[Code of Federal Regulations]
[Title 26, Volume 16]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR49.4261-3]

[Page 251-252]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 49_FACILITIES AND SERVICES EXCISE TAXES--Table of Contents
 
                   Subpart D_Transportation of Persons
 
Sec. 49.4261-3  Payments made within the United States.

    (a) Transportation beginning and ending in the United States or the 
225-mile zone. The tax imposed by section 4261(a) applies to payments 
made within the United States for 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. For example, an amount paid within the United 
States for transportation between New York and Montreal, Canada; between 
Vancouver, Canada, and Windsor, Canada; or between Nogales, Mexico, and 
Hermosillo, Mexico, would be fully taxable. See section 4262(c) (2) and 
paragraph (b) of Sec. 49.4262(c)-1 for the definition of the term 
``225-mile zone''.
    (b) Other transportation--(1) Transportation beginning before 
November 16, 1962. In the case of transportation beginning before 
November 15, 1962, (other than that described in paragraph (a) of this 
section), for which payment is made in the United States, the tax 
applies with respect to the amount paid for 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. 
Transportation that (i) begins in the United States or in the 225-mile 
zone and ends outside such area, (ii) begins outside the United States 
or the 225-mile zone and ends inside such area, or (iii) begins outside 
the United States and ends outside such area is taxable only with 
respect to such portion of the transportation which is directly or 
indirectly from one port or station in the United States to another such 
port or station. Thus, on a trip from Chicago to London, England, with a 
stopover at New York, for which payment is made in the United States, 
the tax would apply to the part of the payment

[[Page 252]]

which is applicable to the transportation from Chicago to New York.
    (2) Transportation beginning after November 15, 1962. In the case of 
transportation beginning after November 15, 1962 (other than that 
described in paragraph (a) of this section), for which payment is made 
in the United States, the tax applies with respect to the amount paid 
for that portion of such transportation by air 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 a part 
of ``uninterrupted international air transportation'' within the meaning 
of section 4262(c) (3) and paragraph (c) of Sec. 49.4262(c)-1. 
Transportation that
    (i) Begins in the United States or the 225-mile zone and ends 
outside such area,
    (ii) Begins outside the United States or the 225-mile zone and ends 
inside such area, or
    (iii) Begins outside the United States and ends outside such area.

is taxable only with respect to such portion of the transportation by 
air 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 a part of ``uninterrupted international air 
transportation'' within the meaning of section 4262(c) (3) and paragraph 
(c) of Sec. 49.4262(c)-1. Thus, on a trip by air from Chicago to 
London, England, with a stopover at New York, for which payment is made 
in the United States, if the portion from Chicago to New York is not a 
part of ``uninterrupted international air transportation'' within the 
meaning of section 4262(c)(3) and paragraph (c) of Sec. 49.4262(c)-1, 
the tax would apply to the part of the payment which is applicable to 
the transportation from Chicago to New York. However, if the portion 
from Chicago to New York is a part of ``uninterrupted international air 
transportation'' within the meaning of section 4262(c) (3) and paragraph 
(c) of Sec. 49.4262(c)-1, the tax would not apply.
    (c) Method of computing tax on taxable portion. Where a payment is 
made for transportation which is partially taxable under paragraph (b) 
of this section:
    (1) The tax may be computed on that proportin of the total amount 
paid which the mileage of the taxable portion of the transportation 
bears to the mileage of the entire trip, or
    (2) The tax may be computed on the basis of the applicable local 
fare for transportation of a like class between the ports or stations 
referred to in paragraph (b) of this section. Where a uniform fare is 
charge for transportation between a station and any coastal gateway 
point of embarkation on a trip to the same international destination, 
the tax may be computed on the basis of such uniform fare. In the 
absence of a fare described in this subparagraph, the tax must be 
determined in accordance with subparagraph (1) of this paragraph. If an 
international trip includes a leg between coastal gateway points of 
embarkation for which no additional fare is charged, no tax shall be 
applicable to such leg of the transportation.
    (d) Cross reference. See section 4262 (b) and Sec. 49.4262(b)-1 for 
a partial exclusion with respect to amounts paid for certain 
transportation.

[T.D. 6430, 24 FR 9665, Dec. 3, 1959, as amended by T.D. 6618, 27 FR 
11222, Nov. 14, 1962]