Frequently Asked Questions
Who is eligible for the Special Occupational Tax Exemption for Government Contractors?
Must establish to the Secretary that business is conducted exclusively with the U.S. and file an application for exemption annually by July 1.
How does the Special Occupational Tax Exemption for Government Contractors work?
Relieves persons from the special occupational tax if their business is conducted exclusively with or on behalf of the United States government.
What law authorizes the Special Occupational Tax Exemption for Government Contractors?
The Special Occupational Tax Exemption for Government Contractors is authorized under IRC §5851 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §5851
Source: Internal Revenue Code, Title 26, United States Code
§ 5851. Special (occupational) tax exemption(a) Business with United StatesAny person required to pay special (occupational) tax under section 5801 shall be relieved from payment of that tax if he establishes to the satisfaction of the Secretary that his business is conducted exclusively with, or on behalf of, the United States or any department, independent establishment, or agency thereof. The Secretary may relieve any person manufacturing firearms for, or on behalf of, the United States from compliance with any provision of this chapter in the conduct of such business.
(b) ApplicationThe exemption provided for in subsection (a) of this section may be obtained by filing with the Secretary an application on such form and containing such information as may by regulations be prescribed. The exemptions must thereafter be renewed on or before July 1 of each year. Approval of the application by the Secretary shall entitle the applicant to the exemptions stated on the approved application.
(Added Pub. L. 90–618, title II, § 201, Oct. 22, 1968, 82 Stat. 1233; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
Editorial Notes
Prior ProvisionsA prior section 5851, act Aug. 16, 1954, ch. 736, 68A Stat. 728, as amended by act Sept. 2, 1958, Pub. L. 85–859, title II, § 203(h)(1), (2), 72 Stat. 1428, related to possessing firearms illegally, prior to the general revision of this chapter by Pub. L. 90–618. See section 5861(b) of this title.
Provisions similar to those comprising this section were contained in prior section 5812, act Aug. 16, 1954, ch. 736, 68A Stat. 722, prior to the general revision of this chapter by Pub. L. 90–618.
Amendments1976—Subsecs. (a), (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.
Statutory Notes and Related Subsidiaries
Effective DateSection effective on first day of first month following October 1968, see section 207 of Pub. L. 90–618, set out as a note under section 5801 of this title.