[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR49.4252-4]

[Page 242-243]
 
                       TITLE 26--INTERNAL REVENUE
 
                               (Continued)
 
PART 49--FACILITIES AND SERVICES EXCISE TAXES--Table of Contents
 
                        Subpart C--Communications
 
Sec. 49.4252-4  Provisions common to telephone and telegraph services.

    (a) In general. The tax applies to all amounts paid for services 
rendered which are incidental to the transmission of a message or 
conversation. Where dispatches, messages, or conversations are 
transmitted by telephone, radio telephone, telegraph, cable, or radio 
free of any charge whatsoever, no tax attaches, but where the carrier in 
fact makes some charge for the transmission, either in money, service, 
or other valuable consideration, such charge is subject to the tax upon 
the basis of the amount of the charge computed in money or money's 
worth. The tax is payable by the person paying the transmission charge 
and is to be collected by the person receiving the payment. If a 
message, dispatch, or conversation is transmitted ``collect'', the 
person who pays the charge therefor is liable for the tax. All telephone 
and telegraph transmission services when rendered for hire are subject 
to tax whether or not the agency furnishing such services is a common 
carrier. For provisions relating to the computation of tax with respect 
to charges for telephone and telegraph services, see section 4254 and 
Secs. 49.4254-1 and 49.4254-2.
    (b) When transmission begins and ends. Transmission begins when the 
message is delivered by the sender to the carrier, or its agent, and 
continues until receipt by the addressee or his agent. Thus, an amount 
paid to a telephone, telegraph, radio, or cable company for messenger 
service in bringing the recipient of a message to the telephone, or in 
delivering a dispatch or message, must be included in determining the 
total amount subject to tax. However, an amount paid for messenger 
service rendered by a hotel or similar establishment is not to be 
included in the total charge on which the tax is computed.
    (c) Services rendered under contract. (1) Except as an exemption may 
otherwise be specifically provided for in this part, where, under the 
provisions of a contract, dispatches, messages, or conversations are 
transmitted by telephone, radio telephone, telegraph, cable, or radio in 
consideration of the payment of a lump sum of money or

[[Page 243]]

the performance of services, the amounts paid for such transmissions are 
subject to tax regardless of whether such dispatches, messages, or 
conversations relate to the operation of the business of a common 
carrier and whether they are ``on line'' or ``off line''.
    (2) Where a telegraph company agrees to transmit over its wires 
dispatches or messages relating to the business of a carrier free or at 
reduced rates in consideration of services to be performed by the 
carrier in transporting men or materials of the telegraph company, all 
such dispatches or messages are subject to tax.
    (d) Meaning of the term ``United States''. For purpose of section 
4252 (b) and (c), the term ``United States'' includes the States and the 
District of Columbia. Such term also includes inland waters (such as 
rivers, lakes, bays, etc.) lying wholly within the United States, and, 
where an international boundary line divides inland waters, such parts 
of such inland waters as lie within the boundary of the United States, 
and also the waters known as a marine league from low tide on the coast 
line. Ships within these limits whether of foreign or domestic registry 
are considered to be within the United States.
    (e) Exemptions. For exemptions from the taxes imposed on amounts 
paid for telephone and telegraph services, see sections 4253, 4292, 
4293, and 4294, and the regulations thereunder contained in this part.