Publication 510 - Excise Taxes For 2005 - Department Of Treasury (Page 6 of 47) in pdf

the initial certificate to claim an exemption from

•

The name of the member of the U.S.

Amounts paid for mileage awards that

the communications tax.

Armed Forces performing services in the

cannot be redeemed for taxable transpor-

•

combat zone who originated the call.

The American National Red Cross and

tation beginning and ending in the United

other international organizations.

•

States are not subject to the tax. For this

The toll charges, point of origin, and name

•

rule, mileage awards issued by a foreign

of carrier.

Nonprofit hospitals.

air carrier are considered to be usable

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A statement that the charges are exempt

Nonprofit educational organizations.

only on that foreign air carrier and thus not

from tax under section 4253(d) of the In-

•

redeemable for taxable transportation be-

State and local governments.

ternal Revenue Code.

ginning and ending in the United States.

•

Therefore, amounts paid to a foreign air

The name and address of the telephone

The federal government does not have to file

carrier for mileage awards are not subject

subscriber.

any exemption certificate.

to the tax.

All other organizations must furnish exemp-

This exemption also applies to members of the

tion certificates when required.

•

Amounts paid by an air carrier to a domes-

Armed Forces serving in a qualified hazardous

duty area. A qualified hazardous duty area in-

tic air carrier for mileage awards that can

cludes an area only while the special pay provi-

be redeemed for taxable transportation

Credits or Refunds

sion is in effect for that area.

are not subject to the tax to the extent

those miles will be awarded in connection

If tax is collected and paid over for certain serv-

For information about areas designated a

with the purchase of taxable transporta-

ices or users exempt from the communications

combat zone or qualified hazardous duty area,

tion.

tax:

see Publication 3, Armed Forces’ Tax Guide.

•

Amounts paid by an air carrier to a domes-

1. The collector may claim a credit or refund

International organizations and the Ameri-

tic air carrier for mileage awards that can

if it has:

can Red Cross. The tax does not apply to

be redeemed for taxable transportation

communication services furnished to an interna-

a. Repaid the tax to the person from

are subject to the tax to the extent those

tional organization or to the American National

whom the tax was collected, or

miles will not be awarded in connection

Red Cross.

with the purchase of taxable transporta-

b. Obtained the consent of that person to

tion.

Nonprofit hospitals. The tax does not apply

the allowance of the credit or refund, or

to telephone services furnished to income

tax-exempt nonprofit hospitals for their use.

2. The person who paid the tax may claim a

Domestic-segment tax. The domestic-seg-

Also, the tax does not apply to amounts paid by

refund.

ment tax is a flat dollar amount for each segment

these hospitals to provide local telephone serv-

of taxable transportation for which an amount is

For information about credits or refunds, see

ice in the homes of their personnel who must be

paid. However, see Rural airports, later. A seg-

the Instructions for Form 720 or Form 8849.

reached during their off-duty hours.

ment is a single takeoff and a single landing.

The domestic-segment tax is $3.20 per segment

Air Transportation Taxes

Nonprofit educational organizations. The

that begins during 2005.

tax does not apply to payments received for

Taxes are imposed on amounts paid for all the

services and facilities furnished to a nonprofit

Example. In January 2005, Frank Jones

following services.

educational organization for its use. A nonprofit

pays $264.40 to a commercial airline for a flight

educational organization is one that satisfies all

•

Transportation of persons by air.

in January from Washington to Chicago with an

the following requirements.

•

intermediate stop in Cleveland. The flight com-

Use of international air travel facilities.

•

It normally maintains a regular faculty and

prises two segments. The price includes the

•

Transportation of property by air.

$240 fare and $24.40 excise tax [($240 × 7.5%)

curriculum.

+ (2 × $3.20)] for which Frank is liable. The

•

It normally has a regularly enrolled body of

airline collects the tax from Frank and pays it

Transportation of

pupils or students in attendance at the

over to the government.

Persons by Air

place where its educational activities are

regularly carried on.

Charter flights. If an aircraft is chartered,

The tax on transportation of persons by air is

•

the domestic-segment tax for each segment of

It is exempt from income tax under section

made up of the following two parts.

taxable transportation is figured by multiplying

501(a) of the Internal Revenue Code.

•

The percentage tax.

the tax by the number of passengers trans-

This includes a school operated by an organiza-

•

ported on the aircraft.

The domestic-segment tax.

tion exempt under section 501(c)(3) of the Inter-

nal Revenue Code if the school meets the above

Example. In March 2005, Tim Clark pays

qualifications.

Percentage tax. A tax of 7.5% applies to

$1,119.80 to an air charter service to carry 7

amounts paid for taxable transportation of per-

employees from Washington to Detroit with an

Federal, state, and local government. The

sons by air. Amounts paid for transportation

intermediate stop in Pittsburgh. The flight com-

tax does not apply to communication services

include charges for layover or waiting time and

prises two segments. The price includes the

provided to the government of the United States,

movement of aircraft in deadhead service.

$1,000 charter payment and $119.80 excise tax

the government of any state or its political subdi-

[($1,000 × 7.5%) + (2 × $3.20 × 7 passengers)]

Mileage awards. The percentage tax may

visions, the District of Columbia, or the United

for which Tim is liable. The charter service col-

apply to an amount paid (in cash or in kind) to an

Nations. Treat an Indian tribal government as

lects the tax from Tim and pays it over to the

air carrier (or any related person) for the right to

a state for the exemption from the communica-

government.

provide mileage awards for, or other reductions

tions tax only if the services involve the exercise

in the cost of, any transportation of persons by

of an essential tribal government function.

Rural airports. The domestic-segment tax

air. For example, this applies to mileage awards

does not apply to a segment to or from a rural

Exemption certificate. Any form of exemp-

purchased by credit card companies, telephone

airport. An airport is a rural airport for a calendar

tion certificate will be acceptable if it includes all

companies, restaurants, hotels, and other busi-

year if it satisfies both the following require-

the information required by the Internal Revenue

nesses.

ments.

Code and Regulations. See Regulations section

Generally, the percentage tax does not apply

49.4253-11. File the certificate with the provider

to amounts paid for mileage awards where the

1. Fewer than 100,000 commercial passen-

of the communication services.

mileage awards cannot, under any circum-

gers departed from the airport during the

The following users that are exempt from the

stances, be redeemed for air transportation that

second preceding calendar year.

communications tax do not have to file an an-

is subject to the tax. Until regulations are issued,

nual exemption certificate after they have filed

the following rules apply to mileage awards.

2. Either of the following statements is true.

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Publication 510 - Excise Taxes For 2005 - Department Of Treasury Page 6

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