SEC. 7701. Definitions. (a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof

(1) Person. The term "person" shall be construed to mean and include an individual,

a

trust, estate, partnership, association, company or corporation.

(2) Partnership and partner. The term "partnership" includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a trust or estate or a corporation; and the term "partner" includes a member in such a syndicate, group, pool, joint venture, or organization.

(3) Corporation. The term "corporation" includes associations, joint-stock companies, and insurance companies.

**

(9) United States. The term "United States" when used in a geographical sense includes only the States and the District of Columbia.

(11) Secretary. The term "Secretary" means the Secretary of the Treasury.

Sec. 7701. Definitions. (a)

* *

(12) Delegate-(A) In general. The term "Secretary or his delegate" means the Secretary of the Treasury, or any officer, employee, or agency of the Treasury Department duly authorized by the Secretary (directly, or indirectly by one or more redelegations of authority) to perform the function mentioned or described in the context, and the term "or his delegate" when used in connection with any other official of the United States shall be similarly construed.

(13) Commissioner. The term "Commissioner" means the Commissioner of Internal Revenue.

(14) Taxpayer. means any person subject to any internal revenue tax.

The term "taxpayer"

[Sec. 7701 as amended by sec. 22(g), Alaska Omnibus Act (73 Stat. 146); sec. 18(1), Hawaii Omnibus Act (74 Stat. 416); sec. 103 (t) of the Social Security Amendments 1960 (74 Stat. 941)]

[T.D. 6216, 21 F.R. 9645, Dec. 6, 1956, as amended by T.D. 6518, 25 F.R. 13133, Dec. 21, 1960, T.D. 6743, 29 F.R. 7933, June 23, 1964]

§ 41.7805 Statutory provisions; rules and regulations.

SEC. 7805. Rules and regulations—(a) Authorization. Except where such authority is expressly given by this title to any person other than an officer or employee of the Treasury Department, the Secretary or his delegate shall prescribe all needful rules and regulations for the enforcement of this title, including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue.

(b) Retroactivity of regulations or rulings. The Secretary or his delegate may prescribe the extent, if any, to which any ruling or regulation, relating to the internal revenue laws, shall be applied without retroactive effect.

(c) Preparation and distribution of regulations, forms, stamps, and other matters. The Secretary or his delegate shall prepare and distribute all the instructions, regulations, directions, forms, blanks, stamps, and other matters pertaining to the assessment and collection of internal revenue.

§ 41.7805-1 Promulgation of regula

tions.

42.4291 Statutory provisions; cases where persons receiving payment must collect tax.

42.4291-1 Duty to collect tax.

42.4292 Statutory provisions; State and local government exemption. 42.4292-1 State and local

exemptions.

government

42.4293 Statutory provisions; exemption for United States and possessions. 42.4293-1 Exemption for the United States and possessions.

AUTHORITY: §§ 42.0-1 to 42.4293-1, issued under sec. 7805, 68A Stat. 917; 26 U. S. C. 7805.

Subpart A-Introduction

SOURCE: §§ 42.0-1 to 42.0-4 contained in Treasury Decision 6327, 23 F. R. 8057, Oct. 18, 1958, except as otherwise noted.

§ 42.0-1 Introduction.

(a) In general. The regulations in this part (Part 42, Subchapter D, Chapter I, Title 26 (1954) Code of Federal Regulations) are designated "Facilities and Services Excise Tax Regulations". The regulations relate to the taxes imposed by chapter 33 of the Internal Revenue Code of 1954, as amended, and to certain related administrative provisions of subtitle F of such Code. Chapter 33 of the Code imposes a tax on amounts paid for certain specified facilities and services. References in these regulations to the "Internal Revenue Code" or the "Code" are references to the Internal Revenue Code of 1954, as amended, unless otherwise indicated. References to a section or other provision of law are references to a section or other provision of the Internal Revenue Code, as amended, unless otherwise indicated.

(b) Division of regulations. The regulations in this part are divided into 9 subparts. Subpart A contains provisions relating to the arrangement and numbering of the sections of the regulations in this part, general definitions and use of terms, scope of regulations, and the extent to which the regulations in this part supersede prior regulations relating to the excise taxes imposed by chapter 33 of the Internal Revenue Code. The other subparts of the regulations in this part and the subject matter to which they relate are as follows:

Subpart B-Admissions and dues. Subpart C-Communications.

Subpart D-Transportation of persons. Subpart E-Transportation of property. Subpart F-Transportation of oil by pipe

line.

Subpart G-Safe deposit boxes.

Subpart H-Special provisions applicable to services and facilities taxes.

Subpart I-Refund and other administrative provisions of special application to facilities and services taxes.

(c) Arrangement and numbering. Each section of the regulations in Subpart B through Subpart I of this part is preceded by the section, subsection, or paragraph of the Internal Revenue Code which it interprets. The sections of the regulations can readily be distinguished from the sections of the Code since—

(1) The sections of the regulations are printed in larger type;

(2) The sections of the regulations are preceded by a section symbol and the part number, arabic numeral 42, followed by a decimal point (§ 42.); and

(3) The sections of the Code are preceded by "Sec.". Each section of the regulations setting forth law or regulations is designated by a number composed of the part number followed by a decimal point (42.) and the number of the corresponding provision of the Internal Revenue Code. In the case of a section setting forth regulations. this designation is followed by a hyphen and a number identifying such section. § 42.0-2

terms.

General definitions and use of

As used in the regulations in this part, unless otherwise expressly indicated

(a) The terms defined in the provisions of law contained in the regulations in this part shall have the meanings so assigned to them.

(b) The Internal Revenue Code of 1954 means the Act approved August 16, 1954 (68A Stat.), entitled "An Act to revise the internal revenue laws of the United States", as amended.

(c) District director means district director of internal revenue.

(d) Calendar quarter means a period of 3 calendar months ending on March 31, June 30, September 30, or December 31.

(b) Subpart C. The regulations in Subpart C of this part apply, unless otherwise specified in such subpart, to all amounts paid on or after January 1, 1955, for communications services or facilities.

(c) Subpart D. The regulations in Subpart D of this part apply to amounts paid on or after October 1, 1956, for transportation of persons commencing on or after such date.

(d) Subpart E. The regulations in Subpart E of this part relate to amounts paid on or after January 1, 1955, and before August 1, 1958, for the transportation of property.

(e) Subpart F. The regulations in Subpart F of this part relate to:

(1) Any transportation of oil by pipeline on or after January 1, 1955, for which payment is made before August 1, 1958; and

(2) Any transportation of oil by pipeline on or after January 1, 1955, exclusive of any such transportation which begins on or after August 1, 1958, for which no charge is made or the amount paid (other than pursuant to an arm's length transaction) is less than the fair charge therefor.

(f) Subpart G. The regulations in Subpart G of this part relate to amounts paid on or after January 1, 1955, for the use of safe deposit boxes.

regulations and such regulations as prescribed and made applicable to the Inernal Revenue Code of 1954 by Treasury Decision 6091, 19 F. R. 5167, Aug. 17, 1954.

Safe deposit boxes, transportation of oil by pipeline, telephone, telegraph, radio and cable messages and services, and transportation of persons-Regulations 42 (1942 edition, as amended), 26 CFR (1939) Part 130.

Admissions, dues, and initiation feesRegulations 43 (1941 edition, as amended), 26 CFR (1939) Part 101.

Transportation of property-Regulations 113 (1943 edition, as amended), 26 CFR (1939) Part 143.

Subpart C-Communications

SOURCE: §§ 42.4241 to 42.4254-2 contained in Treasury Decision 6356, 24 F.R. 358, Jan. 15, 1959.

§ 42.4251 Statutory provisions; imposition of tax.

SEC. 4251. Imposition of tax. There is hereby imposed on amounts paid for the communication services or facilities enumerated in the following table a tax equal to the percent of the amount so paid as is specified in such table:

(c) Amounts paid. The term "amounts paid" means the amounts collected for the communication services and facilities specified in paragraph (a) of this section, without regard to whether the charge therefor is paid or satisfied in money, service, or other valuable consideration. See also paragraph (c) of

§ 42.4252-1.

(d) Liability for, and return of, tax. The taxes imposed by section 4251 are payable by the person paying for the services and facilities furnished, and shall be paid to the person furnishing the services and facilities who is required to collect the tax and return and pay over the tax in accordance with the applicable provisions of the regulations contained in Subparts H and I' of this part.

§ 42.4252 tions. SEC. 4252.

Statutory provisions; defini

Definitions-(a) Local telephone service. As used in section 4251 the term, "local telephone service" means any telephone service not taxable as long distance telephone service; leased wire, teletypewriter or talking circuit special service; or wire and equipment service. Amounts paid for the installation of instruments, wires, poles, switchboards, apparatus, and equipment shall not be considered amounts paid for service. This subsection shall not be construed as defining as local telephone service, amounts paid for services and facilities which are exempted from other communication taxes by section 4253 (b).

(b) Long distance telephone service. As used in section 4251 the term "long distance telephone service" means a telephone or radio telephone message or conversation for which the toll charge is more than 24 cents and for which the charge is paid within the United States.

(c) Telegraph service. As used in section 4251 the term "telegraph service" means a telegraph, cable, or radio dispatch or message for which the charge is paid within the United States.

(d) Leased wire, teletypewriter or talking circuit special service. As used in section 4251 the term "leased wire, teletypewriter or talking circuit special service" does not include any service used exclusively in rendering a service taxable as wire and equipment service. The tax imposed by section 4251 with respect to a leased wire, teletypewriter or talking circuit special service shall apply whether or not the wires or services are within a local exchange area.

1 In process of preparation.

(e) Wire and equipment service. As used in section 4251 the term "wire and equipment service" shall include stock quotation and information services, burglar alarm or fire alarm service, and all other similar services, but not including service described in subsection (d) of this section. The tax imposed by section 4251 with respect to wire and equipment service shall apply whether or not the wires or services are within a local exchange area.

§ 42.4252-1 Local telephone service.

(a) The term "local telephone service" means telephone service furnished within a local service area, and any telephone call between points which are not within the same local service area if the toll charge for such call is 24 cents or less. Such term includes generally the ordinary residential and business or commercial telephone service within a local service area, and includes all types of such service, such as individual line and party line telephones, and extension telephones. Where, in addition to the basic periodic charge for telephone service within the local service area, there are additional charges, for example, for calls in excess of a certain number or for calls between certain points within the same local service area, the telephone service for which such additional charges are made is included within the term "local telephone service" regardless of the amount of the total charge for any particular call within the local service area. These additional charges for services within a local service area, generally referred to as "message units", are not considered to be "toll charges". The term "local telephone service" includes any service furnished which is telephonic in nature, regardless of the commercial or other name or term by which such service may be known or designated, and which is not taxable as long distance telephone service; leased wire, teletypewriter or talking circuit special service; or wire and equipment service. For the definition of the term "toll charge", see paragraph (a) of § 42.4252-2. For provisions relating to coin-operated telephones, see section 4253 (a) and § 42.4253-1.

(b) Notwithstanding the provisions of paragraph (a) of this section, the term "local telephone service" does not include any service which is included in the term "long distance telephone service", "leased wire, teletypewriter or talk

ing circuit special service", or "wire and equipment service" (see §§ 42.4252-2, 42.4252-5, and 42.4252-6) and which is exempt from the tax imposed on any such service. For provisions relating to such exemptions, see sections 4253, 4292, and 4293 and the regulations thereunder contained in this part.

(c) For purposes of the tax in respect of local telephone service, the term "amounts paid" means the amounts collected for the service, whether the charge for the service is paid or satisfied in money, service, or other valuable consideration, and whether the charge is made on a monthly or other periodic basis, or is based on the number of calls made, or is in the form of an assessment as in the case of a mutual telephone system. Where a basic periodic charge is made for the service, with additional charges for all calls or additional calls above a certain number, the additional charges are also subject to the tax.

(d) Where the charge for telephone service includes an additional charge for not making payment within a specified time, the total amount paid including the additional charge is the basis for computing the amount of tax due. Similarly, where a discount is allowed for the payment within a specified time of a charge for service rendered, the tax is to be computed on the amount actually paid.

(e) Assessments or charges paid by members or subscribers of a mutual or cooperative telephone company, association, or system for switching services or facilities, or for the repair or replacement of instruments, poles, wires, equipment, etc., incidental to ordinary maintenance, are subject to the tax.

(f) All amounts paid by subscribers for private branch exchange service, for the use of switchboard, switching, and other telephone equipment, for the use of trunkline facilities, for tie lines (within the local service area) connecting private branch exchanges within a local service area, are subject to the tax on local telephone service.

(g) Where a subscriber to local telephone service is outside the local service area and an additional charge is made on a mileage or other basis, the additional charge is regarded as a charge for leased wire service and is subject to the tax imposed by section 4251 on leased wire service. For provisions relating to the tax on leased wire service, see § 42.4252-5.