Verified answer

lol, I'd have to go with inside. Keeps his belly and the Mrs. a little warmer.!!

Outside.

I think he sleeps with his beard on the outside. Someone should ask him!

Outside the covers of course otherwize it would get caught up in the covers and then underneath his arm pit when he turned over.

"...all my life i've wondered something, and now's my chance to find out. i'm going to find the answer to a question that's puzzled the world for centuries. does santa claus sleep with his whiskers outside or in?" ---fred gailey

"...always sleep with them out. cold air makes them grow ..."

--kris kringle

http://www.imdb.com/title/tt0039628/quotes

from an iranian folktale....

http://www.gnrtr.com/tales/en/b030.html

Ms. Claus told me that he shaves in the offseason

Outside. In case there is an emergency.

under the covers

winter inside to stay warm summer outside to stay cool

LOL, I guess I always thought that it was part under the covers part out. :)