[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: 26CFR49.4261-5]

[Page 253-254]
 
                       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. 49.4261-5  Payments made outside the United States.

    (a) In general. The tax imposed by section 4261(b) applies to 
amounts paid outside the United States for the taxable transportation of 
persons, but only if such transportation begins and ends in the United 
States. Thus, in addition to the exclusion provided for certain travel 
under section 4262(b), the tax imposed by section 4261(b), shall not 
apply unless the transportation both begins and ends within the United 
States. Accordingly, the tax does not apply to a payment made outside 
the United States for one-way or round-trip transportation between a 
point within the United States and a point outside the United States.
    (b) Transportation between two or more points in the United States. 
(1) For purposes of this section, a payment made outside the United 
States for transportation between two or more points in the United 
States is a payment for transportation which begins and ends

[[Page 254]]

in the United States, even though additional transportation to or from a 
point outside the United States is involved in the entire journey, if at 
the time of making payment for the transportation between two or more 
points in the United States it is not definitely established, under the 
rules set forth in Sec. 49.4261-6, that such transportation is 
purchased for use in making the journey from or to a point outside the 
United States. The fact that the entire journey includes transportation 
from or to a point outside the United States is not in itself 
determinative of the liability for tax.
    (2) The following examples illustrate the application of this 
paragraph:

    Example (1). W travels from Havana, Cuba to New York by way of 
Miami. He purchases in Havana a steamship ticket for his transportation 
from Havana to Miami and an exchange order for air transportation from 
Miami to New York. The ticket for the connecting transportation from 
Havana to Miami, and the order for the transportation from Miami to New 
York were not appropriately inscribed by the agency or carrier which 
received the payment for the air transportation involved at the time 
such payment was received so as to clearly show that the ticket and 
order were purchased for use in conjunction with each other. Therefore, 
the agency or carrier which accepts the exchange order and issues the 
ticket for the transportation from Miami to New York is required to 
collect the tax which applies to the amount paid outside the United 
States for such transportation.
    Example (2). X travels on a round trip from Montreal, Canada, to Los 
Angeles by way of New York. He purchases in Montreal air transportation 
for the round trip between New York and Los Angeles, and uses a private 
automobile for transportation from Montreal to New York and return to 
Montreal. The amount paid in Montreal for the round-trip transportation 
between New York and Los Angeles is a payment for transportation which 
begins and ends in the United States and is therefore subject to tax.

    (c) Cross reference. See section 4262(b) and Sec. 49.4262(b)-1 for 
a partial exclusion with respect to amounts paid for certain 
transportation.