26 U.S.C. § 4251: Imposition of tax

§ 49.4251-1 Imposition of tax.§ 49.4251-2 Rate and application of tax.§ 49.4251-4 Prepaid telephone cards.

Amended 1958, 1959

1959 Pub. L. 86-75 Pub. L. 86–75 designated former provisions as subsec. (a) and added subsec. (b).
1958 Pub. L. 85-859 Pub. L. 85–859 redesignated “local telephone service” as “general telephone service”, “long distance telephone service” as “toll telephone service” and “leased wire, teletypewriter or talking circuit special service” as “teletypewriter exchange service” and “wire mileage service”.

Cases: Officemax v. United States, 428 F.3d 583 (6th Cir. 2005); Reese Brothers v. United States, 447 F.3d 229 (3rd Cir. 2006)

Final rules 2

(a) Tax imposed

Amended 1965, 1982

1982 Pub. L. 97-248 Pub. L. 97–248 added subsec. (a) and struck out former subsec. (a) which provided that there was a tax on communication services specified as local telephone service, toll telephone service, and teletypewriter exchange service, directed that the tax was to be paid by the person paying for such services, and designated the tax as the percentage of the amount paid for the services as set out in the following table:
1965 Pub. L. 89-44 Pub. L. 89–44, § 302, substituted local telephone service, toll telephone service, and teletypewriter exchange service, for general telephone service, toll telephone service, telegraph service, teletypewriter exchange service, wire mileage service, and wire and equipment service as the taxed services and reduced the rate of tax to 3 percent during 1966, 2 percent during 1967, and 1 percent during 1968.

Cited by 4

(1) In general There is hereby imposed on amounts paid for communications services a tax equal to the applicable percentage of amounts so paid.

Cases: USA Choice Internet Services v. United States, 522 F.3d 1332 (Fed. Cir. 2008)

(2) Payment of tax The tax imposed by this section shall be paid by the person paying for such services.

Amended 1966, 1968, 1969, 1970, 1980, 1981

1981 Pub. L. 97-34 Pub. L. 97–34, § 821(a), substituted “During 1982, 1983, or 1984” for “During 1982” in table.
1980 Pub. L. 96-499 Pub. L. 96–499, § 1151(a), substituted “During 1980 or 1981” for “During 1980” and “During 1982” for “During 1981” in table.
1970 Pub. L. 91-614 Pub. L. 91–614, § 201(b)(1), substituted provisions providing the rate of tax on amounts paid for communication services pursuant to bills first rendered before Jan. 1, 1973 is 10% of such amount, amounts paid pursuant to bills first rendered during 1973 is 9% of such amount, during 1974 is 8% of such amount, during 1975 is 7% of such amount, during 1976 is 6% of such amount, during 1977 is 5% of such amount, during 1978 is 4% of such amount, during 1979 is 3% of such amount, during 1980 is 2% of such amount, and during 1981 is 1% of such amount for provisions providing the rate of tax on amounts paid for communication services pursuant to bills first rendered before Jan. 1, 1971 is 10% of such amount, amounts paid pursuant to bills first rendered during 1971 is 5% of such amount, during 1972 is 3% of such amount, and during 1973 is 1% of such amount.
1969 Pub. L. 91-172 Pub. L. 91–172, § 702(b)(1), increased rate of tax on amounts paid for communication services from 5 to 10 percent during 1970, from 3 to 5 percent during 1971, from 1 to 3 percent during 1972, and imposed a 1 percent tax on amounts paid for communication services during 1973.
1968 Pub. L. 90-364 Pub. L. 90–364, § 105(b)(1), extended from April 30, 1968, through the end of 1969 the period for the imposition of the 10 percent rate, thereby increasing the rate from 1 percent to 10 percent for the period May 1, 1968, through the end of 1968 and from 0 percent to 10 percent for 1969, and imposed a rate of 5 percent during 1970, a rate of 3 percent during 1971, and a rate of 1 percent during 1972.
1968 Pub. L. 90-285 Pub. L. 90–285 substituted “April 30, 1968” and “May 1, 1968” for “March 31, 1968” and “April 1, 1968” respectively.
1966 Pub. L. 89-368 Pub. L. 89–368, § 202(a)(1), increased to 10 percent the schedule of rates for tax imposed for the period up to April 1, 1968, and authorized a reduction to 1 percent for the period after March 31, 1968, and before January 1, 1969.

(b) Definitions For purposes of subsection (a)—

Amended 1965, 1968, 1969, 1970, 1980, 1981, 1982

1982 Pub. L. 97-248 Pub. L. 97–248 added subsec. (b) and struck out former subsec. (b) which provided that the tax imposed by former subsec. (a) would not apply to amounts paid pursuant to bills first rendered on or after January 1, 1985.
1981 Pub. L. 97-34 Pub. L. 97–34, § 821(b), extended termination date to Jan. 1, 1985, from Jan. 1, 1983.
1980 Pub. L. 96-499 Pub. L. 96–499, § 1151(b), substituted “1983” for “1982”.
1970 Pub. L. 91-614 Pub. L. 91–614, § 201(b)(2), substituted “January 1, 1982” for “January 1, 1974”.
1969 Pub. L. 91-172 Pub. L. 91–172, § 702(b)(2), substituted “January 1, 1974” for “January 1, 1973”.
1968 Pub. L. 90-364 Pub. L. 90–364, § 105(b)(2), substituted “1973” for “1969”.
1965 Pub. L. 89-44 Pub. L. 89–44, § 302, added subsec. (b). Pub. L. 89–44, § 701(b)(2)(B), repealed former subsec. (b), as in effect June 30, 1965, effective on and after July 1, 1965. Such repealed provision had called for termination of the tax on general telephone service as of July 1, 1965.

Cited by 1

(1) Communications services The term “communications services” means—

(A) local telephone service;

(B) toll telephone service; and

(2) Applicable percentage The term “applicable percentage” means 3 percent.

Amended 1960, 1961, 1962, 1963, 1964, 1984, 1986, 1987, 1990

1990 Pub. L. 101-508 Pub. L. 101–508 substituted “percent.” for “percent; except that, with respect to amounts paid pursuant to bills first rendered after 1990, the applicable percentage shall be zero.”
1987 Pub. L. 100-203 Pub. L. 100–203 amended par. (2) generally. Prior to amendment, par. (2) read as follows: “The term ‘applicable percentage’ means—
1986 Pub. L. 99-514 Pub. L. 99–514 inserted “1985,” after “1984,” in table.
1984 Pub. L. 98-369 Pub. L. 98–369 substituted “During 1983, 1984, 1986, or 1987” for “During 1983, 1984, or 1985” in item relating to an applicable percentage of 3 and substituted “During 1988 or thereafter” for “During 1986 or thereafter” in item relating to an applicable percentage of 0.
1964 Pub. L. 88-348 Pub. L. 88–348 substituted “July 1, 1965” for “July 1, 1964” in two places.
1963 Pub. L. 88-52 Pub. L. 88–52 substituted “July 1, 1964” for “July 1, 1963” in two places.
1962 Pub. L. 87-508 Pub. L. 87–508 substituted “July 1, 1963” for “July 1, 1962” in two places.
1961 Pub. L. 87-72 Pub. L. 87–72 substituted “July 1, 1962” for “July 1, 1961” in two places.
1960 Pub. L. 86-564 Pub. L. 86–564 substituted “July 1, 1961” for “July 1, 1960” in two places.

(c) Special rule For purposes of subsections (a) and (b), in the case of communications services rendered before November 1 of a calendar year for which a bill has not been rendered before the close of such year, a bill shall be treated as having been first rendered on December 31 of such year.

Amended 1965, 1966, 1968

1968 Pub. L. 90-364 Pub. L. 90–364, § 105(b)(2), extended provisions calling for treatment of bills not rendered before the end of a year for service rendered before November 1 of that year as having been first rendered on December 31 of that year so as to include years subsequent to 1968 and struck out special provision for the application of subsec. (a) in the case of communication services rendered before March 1, 1968, for which a bill was not rendered before May 1, 1968.
1968 Pub. L. 90-285 Pub. L. 90–285 substituted “March 1, 1968,” for “February 1, 1968”, “May 1, 1968” for “April 1, 1968”, “April 30, 1968” for “March 31, 1968”, and “February 29, 1968” for “January 31, 1968”.
1966 Pub. L. 89-368 Pub. L. 89–368, § 202(a)(2), conformed subsection to rate reduction schedule alterations by providing that, in the case of communications services rendered before February 1, 1968, for which a bill has not been rendered before April 1, 1968, the bill shall be treated as having been first rendered on March 31, 1968, and, in the case of services rendered after January 31, 1968, and before November 1, 1968, for which a bill has not been rendered before January 1, 1969, the bill shall be treated as having first been rendered on December 31, 1968.
1965 Pub. L. 89-44 Pub. L. 89–44, § 302, added subsec. (c).

(d) Treatment of prepaid telephone cards

Amended 1997

1997 Pub. L. 105-34 Pub. L. 105–34 added subsec. (d).

Cited by 2

(1) In general For purposes of this subchapter, in the case of communications services acquired by means of a prepaid telephone card—

(A) the face amount of such card shall be treated as the amount paid for such communications services, and

(B) that amount shall be treated as paid when the card is transferred by any telecommunications carrier to any person who is not such a carrier.

(2) Determination of face amount in absence of specified dollar amount In the case of any prepaid telephone card which entitles the user other than to a specified dollar amount of use, the face amount shall be determined under regulations prescribed by the Secretary.

(3) Prepaid telephone card For purposes of this subsection, the term “prepaid telephone card” means any card or any other similar arrangement which permits its holder to obtain communications services and pay for such services in advance.

Amended 1998

1998 Pub. L. 105-206 Pub. L. 105–206 substituted “any other similar arrangement” for “other similar arrangement”.