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Internal Revenue Code · 26 U.S.C.

§ 6416. Certain taxes on sales and services

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 6416

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status
In force
Enacted
June 30, 1958 by Pub. L. 85–475
Last amended
December 20, 2019 by Pub. L. 116–94
Amendments
31 dated changes in the source credit
Length
6 subsections · 2,665 words · about 12 min to read
Defines
1 term
Cross-references
cites 13; cited by 8 Code sections and 25 other regulations
Regulations
19 issued under this section
(a) Condition to allowance
(1) General rule No credit or refund of any overpayment of tax imposed by chapter 31 (relating to retail excise taxes), or chapter 32 (manufacturers taxes), shall be allowed or made unless the person who paid the tax establishes, under regulations prescribed by the Secretary, that he—
(A) has not included the tax in the price of the article with respect to which it was imposed and has not collected the amount of the tax from the person who purchased such article;
(B) has repaid the amount of the tax to the ultimate purchaser of the article;
(C) in the case of an overpayment under subsection (b)(2) of this section—
(i) has repaid or agreed to repay the amount of the tax to the ultimate vendor of the article, or
(ii) has obtained the written consent of such ultimate vendor to the allowance of the credit or the making of the refund; or
(D) has filed with the Secretary the written consent of the person referred to in subparagraph (B) to the allowance of the credit or the making of the refund.
(2) Exceptions This subsection shall not apply to—
(A) the tax imposed by section 4041 (relating to tax on special fuels) on the use of any liquid, and
(B) an overpayment of tax under paragraph (1), (3)(A), (4), (5), or (6) of subsection (b) of this section.
(3) Special rule

For purposes of this subsection, in any case in which the Secretary determines that an article is not taxable, the term “ultimate purchaser” (when used in paragraph (1)(B) of this subsection) includes a wholesaler, jobber, distributor, or retailer who, on the 15th day after the date of such determination, holds such article for sale; but only if claim for credit or refund by reason of this paragraph is filed on or before the date for filing the return with respect to the taxes imposed under chapter 32 for the first period which begins more than 60 days after the date on such determination.

(4) Registered ultimate vendor or credit card issuer to administer credits and refunds of gasoline tax
(A) In general

For purposes of this subsection, except as provided in subparagraph (B), if an ultimate vendor purchases any gasoline on which tax imposed by section 4081 has been paid and sells such gasoline to an ultimate purchaser described in subparagraph (C) or (D) of subsection (b)(2) (and such gasoline is for a use described in such subparagraph), such ultimate vendor shall be treated as the person (and the only person) who paid such tax, but only if such ultimate vendor is registered under section 4101.

(B) Credit card issuer For purposes of this subsection, if the purchase of gasoline described in subparagraph (A) (determined without regard to the registration status of the ultimate vendor) is made by means of a credit card issued to the ultimate purchaser, paragraph (1) shall not apply and the person extending the credit to the ultimate purchaser shall be treated as the person (and the only person) who paid the tax, but only if such person—
(i) is registered under section 4101,
(ii) has established, under regulations prescribed by the Secretary, that such person—
(I) has not collected the amount of the tax from the person who purchased such article, or
(II) has obtained the written consent from the ultimate purchaser to the allowance of the credit or refund, and
(iii) has so established that such person—
(I) has repaid or agreed to repay the amount of the tax to the ultimate vendor,
(II) has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or
(III) has otherwise made arrangements which directly or indirectly provides the ultimate vendor with reimbursement of such tax.
If clause (i), (ii), or (iii) is not met by such person extending the credit to the ultimate purchaser, then such person shall collect an amount equal to the tax from the ultimate purchaser and only such ultimate purchaser may claim such credit or payment.
(C) Timing of claims

The procedure and timing of any claim under subparagraph (A) or (B) shall be the same as for claims under section 6427(i)(4), except that the rules of section 6427(i)(3)(B) regarding electronic claims shall not apply unless the ultimate vendor or credit card issuer has certified to the Secretary for the most recent quarter of the taxable year that all ultimate purchasers of the vendor or credit card issuer are certified and entitled to a refund under subparagraph (C) or (D) of subsection (b)(2).

(b) Special cases in which tax payments considered overpayments Under regulations prescribed by the Secretary, credit or refund (without interest) shall be allowed or made in respect of the overpayments determined under the following paragraphs:
(1) Price readjustments
(A) In general

Except as provided in subparagraph (B) or (C), if the price of any article in respect of which a tax, based on such price, is imposed by chapter 31 or 32, is readjusted by reason of the return or repossession of the article or a covering or container, or by a bona fide discount, rebate, or allowance, including a readjustment for local advertising (but only to the extent provided in section 4216(e)(2) and (3)), the part of the tax proportionate to the part of the price repaid or credited to the purchaser shall be deemed to be an overpayment.

(B) Further manufacture

Subparagraph (A) shall not apply in the case of an article in respect of which tax was computed under section 4223(b)(2); but if the price for which such article was sold is readjusted by reason of the return or repossession of the article, the part of the tax proportionate to the part of such price repaid or credited to the purchaser shall be deemed to be an overpayment.

(C) Adjustment of tire price

No credit or refund of any tax imposed by subsection (a) or (b) of section 4071 shall be allowed or made by reason of an adjustment of a tire pursuant to a warranty or guarantee.

(2) Specified uses and resales The tax paid under chapter 32 (or under subsection (a) or (d) of section 4041 in respect of sales or under section 4051) in respect of any article shall be deemed to be an overpayment if such article was, by any person—
(A) exported;
(B) used or sold for use as supplies for vessels or aircraft;
(C) sold to a State or local government for the exclusive use of a State or local government;
(D) sold to a nonprofit educational organization for its exclusive use;
(E) sold to a qualified blood collector organization (as defined in section 7701(a)(49)) for such organization’s exclusive use in the collection, storage, or transportation of blood;
(F) in the case of any tire taxable under section 4071(a), sold to any person for use as described in section 4221(e)(3); or
(G) in the case of gasoline, used or sold for use in the production of special fuels referred to in section 4041.
Subparagraphs (C), (D), and (E) shall not apply in the case of any tax paid under section 4064. In the case of the tax imposed by section 4131, subparagraphs (B), (C), (D), and (E) shall not apply and subparagraph (A) shall apply only if the use of the exported vaccine meets such requirements as the Secretary may by regulations prescribe. This paragraph shall not apply in the case of any tax imposed under section 4041(a)(1) or 4081 on diesel fuel or kerosene and any tax paid under section 4121. Subparagraphs (C) and (D) shall not apply in the case of any tax imposed on gasoline under section 4081 if the requirements of subsection (a)(4) are not met. In the case of taxes imposed by subchapter C or D of chapter 32, subparagraph (E) shall not apply.
(3) Tax-paid articles used for further manufacture, etc. If the tax imposed by chapter 32 has been paid with respect to the sale of any article (other than coal taxable under section 4121) by the manufacturer, producer, or importer thereof and such article is sold to a subsequent manufacturer or producer before being used, such tax shall be deemed to be an overpayment by such subsequent manufacturer or producer if—
(A) in the case of any article other than any fuel taxable under section 4081, such article is used by the subsequent manufacturer or producer as material in the manufacture or production of, or as a component part of—
(i) another article taxable under chapter 32, or
(ii) an automobile bus chassis or an automobile bus body,
manufactured or produced by him; or
(B) in the case of any fuel taxable under section 4081, such fuel is used by the subsequent manufacturer or producer, for nonfuel purposes, as a material in the manufacture or production of any other article manufactured or produced by him.
(4) Tires If—
(A) the tax imposed by section 4071 has been paid with respect to the sale of any tire by the manufacturer, producer, or importer thereof, and
(B) such tire is sold by any person on or in connection with, or with the sale of, any other article, such tax shall be deemed to be an overpayment by such person if such other article is—
(i) an automobile bus chassis or an automobile bus body,
(ii) by such person exported, sold to a State or local government for the exclusive use of a State or local government, sold to a nonprofit educational organization for its exclusive use, or used or sold for use as supplies for vessels or aircraft, or
(iii) sold to a qualified blood collector organization for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood.
(5) Return of certain installment accounts If—
(A) tax was paid under section 4216(d)(1) in respect of any installment account,
(B) such account is, under the agreement under which the account was sold, returned to the person who sold such account, and
(C) the consideration is readjusted as provided in such agreement,
the part of the tax paid under section 4216(d)(1) allocable to the part of the consideration repaid or credited to the purchaser of such account shall be deemed to be an overpayment.
(6) Truck chassis, bodies, and semitrailers used for further manufacture If—
(A) the tax imposed by section 4051 has been paid with respect to the sale of any article, and
(B) before any other use, such article is by any person used as a component part of another article taxable under section 4051 manufactured or produced by him,
such tax shall be deemed to be an overpayment by such person. For purposes of the preceding sentence, an article shall be treated as having been used as a component part of another article if, had it not been broken or rendered useless in the manufacture or production of such other article, it would have been so used.
This subsection shall apply in respect of an article only if the exportation or use referred to in the applicable provision of this subsection occurs before any other use, or, in the case of a sale or resale, the use referred to in the applicable provision of this subsection is to occur before any other use.
(c) Refund to exporter or shipper

Under regulations prescribed by the Secretary the amount of any tax imposed by chapter 31, or chapter 32 erroneously or illegally collected in respect of any article exported to a foreign country or shipped to a possession of the United States may be refunded to the exporter or shipper thereof, if the person who paid such tax waives his claim to such amount.

(d) Credit on returns

Any person entitled to a refund of tax imposed by chapter 31 or 32, paid to the Secretary may, instead of filing a claim for refund, take credit therefor against taxes imposed by such chapter due on any subsequent return. The preceding sentence shall not apply to the tax imposed by section 4081 in the case of refunds described in section 4081(e).

(e) Accounting procedures for like articles Under regulations prescribed by the Secretary, if any person uses or resells like articles, then for purposes of this section the manufacturer, producer, or importer of any such article may be identified, and the amount of tax paid under chapter 32 in respect of such article may be determined—
(1) on a first-in-first-out basis,
(2) on a last-in-first-out basis, or
(3) in accordance with any other consistent method approved by the Secretary.
(f) Meaning of terms

For purposes of this section, any term used in this section has the same meaning as when used in chapter 31, 32, or 33, as the case may be.

(Aug. 16, 1954, ch. 736, 68A Stat. 798; Aug. 11, 1955, ch. 793, § 2, 69 Stat. 676; Aug. 11, 1955, ch. 805, §§ 1(h), (i), 2(b), 69 Stat. 690; Apr. 2, 1956, ch. 160, § 2(b)(1), 70 Stat. 90; June 29, 1956, ch. 462, title II, § 208(b), 70 Stat. 393; Pub. L. 85–475, § 4(b)(5), (6), June 30, 1958, 72 Stat. 260; Pub. L. 85–859, title I, § 163(a), (c), Sept. 2, 1958, 72 Stat. 1306, 1311; Pub. L. 86–342, title II, § 201(d)(1), Sept. 21, 1959, 73 Stat. 614; Pub. L. 86–418, § 3, Apr. 8, 1960, 74 Stat. 38; Pub. L. 86–781, § 2, Sept. 14, 1960, 74 Stat. 1018; Pub. L. 87–61, title II, § 205(c), (d), June 29, 1961, 75 Stat. 126; Pub. L. 87–508, § 5(c)(3), June 28, 1962, 76 Stat. 119; Pub. L. 89–44, title II, § 207(c), title VI, § 601(c), title VIII, § 801(d)(2), June 21, 1965, 79 Stat. 140, 153, 158; Pub. L. 91–258, title II, §§ 205(b)(3), (4), 207(d)(4)–(7), May 21, 1970, 84 Stat. 242, 248, 249; Pub. L. 91–614, title III, § 302(a), (b), Dec. 31, 1970, 84 Stat. 1845; Pub. L. 92–178, title IV, § 401(a)(3)(C), (g)(6), Dec. 10, 1971, 85 Stat. 531, 534; Pub. L. 94–455, title XIX, §§ 1904(b)(1), (2), 1906(a)(24)(A), (B)(i), (b)(13)(A), title XXI, § 2108(a), Oct. 4, 1976, 90 Stat. 1815, 1827, 1834, 1904; Pub. L. 95–227, § 2(b)(4), Feb. 10, 1978, 92 Stat. 12; Pub. L. 95–618, title II, §§ 201(c)(3), 232(b), 233(c)(3), Nov. 9, 1978, 92 Stat. 3184, 3189, 3192; Pub. L. 96–222, title I, § 108(c)(2)(A), (B), (3), (4), Apr. 1, 1980, 94 Stat. 227; Pub. L. 96–596, § 4(c)(1), Dec. 24, 1980, 94 Stat. 3475; Pub. L. 96–598, § 1(a), (b), Dec. 24, 1980, 94 Stat. 3485, 3486; Pub. L. 97–424, title V, §§ 511(g)(2)(A), 512(b)(2)(C), (D), 515(b)(4), Jan. 6, 1983, 96 Stat. 2173, 2177, 2181; Pub. L. 98–369, div. A, title VII, §§ 734(b), (j), 735(c)(13), July 18, 1984, 98 Stat. 978, 980, 984; Pub. L. 99–499, title V, § 521(d)(5), Oct. 17, 1986, 100 Stat. 1780; Pub. L. 100–203, title IX, § 9201(b)(2), title X, § 10502(d)(6)–(8), Dec. 22, 1987, 101 Stat. 1330–330, 1330–444; Pub. L. 100–647, title II, § 2001(d)(1)(B), title VI, § 6102(a), Nov. 10, 1988, 102 Stat. 3594, 3710; Pub. L. 101–508, title XI, § 11212(d)(2), Nov. 5, 1990, 104 Stat. 1388–432; Pub. L. 103–66, title XIII, § 13242(d)(17)–(19), Aug. 10, 1993, 107 Stat. 524; Pub. L. 104–188, title I, § 1702(b)(3), Aug. 20, 1996, 110 Stat. 1868; Pub. L. 105–34, title IX, § 905(a), title X, § 1032(e)(6), title XIV, § 1436(b), Aug. 5, 1997, 111 Stat. 874, 935, 1053; Pub. L. 105–206, title VI, § 6023(23), July 22, 1998, 112 Stat. 826; Pub. L. 108–357, title VIII, §§ 853(d)(2)(G)–(I), 865(a), Oct. 22, 2004, 118 Stat. 1613, 1621; ; Pub. L. 109–59, title XI, § 11163(b), Aug. 10, 2005, 119 Stat. 1973; Pub. L. 109–280, title XII, § 1207(e), Aug. 17, 2006, 120 Stat. 1071; Pub. L. 110–172, § 11(d)(1), Dec. 29, 2007, 121 Stat. 2489; Pub. L. 111–152, title I, § 1405(b)(2), Mar. 30, 2010, 124 Stat. 1065; Pub. L. 116–94, div. N, title I, § 501(b)(2), Dec. 20, 2019, 133 Stat. 3118.)

Terms defined here

Where the text says “the term … means”. Select a term to jump to its definition.

Regulations under this section

Treasury regulations (26 CFR) issued under § 6416

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 13 other sections

Cited by 8 Code sections

Cited in 25 regulations not issued under it

Show 1 more

Amendment history

From the source credit and the official notes, newest first.

  1. Amended by Pub. L. 116–94Parts changed in 2019: (b)(2)
  2. Amended by Pub. L. 111–152Parts changed in 2010: (b)(2)
  3. Amended by Pub. L. 110–172Parts changed in 2007: (a)(4)(C)
  4. Amended by Pub. L. 109–280Parts changed in 2006: (b)(2) (b)(2)(E) (b)(4)(B)(iii)
  5. Amended by Pub. L. 109–59Parts changed in 2005: (a)(4) (a)(4)(A) (a)(4)(B) (a)(4)(C) (b)(2)
  6. Amended by Pub. L. 108–357Parts changed in 2004: (a)(4) (b)(2) (b)(3) (d)
  7. Amended by Pub. L. 105–206Parts changed in 1998: (b)(5)
  8. Amended by Pub. L. 105–34Parts changed in 1997: (a)(4)(B) (b)(2) (d)
  9. Amended by Pub. L. 104–188Parts changed in 1996: (b)(1)(A)
  10. Amended by Pub. L. 103–66Parts changed in 1993: (a)(4)(A) (a)(4)(B) (b)(2) (b)(3)(A) (b)(3)(B)
  11. Amended by Pub. L. 101–508Parts changed in 1990: (d)
  12. Amended by Pub. L. 100–647Parts changed in 1988: (a)(4) (b)(2)
  13. Amended by Pub. L. 100–203Parts changed in 1987: (b)(2) (b)(3)(A) (b)(3)(B)
  14. Amended by Pub. L. 99–499Parts changed in 1986: (b)(2)
  15. Amended by Pub. L. 98–369Parts changed in 1984: (a)(1)(C) (a)(2)(B) (a)(3) (b)(1)(A) (b)(1)(C) (b)(2) (b)(2)(A) (b)(2)(E) (b)(2)(F) (b)(2)(G) (b)(3) (b)(3)(A) (b)(3)(B) (b)(3)(C) (b)(3)(D) (b)(4)(A) (b)(6) (c) (d) (g) (h)
  16. Amended by Pub. L. 97–424Parts changed in 1983: (a)(1) (b)(2)
  17. Amended by Pub. L. 96–596, Pub. L. 96–598Parts changed in 1980: (a)(1)(C) (b)(1) (b)(2) (b)(2)(E) (b)(2)(G) (b)(3)(A) (b)(3)(C) (b)(3)(D) (b)(4)(A) (b)(4)(B)
  18. Amended by Pub. L. 96–222
  19. Amended by Pub. L. 95–618Parts changed in 1978: (b)(2) (b)(3)
  20. Amended by Pub. L. 95–227
  21. Amended by Pub. L. 94–455Parts changed in 1976: (a)(1) (a)(3) (b) (b)(1) (b)(2)(E) (b)(2)(F) (b)(2)(G) (b)(2)(H) (b)(2)(I) (b)(2)(J) (b)(2)(K) (b)(2)(L) (b)(2)(R) (b)(2)(T) (c) (e) (g)
  22. Amended by Pub. L. 92–178Parts changed in 1971: (b)(2)(R) (b)(2)(S) (g)
  23. Amended by Pub. L. 91–614Parts changed in 1970: (a)(2)(A) (b)(2)(E) (b)(2)(G) (b)(2)(H) (b)(2)(I) (b)(2)(M) (b)(3) (b)(3)(A) (c)
  24. Amended by Pub. L. 91–258
  25. Amended by Pub. L. 89–44Parts changed in 1965: (a)(1) (a)(1)(A) (a)(1)(B) (a)(1)(C) (a)(1)(D) (a)(3)(A) (a)(3)(C) (a)(3)(D) (b)(1) (b)(2)(F) (b)(2)(N) (b)(2)(R) (b)(3)(A) (b)(3)(B) (b)(3)(C) (b)(3)(D) (b)(4) (b)(5) (c) (d) (g)
  26. Amended by Pub. L. 87–508Parts changed in 1962: (b)(2)(H)
  27. Amended by Pub. L. 87–61Parts changed in 1961: (b)(2)(E) (b)(3)(F)
  28. Amended by Pub. L. 86–781Parts changed in 1960: (b)(1) (b)(2)(E) (b)(3)(A) (b)(3)(E)
  29. Amended by Pub. L. 86–418
  30. Amended by Pub. L. 86–342Parts changed in 1959: (b)(2)(H) (b)(2)(I)
  31. Amended by Pub. L. 85–859Parts changed in 1958: (a) (b)(1) (b)(2) (b)(3) (b)(4) (c) (f) (g)
  32. Enacted by Pub. L. 85–475

Where it sits in the Code

  1. Subtitle F Procedure and Administration
  2. Chapter 65 ABATEMENTS, CREDITS, AND REFUNDS
  3. Subchapter B Rules of Special Application

Nearby sections

Official notes

The Law Revision Counsel's notes for this section (amendments, effective dates and related laws) are long, so they have their own page.