[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: 26CFR49.4262(a)-1]

[Page 258-260]
 
                       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. 49.4262(a)-1  Taxable transportation.

    (a) In general. Unless excluded under section 4262(b) (see Sec. 
49.4262(b)-1), taxable transportation means:
    (1) Transportation which begins in the United States or in that 
portion of Canada or Mexico which is not more than 225 miles from the 
nearest point in the continental United States (the ``225-mile zone'') 
and ends in the United States or in the 225-mile zone; and
    (2) In the case of any other transportation, 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, with respect to transportation which begins after November 15, 
1962, only if such portion is not part of ``uninterrupted international 
air transportation'' within the meaning of section 4262(c) (3) and 
paragraph (c) of Sec. 49.4262(c)-1. Transportation from one port or 
station in the United States to another port or station in the United 
States occurs whenever a carrier, after leaving any port or station in 
the United States, makes a regularly scheduled stop at another port or 
station in the United States irrespective of whether stopovers are 
permitted or whether passengers disembark.

The provisions of this paragraph are applicable whether the 
transportation is by rail, motor vehicle, water, or air, or any 
combination thereof, except that with respect to transportation which 
begins after November 15, 1962, the tax, if applicable, applies only to 
the amount paid for that portion of the transportation which is by air.
    (b) Illustrations of taxable transportation under section 4262(a) 
(1). In each of the following examples the transportation is taxable 
transportation and the amount paid within the United States for such 
transportation is subject to the tax:
    (1) New York to Seattle;
    (2) New York to Vancouver, Canada, with a stop at Jasper, Canada;
    (3) Chicago to Monterrey, Mexico;
    (4) Montreal, Canada, to Toronto, Canada; and
    (5) Miami to Los Angeles via Panama. If in the examples in 
subparagraphs (1) and (5) of this paragraph, payment for the 
transportation had been made outside the United States, such payment 
would nevertheless have been subject to tax since in each case the 
transportation begins and ends in the United States.
    (c) Illustrations of taxable transportation under section 4262(a) 
(2) beginning before November 16, 1962. The following examples will 
illustrate the application of section 4262(a) (2) with respect to 
transportation beginning before November 16, 1962:

    Example (1). A purchases in New York a round-trip ticket for 
transportation by air from New York to Havana, Cuba, with a stop at 
Miami. The amount paid for that part of the transportation between New 
York and Miami on both going and return trips is subject to tax, since 
such transportation is from one station in the United States to another 
station in the United States.
    Example (2). B purchases a ticket in San Francisco for combination 
rail and water transportation from San Francisco to New York to Halifax, 
Canada, to London, England. The amount paid for that part of the 
transportation between San Francisco and New York is subject to tax, 
since such transportation is from one station in the United States to 
another station in the United States. Although Halifax is in the 225-
mile

[[Page 259]]

zone, the transportation between New York and Halifax is not taxable 
because it is not transportation from one port in the United States to 
another port in the United States.
    Example (3). C purchases a ticket in Seattle for transportation from 
Seattle to Lisbon, Portugal, with stops at Vancouver, Edmonton, and 
Montreal, Canada, and New York. The amount paid for that part of the 
transportation from Seattle to New York is subject to tax, since it is 
indirectly from one station in the United States to another station in 
the United States.
    Example (4). E purchases in Chicago a ticket for transportation by 
air from Chicago to New York to Gander, Newfoundland, to London, 
England. Only the amount paid for that part of the transportation 
between Chicago and New York is subject to tax. If, while on the New 
York-Gander leg of the journey the aircraft is forced to land at Boston, 
because of weather or other emergency, no tax is imposed by reason of 
such emergency stop.
    Example (5). G charters a plane in New York for transportation to 
Bogota, Colombia, and pays the charter charges in New York. The plane 
stops at an airport in Miami for refueling in accordance with its flight 
plan. The tax attaches with respect to that part of the transportation 
which is between New York and Miami.

    (d) Illustrations of taxable transportation under section 4262(a) 
(2) beginning after November 15, 1962. The following examples will 
illustrate the application of section 4262(a) (2) with respect to 
transportation beginning after November 15, 1962:

    Example (1). A purchases in New York a round-trip ticket for 
transportation by air from New York to Nassau with a scheduled stopover 
of 10 hours in Miami on both the going and return trip. The amount paid 
for that part of the transportation from New York to Miami on the going 
trip is subject to tax, since such transportation is from one station in 
the United States to another station in the United States and the trip 
is not uninterrupted international air transportation because the 
scheduled stopover interval in Miami is greater than six hours. The 
amount paid for the return trip from Miami to New York is subject to tax 
for the same reason.
    Example (2). A purchases a ticket in San Francisco for 
transportation to London with a stopover in New York. He is to travel by 
air from San Francisco to New York and from New York to London by water. 
He is scheduled to stopover in New York for 4 hours. That portion of the 
total amount paid by A for his transportation applicable to the air 
transportation between San Francisco and New York is subject to tax 
since such transportation is from one station in the United States to 
another station in the United States, and is not a part of uninterrupted 
international air transportation since the complete trip from San 
Francisco to London is not entirely by air.
    Example (3). A purchases a through ticket for air transportation 
from San Francisco to London with stopovers at Denver, Chicago, 
Philadelphia, and New York. At each stopover the air carrier has 
scheduled his arrival and departure within 6 hours. After arriving in 
Philadelphia, A, for his own convenience, decides to stopover for more 
than 6 hours. The total amount paid by A for his transportation from San 
Francisco to New York is subject to tax since the scheduled interval 
between the beginning or end and the end or beginning of any two 
segments of the domestic portion of international air transportation 
exceeded 6 hours. If the stopover interval in Philadelphia is extended 
for more than 6 hours by the carrier solely for its own convenience such 
as making repairs to the aircraft, the domestic portion of A's trip will 
not become taxable, provided A continues his international air 
transportation no later than on the first available flight offered by 
the carrier.
    Example (4). A purchases a through ticket for transportation by air 
from Los Angeles to Barbados with stopovers at Houston, Mexico City, 
Mexico, and Miami. At each stopover, except Mexico City, A's scheduled 
time of arrival and departure is within six hours. At Mexico City, A's 
scheduled time of arrival and departure exceeds six hours. The total 
amount paid by A for his transportation from Los Angeles to Miami, 
including that part of the transportation to and from Mexico City, is 
subject to tax since the transportation includes a portion which is 
indirectly from one port or station in the United States to another port 
or station in the United States (Houston to Miami via Mexico City) and 
the scheduled interval in Mexico City between two segments of such 
portion exceeds six hours. If A's scheduled arrival and departure at 
each stopover of his transportation which is directly or indirectly 
between ports or stations in the United States, including that at Mexico 
City, had been within a six hour interval and A had arrived and departed 
at each such stopover within that period, the transportation would have 
qualified as uninterrupted international air transportation and no part 
of the amount paid for the transportation by air from Los Angeles to 
Barbados would be subject to tax.

    (e) Illustrations of transportation which is not taxable 
transportation. The following examples will illustrate transportation 
which is not taxable transportation:
    (1) New York to Trinidad with no intervening stops;

[[Page 260]]

    (2) Minneapolis to Edmonton, Canada, with a stop at Winnipeg, 
Canada;
    (3) Los Angeles to Mexico City, Mexico, with stops at Tia Juana and 
Guadalajara, Mexico;
    (4) New York to Whitehorse, Yukon Territory, Canada, after November 
15, 1962, by air with a scheduled stopover in Chicago of five hours.

Amounts paid for the transportation referred to in examples set forth in 
subparagraphs (1), (2), and (3) of this paragraph are not subject to the 
tax regardless of where payment is made, since none of the trips (i) 
begin in the United States or in the 225-mile zone and end in the United 
States or in the 225-mile zone, nor (ii) contain a portion of 
transportation which is directly or indirectly from one port or station 
in the United States to another port or station in the United States. 
The amount paid within the United States for the transportation referred 
to in the example set forth in subparagraph (4) of this paragraph is not 
subject to tax since the entire trip (including the domestic portion 
thereof) is ``uninterrupted international air transportation'' within 
the meaning of section 4262(c) (3) and paragraph (c) of Sec. 
49.4262(c)-1. In the event the transportation is paid for outside the 
United States, no tax is due since the transportation does not begin and 
end in the United States.

[T.D. 6430, 24 FR 9665, Dec. 3, 1959, as amended by T.D. 6618, 27 FR 
11223, Nov. 14, 1962]