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Regulations Promulgated by the Commissioner of Internal Revenue with the Approval of the Secretary of the Treasury Relating to the

COLLECTION OF TAX ON TRANSPORTATION AND OTHER FACILITIES

Title V, Sections 500, 501, and 502 of the Revenue Act of 1918

1179. These regulations supersede Regulations No. 42, issued under the Act of October 3, 1917, which are reprinted at pages 735 to 764 of the Tax Book. The new regulations necessarily repeat some of the provisions which appeared in the earlier regulations, and where such repetition takes place reference has been made to the article in the earlier regulations.

PART I

GENERAL DEFINITIONS

Law and Regulations Relating to Transportation Taxes

1180. The Revenue Act of 1918, Title V, Section 500, provides: That from and after April 1, 1919, there shall be levied, assessed, collected and paid in lieu of the taxes imposed by Section 500 of the Revenue Act of 1917 . . .

¶ 1181. Article 1. Carrier.-[Same as Art. 1, Regulations 42.] ¶ 1182. Art. 2. Transportation.-[Same as Art. 2, Reg. 42.] ¶ 1183. Art. 3. Terms.—[Definition of "United States," "person," "Commissioner," and "collector" see Section 1 of Revenue Act of 1918.]

CHARGES TAXABLE

1184. Art. 4. General rule.-[Same as Art. 4, Reg. 42.] ¶ 1185. Art. 5. Tax less than half cent disregarded.—[Same as Art. 5, Reg. 42.]

PART II

TRANSPORTATION OF PROPERTY BY FREIGHT

1186. Section 500, subdivision (a), of the Act imposes:

A tax equivalent to three per centum of the amount paid for the transportation by rail or water or by any form of mechanical motor power when in competition with carriers by rail or water of property by freight transported from one point in the United States to another; and a like tax on the amount paid for such transportation within the United States of property transported from a point without the United States to a point within the United States.

1187. Art. 6. Tax under Revenue Act of 1918.-The tax under the Revenue Act of 1918 is in lieu of the tax under Section 500 of the Revenue Act of 1917, and in the case of the transportation of property by freight, the rate of taxation is the same under both acts. The provisions of the Revenue Act of 1917 are effective as to all taxable services or facilities furnished between midnight of October 31, 1917, and midnight of March 31, 1919; the provisions of the Revenue Act of 1918 do not apply to services or facilities furnished prior to midnight of March 31, 1919, but do apply to such services or facilities furnished subsequent to midnight of March 31, 1919.

¶ 1188. Art. 7. Transportation completed prior to November 1, 1917.-The tax under the Revenue Act of 1917 became effective November 1, 1917, and accordingly where transportation services are completed prior to that date no tax would be due under either of the acts, even though the transportation chargs covering such services are paid at any time after November 1, 1917.

SERVICES AND FACILITIES TAXABLE

¶ 1189. Art. 8. [Same as Art. 25,

¶ 1190. Art. 9. Art. 26, Reg. 42.]

Service in respect of which tax is assessed.-
Reg. 42.]

Total amount of charges taxable.—[Same as .

1191. Art. 10. No duplication of tax.-[Same as Art. 27, Reg. 42.] Added sentence: When an express company furnishes express transportation over transportation facilities of another carrier, the amounts paid by the express company to such carrier for use of the transportation facilities are not subject to tax. The tax is imposed only upon the amounts paid by the consignor or consignee of the express shipments.

1192. Art. 11. Towage charges.-Towage, if a part of transportation, is subject to tax. If, however, towage is performed for a carrier and paid for by the carrier as a part of its operating expense, the charge is not taxable. If it is performed for a shipper, either direct or as an agent of the carrier, and the shipper is charged for the services, the amount paid therefor is taxable.

¶ 1193. Art. 12. Carrier shall collect, return, and remit total taxes on all charges collected.-[Same as Art. 28, Reg. 42.] Taxable charges-in-transit privileges.-

¶ 1194. Art. 13.

[Same as Art. 29, Reg. 42.]

1195. Art. 14. Taxable charges-terminal or water service. [Same as Art. 30, Reg. 42.]

¶ 1196.

Art. 15. Charges on property shipped for export and actually exported exempt from tax.-[Same as Art. 31, Reg. 42.] ¶ 1197. Art. 16. Shipments to Porto Rico, Philippine Islands, Virgin Island, and the Canal Zone.-Shipments to Porto Rico, the Philippine Islands, the Virgin Islands, and the Canal Zone are not export shipments. But the rail transportation from an interior point of the United States to a port for transshipment to Porto Rico, the Philippine Islands, and the Virgin Islands is exempt from tax by reason of specific acts of Congress. Property will be deemed to be in the course of transportation to these localities only when shipped under the conditions described in Article 15. Transportation of shipments destined to the Canal Zone is not exempt.

¶ 1198. Art. 17. Property imported.—[Same as Art. 32, Reg. 42, except that the sentence, "Provided, however, United States," in Art. 32, is embodied in the new Art. 18.]

¶ 1199. Art. 18. Import shipments from adjacent foreign countries. When import shipments from adjacent foreign countries move on through rates, and there are no established divisions, the charges shall be prorated on a mileage basis, and the transportation tax shall be paid and collected upon that proportion of the amount paid which the mileage within the United States bears to the mileage of the shipment transported. When there are established divisions, the transportation tax shall be paid and collected upon the division accruing for the transportation from the border point, if the divisions are based on the border, to destination within the United States. If divisions are not based on the border, then the tax shall be paid and collected upon the division from the basing point nearest the border to destination, plus or minus an amount computed on the mileage from such basing point to border.

¶ 1200. Art. 19. Property passing through the United States. [Same as Art. 33, Reg. 42.] Add "within the United States."

DOMESTIC SHIPMENT PASSING THROUGH A

FOREIGN COUNTRY EN ROUTE

¶ 1201. Art. 20. Charges on such property taxable.-If a shipment having both origin and destination within the United States passes out of the United States on its journey, the gross transportation charges from point of origin to final destination are nevertheless subject to the tax.

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