Rev. Rul. 56-466

A state college contracted with a Federal agency to carry out a program for technical cooperation in a foreign country. The college, on behalf of the agency, agreed to carry out certain undertakings assumed by the Federal Government. All funds received from the Government were deposited by the college in a special fund with the state treasurer and were disbursed by voucher drawn against the treasurer. The college was responsible for proper disbursement of the funds and for refunding to the United States any residual balance that existed at termination of the contract. The transportation of the personal effects of the employees or representatives of the college who returned from abroad was paid from these funds. Held, payments for the transportation of property made by the college in its capacity as contractor for the Government from the funds advanced to it by the Government are not amounts paid by the state or political subdivision thereof. Also, the transportation of property in connection with the contract is not considered to be transportation of property to or from a state or political subdivision thereof within the meaning of section 4292 of the Code. Accordingly, payments made by the college, for the transportation of the personal effects of its employees or representatives who were engaged in carrying out its contract, are not exempt from the tax.