances under which credit or refund of tax is available where tax-paid articles are sold for the exclusive use of a State or local government.

¶(b) State or local government. The term “State or local government” includes any State, the District of Columbia, and any political subdivision of any of the foregoing.

¶(c) Evidence required in support of tax-free sales to States or local governments.

¶(1) The evidence required in support of a tax-free sale to the State or local government shall, except as provided in paragraph (c)(2) of this section, consist of a certificate, executed and signed by an officer or employee authorized by the State or local government to execute and sign the certificate. If it is impracticable to furnish a separate certificate for each order or contract because of a frequency of purchases, a certificate covering all orders between given dates (such period not to exceed 12 calendar quarters) will be acceptable. The certificates and proper records of invoices, orders, etc., relative to tax-free sales must be retained by the manufacturer as provided in section 6001 and the regulations thereunder. The certificate shall be in substantially the following form:

Exemption Certificate

(For use by States and local governments (section 4221(a)(4) of the Internal Revenue Code))

(Date) __________________________, 19____.

I hereby certify that I am __________________ (Title of Officer) of __________________ (State or local government) that I am authorized to execute this certificate; and that:

(Check applicable type of certificate)

____ the article or articles specified in the accompanying order, or on the reverse side hereof, (or)

____ all orders placed by the purchaser for the period commencing __________________ (Date) and ending __________________ (Date) (period not to exceed 12 calendar quarters), are, or will be, purchased from __________________ (Name of manufacturer) for the exclusive use of __________________ (Governmental unit) of __________________ (State or local government).

I understand that the exemption from tax in the case of sales of articles under this exemption certificate to a State, etc., is limited to the sale of articles purchased for its exclusive use. I understand that the fraudulent use of this certificate for the purpose of securing this exemption will subject me and all parties making such fraudulent use of this certificate to a fine of not more than $10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution.

(Signature)

(Address)

¶(2) A purchase order, provided that all of the information required by paragraph (c)(1) of this section is included therein, is acceptable in lieu of a separate exemption certificate.

¶(d) Resale of articles purchased tax free by a State or local government. If articles purchased tax free for the exclusive use of a State or local government are prior to use by the State or local government resold under circumstances that do not amount to an exclusive use by the State or local government (such as tires that are resold by a volunteer fire department to volunteer firemen), the parties responsible in the State or local government are required to inform the manufacturer, producer, or importer from whom the articles were purchased that they were disposed of in a manner that did not amount to an exclusive use by the State or local government. A willful failure to supply the manufacturer, producer, or importer with the information required by this subparagraph will subject responsible parties to the penalties provided by section 7203.

[T.D. 7536, 43 FR 13522, Mar. 31, 1978, as amended by T.D. 8036, 50 FR 29963, July 23, 1985; T.D. 8659, 61 FR 10463, Mar. 14, 1996]

Terms defined here

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State or local government § 48.4221-5(b)

Cross-references

Computed from the citations in the text of 26 CFR.

Code sections it cites

Cited by 2 other regulations

Amendment history

From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.

March 14, 1996Amended by T.D. 8659 (61 FR 10463)
July 23, 1985Amended by T.D. 8036 (50 FR 29963)
March 31, 1978Issued by T.D. 7536 (43 FR 13522)

Where it sits in 26 CFR

Subchapter D Miscellaneous excise taxes
Part 48 Manufacturers and retailers excise taxes
Subpart N Exemptions, Registration, Etc.