Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 58-44

1958-1 C.B. 98

Sec. 164

IRS Headnote

Nebraska State motor vehicle fuel taxes are not imposed on the consumer and are not deductible under section 164(a) of the Internal Revenue Code of 1954. However, amounts representing such taxes paid by a consumer (other than in connection with his trade or business) are deductible under section 164(c) of the Code.

I.T. 3669, C.B. 1944, 112, is revoked.

Full Text

Rev. Rul. 58-44

Further consideration has been given to I.T. 3669, C.B. 1944, 112, which holds that the motor vehicle fuel taxes imposed by the State of Nebraska are, by virtue of amendments to Nebraska law indicating an intent on the part of the State legislature to place the tax on the consumer or user, deductible for Federal income tax purposes under section 23(c)(1) of the Internal Revenue Code of 1939 by the consumer or user.

The State of Nebraska imposes a tax upon dealers on the basis of the number of gallons of motor vehicle fuel received or imported and unloaded and emptied or caused to be received and unloaded in the State and the number of gallons of motor vehicle fuels produced, refined, manufactured, blended or compounded by such dealer. The tax is currently at the rate of six cents per gallon.

Legislative Bill 294, Laws of Nebraska, 1943, 482, approved May 7, 1943, was enacted to amend section 66-405, C.S. Supp. 1941, as amended by section 2 of Legislative Bill 60, fifty-sixth session of the Nebraska Legislature, 1943, and section 66-417 C.S. Supp. 1941, relating to taxation upon the sale, distribution and use of motor fuels; to provide that dealers or other persons having paid the tax or liable for its payment shall collect the amount thereof from any person, firm or corporation to whom said motor vehicle fuel is sold in the State and along with the selling price thereof; and to repeal the original section 66-405, C.S. Supp. 1941, as amended.

The direction contained in the 1943 amendments, specifying that `Dealers or other persons having paid said tax, or being liable for its payment, shall collect the amount thereof from any person, firm or corporation to whom said motor vehicle fuel is sold in this State along with the selling price thereof,' is not sufficient to classify the tax in question as being imposed on the consumer and therefore deductible by him under section 23(c)(1) of the 1939 Code.

Amounts representing the Nebraska State motor vehicle fuel taxes paid by a consumer (other than in connection with his trade or business) are deductible, however, under the provisions of section 23(c)(3) of the 1939 Code, as amended by Public Law 29, 82nd Congress, approved May 12, 1951, effective for taxable years beginning after December 31, 1950, and under section 164(c) of the Internal Revenue Code of 1954 for taxable years beginning after December 31, 1953 (except short years ending on or before the date of enactment of the 1954 Code).

Accordingly, I.T. 3669, supra , to the extent that it provides that the Nebraska motor vehicle fuel tax is deductible by the consumer under section 23(c)(1) of the 1939 Code, is revoked.