Rev. Ruling 60-299
Basic Permits and Special Tax Required by Ship Chandlers
The Internal Revenue Service has been requested to state its position with respect to the basic permits required by ship chandlers.
Marine suppliers, otherwise known as ship chandlers, operate such businesses at ports of the United States and frequently service both American and foreign ships with supplies.
Section 3(a) of the Federal Alcohol Administration Act makes it unlawful, except pursuant to a basic permit, to engage in the business of importing into the United States distilled spirits, wines, or malt beverages, or for any person so engaged to sell, offer, or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly, or through an affiliate, distilled spirits, wine, or malt beverages so imported.
The questions with respect to which advice has been requested and the answer thereto are set forth as follows:
(1) Under what circumstances must a ship chandler obtain a basic permit as an importer?
It is held that a ship chandler who imports distilled spirits, wines, or beer into the custody of the Bureau of Customs for sale (even though he sells them exclusively to vessels engaged in foreign trade) for use as ships supplies must obtain a basic permit as an importer. (2) Under what circumstances must ship chandler obtain a basic permit as a wholesaler?
A ship chandler who engages in the domestic purchase of distilled spirits, wine or beer for sale (even though he sells them exclusively to vessels engaged in foreign trade) for use as ships supplies must obtain a basic permit as a wholesaler. See also Revenue Ruling 54-451, page 24, which provides in part that a company purchasing beer for resale as ships supplies must possess a wholesaler's basic permit and must pay the special tax as a retail or wholesale beer dealer as may be required.
(3) Under what circumstances must a ship chandler obtain both importer's and wholesaler's basic permits?
A ship chandler who both imports and purchases domestically distilled spirits, wines or beer must obtain both importer's and wholesaler's basic permits.
(4) Under what circumstances is a ship chandler not subject to special taxes as a wholesale dealer?
A ship chandler who withdraws alcoholic beverages for sale to a ship which is engaged in foreign trade and which uses them as ships supplies solely outside the jurisdictional limits of the United States, is not subject to special tax as a wholesale dealer since such vessel is not considered a dealer within the meaning of section 5112(a) of the Code, and the sale of spirits to such vessel is not a sale to another dealer as provided in section 5112(b) and (c) of the Code. Such a ship chandler is, however, subject to the special tax as a retail dealer.
27 U.S.C. 203; 27 CFR 1.20