Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 64-6

1964-1 C.B. 397

IRS Headnote

An international air trip in which transportation between two points in the United States is furnished by a commercial airline and the connecting transportation is furnished by the Military Air Transport Service constitutes `uninterrupted international air transportation,' within the meaning of section 4262(c)(3) of the Internal Revenue Code of 1954, provided certain conditions relating to prior scheduling and length of stopover are met.

Full Text

Rev. Rul. 64-6

Advice has been requested whether the international air transportation described in the situations below is considered to be `uninterrupted international air transportation' for purposes of the excise tax on the transportation of persons by air.

Situation 1. A , who is on military duty in Tokyo, receives written orders to report to a duty station in the United States for reassignment. A , along with his dependent, is ordered to proceed by a regularly scheduled Military Air Transport Service flight from Tokyo to San Francisco and by commercial air carrier to his destination.

A knows his scheduled time of arrival in San Francisco, and he cables for reservations for onward air transportation to his duty station on a commercial airline flight scheduled to depart from San Francisco within six hours of the scheduled arrival of the Military Air Transport Service flight. Upon arrival in San Francisco, A purchases tickets for the domestic portion of the transportation and proceeds directly to his destination, along with his dependent.

Conversely, the reassignment may be from a duty station in the United States to a duty station in Tokyo, with A scheduling the stopover in San Francisco not to exceed six hours. Here, likewise, the domestic portion of the transportation is furnished by a commercial airline, and the connecting transportation is furnished by the Military Air Transport Service.

Situation 2 . The same conditions prevail as described in situation 1 , relating to the Tokyo to United States transportation, except A does not make reservations for the domestic portion of the transportation until arrival in San Francisco.

Specifically, the question is whether the United States portion of the transportation between Tokyo and the duty station in the United States may qualify as `uninterrupted international air transportation' and, if so, what evidence should be submitted to support the international character of the trip. The question arises primarily because A and his dependent do not have tickets or exchange orders for the flight furnished by the Military Air Transport Service to or from the foreign point as evidence to establish that the United States portion of the trip is part of an international air trip and to establish the scheduled interval between the United States portion and the connecting transportation.

Section 4261(a) of the Internal Revenue Code of 1954 imposes a tax upon the amount paid within the United States for taxable transportation (as defined by section 4262 of the Code) of any person by air.

Section 4262(a) of the Code, as amended by the Tax Rate Extension Act of 1962, Public Law 87-508, C.B. 1962-3, 58, provides, with an exception which is not relevant here, that the term `taxable transportation' means-

(1) transportation which begins in the United States or in the 225-mile zone and ends in the United States or in the 225-mile zone; and

(2) in the case of transportation other than transportation described in paragraph (1), that portion of such transportation which is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if such portion is not part of uninterrupted international air transportation (within the meaning of subsection (c)(3)).

Insofar as is pertinent to the instant case, section 4262(c)(3) of the Code defines the term `uninterrupted international air transportation' to mean any transportation by air which is not transportation described in subsection (a)(1) and in which the scheduled interval between (i) the beginning or end of the portion of such transportation which is directly or indirectly from one port or station in the United States to another port or station in the United States and (ii) the end or beginning of the other portion of such transportation is not more than six hours.

Section 49.4262(c)-1(c)(2) of the Facilities and Services Excise Tax Regulations provides that where the interval between the arrival and departure time at any stopover point in the United States exceeds six hours, such transportation is not uninterrupted international air transportation even though the schedules of the air lines do not make possible a scheduling within the six-hour limit. Where any interval scheduled for six hours or less is increased to exceed six hours, the transportation will continue to be uninterrupted international air transportation if the increase in time is attributable to delays in the arrival or departure of the scheduled air transportation. In such case the transportation shall continue to be uninterrupted international air transportation if the passenger continues his transportation no later than on the first available flight offered by the continuing carrier which affords the passenger substantially the same accommodations as originally purchased. However, if for any other reason such interval at any stopover is increased to more than six hours, the transportation will lose its classification of uninterrupted international air transportation.

That section of the regulations further provides that the transportation from the point of origin in the United States to a port or station outside the United States and the 225-mile zone, with a stopover in the United States, must be scheduled before the time the initial transportation commences in order for the United States portion of such transportation to qualify as uninterrupted international air transportation.

Section 49.4261-4(d) of the regulations provides that all tickets issued for `uninterrupted international air transportation' must have inscribed thereon sufficient information from which may be ascertained the scheduled arrival and departure time at each stopover to which the six-hour scheduled interval requirement applies.

For purposes of the excise tax on the transportation of persons by air, an international air trip is not excluded from the term `uninterrupted international air transportation' merely because the portion between the foreign point and the United States point is furnished by the Military Air Transport Service rather than by a commercial airline. Therefore, the transportation described in the instant case may qualify as `uninterrupted international air transportation' provided (1) the entire trip is scheduled prior to the time the initial transportation commences and (2) the scheduled interval between the foreign and domestic portions does not exceed six hours.

To establish the international character of one of these trips, the person receiving payment for the ticket for the domestic portion must determine (1) that the ticket is for use in conjunction with connecting air transportation to or from a point outside the United States and the `225-mile zone,' (2) that the connecting transportation is to be or has been furnished by the Military Air Transport Service, and (3) that the conditions set forth in the preceding paragraph have been met. The ticket issued for the transportation to be furnished by the commercial carrier should be inscribed to show that it is strictly for use in conjunction with connecting transportation furnished by the Military Air Transport Service and to show the scheduled time of arrival at or departure from San Francisco. The ticket and the related travel orders should be appropriately cross-referenced.

Subject to the foregoing requirements, it is held that the excise tax on the transportation of persons by air, imposed by section 4261(a) of the Code, does not apply to the payment for the domestic portion of the air transportation by A or his dependent in Situation 1 , either on the trip from Tokyo to the United States duty station or on the trip from the United States duty station to Tokyo. On the other hand, the tax imposed by that section does apply to the payment for the domestic portion of the air transportation in Situation 2 , since the reservation for such transportation was not made prior to the departure of A and his dependent from Tokyo.