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Excise taxes are imposed on amounts paid for certain facilities and services. If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government.
If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. See Penalties and Interest, in
chapter 12.
A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid.
After July 31, 2006, collectors stopped collecting and paying over the tax on nontaxable service. Taxpayers may request a credit or refund only on their 2006 federal income tax return for nontaxable service that was billed after February 28, 2003, and before August 1, 2006. Instructions are provided on the applicable income tax returns. Claims can no longer be filed on Form 8849, Form 720, or Form 843 for nontaxable service; the IRS will not process these claims. If you filed a claim prior to May 25, 2006, you or your representative should have received a letter from the IRS explaining how your claim will be processed. If you or your representative have not received a letter or an IRS agent has not contacted you, call 1-866-699-4096 for assistance. If you did not request a refund on your 2006 income tax return, you can file an amended return.
Information on the credit and refund procedures for collectors is described under Credits or Refunds, later. For more information, see Notices 2006-50 and 2007-11.
A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service.
Payments for certain services or payments from certain users are exempt from the communications tax.
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Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting.
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Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press.
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It normally maintains a regular faculty and curriculum.
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It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.
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It is exempt from income tax under Internal Revenue Code section 501(a).
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Described in section 501(c)(3) and exempt from tax under section 501(a),
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Primarily engaged in the activity of collecting human blood,
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Registered with the IRS, and
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Registered by the Food and Drug Administration to collect blood.
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The American National Red Cross and other international organizations.
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Nonprofit hospitals.
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Nonprofit educational organizations.
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Qualified blood collector organizations.
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State and local governments.
If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Alternatively, the person who paid the tax may claim a refund. For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849.
Taxes are imposed on amounts paid for:
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Transportation of persons by air,
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Use of international air travel facilities, and
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Transportation of property by air.
The tax on transportation of persons by air is made up of the:
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Percentage tax and
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Domestic-segment tax.
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Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax.
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Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation.
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Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation.
Example.
In January 2008, Frank Jones pays $265 to a commercial airline for a flight in January from Washington to Chicago with an intermediate stop in Cleveland. The flight comprises two segments. The price includes the $240 fare and $25 excise tax [($240 × 7.5%) + (2 × $3.50)] for which Frank is liable. The airline collects the tax from Frank and pays it over to the government.
Example.
In March 2008, Tim Clark pays $1,124 to an air charter service to carry seven employees from Washington to Detroit with an intermediate stop in Pittsburgh. The flight comprises two segments. The price includes the $1,000 charter payment and $124 excise tax [($1,000 × 7.5%) + (2 × $3.50 × 7 passengers)] for which Tim is liable. The charter service collects the tax from Tim and pays it over to the government.
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The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year,
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The airport was receiving essential air service subsidies as of August 5, 1997, or
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The airport is not connected by paved roads to another airport.
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It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone).
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It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later.
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Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas.
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Planting, cultivating, cutting, transporting, or caring for trees (including logging operations).
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Providing emergency medical transportation.
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Planting, cultivating, cutting, transporting, or caring for trees (including logging operations).
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Providing emergency medical transportation. The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services.
A $15.40 tax per person is imposed on amounts paid during 2008 (whether in or outside the United States) for international flights that begin or end in the United States. However, for a domestic segment that begins or ends in Alaska or Hawaii, a $7.70 tax per person applies only to departures. This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier.
A tax of 6.25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire.
The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States.
In certain circumstances, special rules apply to the taxes on transportation of persons and property by air.
If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Alternatively, the person who paid the tax may claim a refund. For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849.
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