[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.164-5]

[Page 885-886]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.164-5  Certain retail sales taxes and gasoline taxes.

    For taxable years beginning before January 1, 1964, any amount 
representing a State or local sales tax paid by a consumer of services 
or tangible personal property is deductible by such consumer as a tax, 
provided it is separately stated and not paid in connection with his 
trade or business. For taxable years beginning after December 31, 1963, 
only the amount of any separately stated State and local general sales 
tax (as defined in paragraph (g) of Sec. 1.164-3) and tax on the sale 
of gasoline, diesel fuel or other motor fuel paid by the consumer (other 
than in connection with his trade or business) is deductible by the 
consumer as tax. The fact that, under the law imposing it, the incidence 
of such State or local tax does not fall on the consumer is

[[Page 886]]

immaterial. The requirement that the amount of tax must be separately 
stated will be deemed complied with where it clearly appears that at the 
time of sale to the consumer, the tax was added to the sales price and 
collected or charged as a separate item. It is not necessary, for the 
purpose of this section, that the consumer be furnished with a sales 
slip, bill, invoice, or other statement on which the tax is separately 
stated. For example, where the law imposing the State or local tax for 
which the taxpayer seeks a deduction contains a prohibition against the 
seller absorbing the tax, or a provision requiring a posted notice 
stating that the tax will be added to the quoted price, or a requirement 
that the tax be separately shown in advertisements or separately stated 
on all bills and invoices, it is presumed that the amount of the State 
or local tax was separately stated at the time paid by the consumer; 
except that such presumption shall have no application to a tax on the 
sale of gasoline, diesel fuel or other motor fuel imposed upon a 
wholesaler unless such provisions of law apply with respect to both the 
sale at wholesale and the sale at retail.

[T.D. 6780, 29 FR 18147, Dec. 22, 1964]