Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 58-59

1958-1 C.B. 428

Caution: Superseded by Rev. Rul. 75-452

IRS Headnote

The North Jeffco Metropolitan Recreation District is a political subdivision of the State of Colorado within the meaning of sections 4055 and 4224 of the Internal Revenue Code of 1954, which relate to sales of articles, otherwise subject to the retailers or manufacturers excise taxes, for the exclusive use of a State, Territory of the United States, or any political subdivision of the foregoing, or the District of Columbia. The recreation district also comes within the scope of the exemption provided by section 4292 of the Code, which relates to excise taxes on communication and transportation services and facilities furnished to such governmental units.

Full Text

Rev. Rul. 58-59

Advice has been requested whether the North Jeffco Metropolitan Recreation District comes within the scope of the exemption from certain Federal excise taxes provided with respect to transactions with states and other local governmental units.

The North Jeffco Metropolitan Recreation District was created in 1956 under the Colorado Revised Statutes of 1953, Chapter 89-12, for the purpose of supplying recreational facilities within the district. Pursuant to that statute, the recreation district is a governmetal subdivision of the State of Colorado and a body corporate with all the powers of a public or quasi-municipal corporation. Among such powers are the right of perpetual existence and the power of eminent domain, whereby, in the manner provided by law for the condemnation of private property for public use, the district may take may property within the district necessary to the exercise of the powers granted in the statute As a means of obtaining revenue or carrying out its purposes and activities, the district is authorized by law to assess taxes not exceeding, in any one year, four mills of the assessed valuation of the real property within the limits of the recreation district. Such taxes are collected by the appropriate county officers and paid over to the treasurer of the district.

Sections 4055 and 4224 of the Internal Revenue Code of 1954 provide that the retailers and manufacturers excise taxes will not apply to the sale of any article for the exclusive use of any State, Territory of the United States, or any political subdivision of the foregoing, or the District of Columbia.

Section 4292 of the Code provides that no tax shall apply to paymets received for communication and transportation services and facilities furnished to the government of any State, Territory of the United States, or any political subdivision of the foregoing, or the District of Columbia. That section also provides that the tax shall not be imposed upon amounts paid for the transportation of property to or from such governmental units.

It is held that the North Jeffco Metropolitan Recreation District formed under Colorado law is a political subdivision of that State within the meaning of (1) section 4055 of the Internal Revenue Code of 1954, relating to the retailers excise taxes, (2) section 4224 of the Code, relating to the manufacturers excise taxes, and (3) section 4292 of theCode, relating to the tax on communications and transportation services and facilities. Accordingly, where taxable articles are sold to the recreation district for its exclusive use or where communication and transportation services and facilities are furnished to such district, the exemptions will apply, provided the requirements of the law and applicable regulations with respect to the particular exemption are met.