The Norman Corporation, Etc., and v. District Director of Internal Revenue

The judgment of the district court in this tax refund case involving the federal excise tax on blackjack gambling units is affirmed.

The question is whether the tax should have been levied on each unit or on each player position served by the unit. Involved are taxes for the tax year ending June 30, 1967. The district court ruled that each player position was a “coin-operated gaming device,” taxable under 26 U.S.C. 4461(a).

Two similar types of units are involved, one made by United Coin Machine Co., Inc. (United), the other by Alstate Coin Machine Co., Inc. (Alstate). Housed in each unit are several individual mechanisms designed to serve the special purpose of ministering to the urges of a single player. United’s unit allows two persons to play at once; Al-state makes room for three.

A difference of opinion regarding proper taxation of its units arose between United and the Reno, Nevada, district director of internal revenue. The district director submitted the question to the Excise Tax Branch of the Internal Revenue Service in Washington, D. C. In January, 1963, that office advised the district director that only one tax per unit was proper. A copy of this advice was given…