Publication 510 - Excise Taxes For 2005 - Department Of Treasury (Page 28 of 47) in pdf

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suitable for use with a vehicle that has a gross

Sold to a nonprofit educational organiza-

other lottery, or any other game of chance for

vehicle weight of 33,000 pounds or less.

tion for its exclusive use.

money or other thing of value that the owner or

operator of the vessel (or their employee, agent,

Farm feed, seed, and fertilizer equipment.

A credit or refund is also allowable if there is a

or franchisee) conducts, sponsors, or operates,

This is any body primarily designed to process

price readjustment by reason of the return or

the voyage is subject to the ship passenger tax.

or prepare, haul, spread, load, or unload feed,

repossession of an article or by reason of a bona

The tax applies regardless of the duration of the

seed, or fertilizer to or on farms. This exemption

fide discount, rebate, or allowance.

voyage. A casual, friendly game of chance with

applies only to the farm equipment body (and

See also Conditions to allowance under Man-

other passengers that is not conducted, spon-

parts and accessories) and not to the chassis

ufacturers Taxes, earlier.

sored, or operated by the owner or operator is

upon which the farm equipment is mounted.

not gambling for determining if the voyage is

Tire credit. A credit is allowed against the tax

Ambulances and hearses. This is any am-

subject to the ship passenger tax.

on heavy vehicles if taxable tires are sold on or

b u l a n c e ,

h e a r s e ,

o r

c o m b i n a t i o n

in connection with the sale of the article. The

Exemptions. The tax does not apply when a

ambulance-hearse.

credit is equal to the manufacturers excise tax

vessel is on a voyage of less than 12 hours

Truck-tractors. This is any truck-tractor

imposed on the taxable tires (discussed earlier).

between 2 points in the United States or if a

specifically designed for use in shifting semitrail-

This is the section 4051(d) taxable tire credit and

vessel is owned or operated by a state or local

ers in and around freight yards and freight termi-

is claimed on line 15a of Schedule C (Form 720)

government.

nals.

for the same quarter for which the tax on the

heavy vehicle is reported.

Concrete mixers. This is any article de-

signed to be placed or mounted on a truck, truck

Foreign Insurance

trailer, or semitrailer chassis to be used to pro-

cess or prepare concrete. This exemption does

Ship Passenger Tax

Taxes

not apply to the chassis on which the article is

mounted.

A tax of $3 per passenger is imposed on certain

Tax is imposed on insurance policies issued by

ship voyages, as explained later under Taxable

Sales exempt from tax. The following sales

foreign insurers. Any person who makes, signs,

situations. The tax is imposed only once for each

are ordinarily exempt from tax.

issues, or sells any of the documents and instru-

passenger, either at the time of first embarkation

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ments subject to the tax, or for whose use or

Sales to a state or local government for its

or disembarkation in the United States.

benefit they are made, signed, issued, or sold, is

exclusive use.

The person providing the voyage (the opera-

liable for the tax.

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tor of the vessel) is liable for the tax.

Sales to Indian tribal governments, but

The following tax rates apply to each dollar

only if the transaction involves the exer-

Voyage. A voyage is the vessel’s journey that

(or fraction thereof) of the premium paid.

cise of an essential tribal government

includes the outward and homeward trips or

function.

passages. The voyage starts when the vessel

1. Casualty insurance and indemnity, fidelity,

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begins to load passengers and continues until

and surety bonds: 4 cents (for example, on

Sales to a nonprofit educational organiza-

the vessel has completed at least one outward

a premium payment of $10.10, the tax is

tion for its exclusive use.

and one homeward passage. The tax may be

44 cents).

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Sales for use by the purchaser for further

imposed even if a passenger does not make

2. Life, sickness, and accident insurance, and

manufacture of other taxable articles (see

both an outward and a homeward passage as

annuity contracts: 1 cent (for example, on

below).

long as the voyage begins or ends in the United

a premium payment of $10.10, the tax is

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States.

Sales for export or for resale by the pur-

11 cents).

chaser to a second purchaser for export.

Passenger. A passenger is an individual car-

3. Reinsurance policies covering any of the

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ried on the vessel other than the Master or a

Sales to the United Nations for official use.

taxable contracts described in items (1)

crew member or other individual engaged in the

and (2): 1 cent.

business of the vessel or its owners.

Registration requirement. In general, the

However, the tax does not apply to casualty

seller and buyer must be registered for a sale to

Example 1. John Smith works as a guest

insurance premiums paid to foreign insurers for

be tax free. See the Form 637 instructions for

lecturer. The cruise line hired him for the benefit

coverage of export goods in transit to foreign

more information. Certain registration excep-

of the passengers. Therefore, he is engaged in

destinations.

tions apply in the case of sales to state and local

the business of the vessel and is not a passen-

governments and to foreign purchasers for ex-

Premium. Premium means the agreed

ger.

port.

price or consideration for assuming and carrying

the risk or obligation. It includes any additional

Further manufacture. If you buy articles

Example 2. Marian Green is a travel agent.

charge or assessment payable under the con-

tax free and resell or use them other than in the

She is taking the cruise as a promotional trip to

tract, whether in one sum or installments. If

manufacture of another article, you are liable for

determine if she wants to offer it to her clients.

premiums are refunded, claim the tax paid on

the tax on their resale or use just as if you had

She is a passenger.

those premiums as an overpayment against tax

manufactured and sold them.

Taxable situations. There are two taxable sit-

due on other premiums paid or file a claim for

uations. The first situation involves voyages on

refund.

Credits and refunds. A credit or refund (with-

commercial passenger vessels extending over

out interest) of the tax on heavy vehicles may be

one or more nights. A voyage extends over one

When liability attaches. The liability for this

allowable if the tax has been paid with respect to

or more nights if it extends for more than 24

tax attaches when the premium payment is

an article and, before any other use, such article

hours. A passenger vessel is any vessel with

transferred to the foreign insurer or reinsurer

is used by any person as a component part of

stateroom or berth accommodations for more

(including transfers to any bank, trust fund, or

another taxable article manufactured or pro-

than 16 passengers.

similar recipient designated by the foreign in-

duced. The person using the article as a compo-

The second situation involves voyages on a

surer or reinsurer) or to any nonresident agent,

nent part is eligible for the credit or refund.

commercial vessel transporting passengers en-

solicitor, or broker. A person can pay the tax

A credit or refund is allowable if, before any

gaged in gambling on the vessel beyond the

before the liability attaches if the person keeps

other use, an article is, by any person:

territorial waters of the United States. Territorial

records consistent with that practice.

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Exported,

waters of the United States are those waters

within the international boundary line between

Who must file. The person who pays the pre-

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Used or sold for use as supplies for ves-

the United States and any contiguous foreign

mium to the foreign insurer (or to any nonresi-

sels,

country or within 3 nautical miles (3.45 statute

dent person such as a foreign broker) must pay

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Sold to a state or local government for its

miles) from low tide on the coastline. If passen-

the tax and file the return. Otherwise, any person

exclusive use, or

gers participate as players in any policy game or

who issued or sold the policy, or who is insured

Page 28

Publication 510 - Excise Taxes For 2005 - Department Of Treasury Page 28

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