Internal Revenue Service
Revenue Ruling
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smRev. Rul. 59-76
1959-1 C.B. 646
IRS Headnote
The payment authorized by section 6421(a) of the Internal Revenue Code of 1954 applies to gasoline used in snow plows and sanders which are not registered or required to be registered for highway use under the laws of any state or foreign country. Similarly, the credit or refund provisions under sections 6416(b)(2)(I) and (J) of the Code apply to diesel fuel and special motor fuels used in such vehicles. However, the payment authorized by section 6421(b) of the Code is not applicable to gasoline used by a transit company in supervisory cars, repair trucks, snow plows, and sanders which are required to be registered for highway use. Likewise, the credit or refund provisions of section 6416(b)(2)(H) of the Code do not apply to diesel fuel and special motor fuels used in such vehicles.
Full Text
Rev. Rul. 59-76
Advice has been requested whether the payment authorized by section 6421(a) of the Internal Revenue Code of 1954, pertaining to gasoline used for nonhighway purposes applies to gasoline used in snow plows and sanders which are not registered or required to be registered for highway use under the laws of any state or foreign country. Further advice has been requested whether the payment authorized by section 6421(b) of the Code, pertaining to gasoline used in vehicles engaged in furnishing scheduled common carrier public passenger land transportation service along regular routes, applies to gasoline used in supervisory cars, repair trucks, snow plows, and sanders (which are required to be registered for highway use under the laws of the state where they are operated) used by a transit company in connection with furnishing scheduled common carrier public passenger land transportation service along regular routes.
Section 6421(a) of the Code provides, in part, that the ultimate purchaser is entitled to a payment equal to one cent for each gallon of gasoline which is purchased on or after July 1, 1956, and which is used otherwise than as a fuel in a highway vehicle which (at the time of such use) is registered, or is required to be registered, for highway use under the laws of any state or foreign country.
Under the provisions of section 6421(b) of the Code, if gasoline is used during any calendar quarter in `vehicles while engaged in furnishing scheduled common carrier public passenger land transportation service along regular routes,' the ultimate purchaser of such gasoline is entitled to a payment, under certain conditions, with respect to gasoline so used. Such payment is determined by multiplying one cent for each gallon of gasoline so used by the percentage which the transit system's `tax-exempt passenger fare revenue' derived from such scheduled service during the calendar quarter was of the total passenger fare revenue derived during the same quarter from such scheduled service. However, 60 percent or more of the total passenger fare revenue must be attributable to tax-exempt passenger fare revenue, not including the tax on the transportation of persons, in order for a carrier to avail itself of this provision. The term `taxexempt passenger fare revenue' means revenue attributable to fares which were exempt from the tax on transportation of persons by reason of section 4263(a) of the Code.
In accordance with the provisions of sections 6416(b)(2)(I) and (J) of the Code (sections 6416(b)(2)(J) and (K), respectively, before their redesignation by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, C.B. 1958-3, 92), where diesel fuel or special motor fuels are purchased taxpaid at the rate of three cents a gallon and used otherwise than as fuel in a highway vehicle which is registered or required to be registered, credit or refund at the rate of one cent a gallon for fuel so used may be claimed. Under the provisions of section 6416(b)(2)(H) of the Code (section 6416(6)(2)(L) before its redesignation by the Excise Tax Technical Changes Act), when diesel fuel or special motor fuel, on which tax was paid under section 4041 of the Code at the rate of three cents a gallon, is used in `vehicles while engaged in furnishing scheduled common carrier public passenger land transportation service along regular routes,' a credit or refund at the rate of one cent a gallon on each gallon so used may be claimed, provided at least 60 percent of the passenger fare revenue derived by the transit system during the calendar quarter from furnishing scheduled service along regular routes was attributable to tax-exempt passenger fare revenue. However, in both instances, the person who paid the tax on the fuel is the one who is entitled to the credit or refund rather than the ultimate purchaser as in the case of gasoline.
Accordingly, in the instant case, it is held that since the snow plows and sanders are not registered or required to be registered for highway use under the laws of any state or foreign country, the ultimate purchaser of gasoline used in such snow plows and sanders is entitled to the payment provided by section 6421(a) of the Code. Likewise, if these vehicles used diesel fuel or a special motor fuel on which tax had been paid at the rate of three cents a gallon, the person who paid the tax would be entitled to a credit or refund of one cent a gallon on each gallon of fuel so used.
It is further held that, since the supervisory cars, repair trucks, snow plows, and sanders (which are required to be registered by the laws of the state where they are operated) used by a transit company in connection with its transit service are not vehicles engaged in furnishing scheduled common carrier public passenger land transportation service along regular routes within the meaning of section 6421(b) of the Code, the payment authorized by that section is not applicable. Furthermore, since these vehicles are required to be registered by the laws of the state where they are operated, the payment authorized by section 6421(a) of the Code is not applicable. Therefore, no payment may be made under the provisions of that section with respect to the gasoline used in such vehicles. Likewise, if taxpaid diesel fuel or special motor fuel were used in these vehicles, the person who paid the tax on such fuel would not be entitled to a credit or refund, since the vehicles are not vehicles engaged in furnishing scheduled common carrier public passenger land transportation service along regular routes and since they are required to be registered.