Rev. Rul. 84-8

1984-1 C.B. 207.

                       Internal Revenue Service
                                 Revenue Ruling

   COMMERCIAL WATERWAY TRANSPORTATION; SPECIFIED WATERWAY; GULF INTRACOASTAL
                              WATERWAY (G.I.W.W.)

                           Published: January 9, 1984

SECTION 4042. - -TAX ON FUEL USED IN COMMERCIAL TRANSPORTATION ON INLAND WATERWAYS, 26 CFR 48.4042-1: Tax on fuel used in commercial waterway transportation

  Commercial waterway transportation; specified waterway; Gulf Intracoastal Waterway (G.I.W.W.).  The Houston Ship Channel is not considered part of the G.I.W.W. for purposes of section 4042 of the Code.

ISSUE

  For purposes of the tax imposed by section 4042 of the Internal Revenue Code on fuel used in commercial transportation on inland waterways, is the Houston Ship Channel a part of the Gulf Intracoastal Waterway (G.I.W.W.) as that term is used in section 48.4042-1(g)(11) of the Manufacturers and Retailers Excise Tax Regulations?

FACTS

  The Houston Ship Channel is a 40 foot deep waterway, 40 miles long, that connects the City of Houston, Texas, with the Gulf of Mexico.  A few miles from the channel's termination into the Gulf of Mexico, it intersects the G.I.W.W., which runs parallel to the Gulf coast.  The channel is utilized by both deep draft and commercial shallow draft vessels.

LAW AND ANALYSIS

  Section 4042(a) of the Code imposes a tax on any liquid used during any calendar quarter by any person as a fuel in a vessel in commercial waterway transportation.

  Section 4042(d)(1) of the Code defines "commercial waterway transportation" as any use of a vessel on any inland or intracoastal waterway of the United States (A) in the business of transporting property for compensation or hire, or (B) in transporting property in the business of the owner, lessee, or operator of the vessel (other than fish or other aquatic life caught on the voyage.)

  Section 4042(d)(2) of the Code defines "inland or intracoastal waterway of the United States" as any inland or intracoastal waterway of the United States which is described in section 206 of the Inland Waterways Revenue Act of 1978, Pub.L. 95-502, 1978-2 C.B. 393, 394.

  The waterways described in that section of the Act are enumerated in section 48.4042-1(g) of the regulations, which states that only fuel used on those waterways specified in that section is taxable.  Section 48.4042-1(g)(11) lists the G.I.W.W. as a specified waterway and provides that such waterway includes its entire length from the mouth of St. Mark's River, Florida, to Brownsville, Texas, a distance of 1134.5 miles.  For vessels traveling along the G.I.W.W., no matter how short the distance, the G.I.W.W. includes the main channel, all alternate channels, and all adjoining bays and sounds, regardless of depth. However, vessels merely crossing the G.I.W.W. on route either to a coastal port or to a nonspecified waterway will not be treated as traveling on the G.I.W.W..

  Section 206 of the Inland Waterways Revenue Act of 1978 describes only the main G.I.W.W. as a "specified waterway" with no references to adjoining bodies of water.  Section 48.4042-1(g)(11) of the regulations expands the definition of the G.I.W.W. to include bodies of water which can be used as alternate means of navigation by a vessel traveling along the G.I.W.W.  This was done

to tax the fuel consumed in such vessel during transportation along the G.I.W.W. itself and also where the vessel leaves the main G.I.W.W. to use an alternate body of water to get to the same destination.  A channel which merely crosses the G.I.W.W., and which could not be used as an alternate waterway by those vessels traveling along the G.I.W.W., was not intended to fall within the regulatory definition of the G.I.W.W..

HOLDING

  For purposes of section 4042 of the Code, the Houston Ship Channel is not considered part of the Gulf Intracoastal Waterway.

Rev. Rul. 84-8, 1984-1 C.B. 207.