Rev. Rul. 55-688

The Internal Revenue Service has received numerous inquiries relative to the application of the tax on the transportation of property, imposed by section 3475 of the Internal Revenue Code of 1939, to charges paid for the transportation of a carload shipment consigned to a point outside the United States on a through carload rate with stopoff instructions on the bill of lading for partial unloading at a point in the United States.

Section 3475 of the Code imposes a tax upon the amount paid for the transportation of property by rail, motor vehicle, water, or air from one point in the United States to another. Section 143.30 of Regulations 113 provides that the tax will not apply to an amount paid for the transportation of property in course of exportation to a foreign destination, or shipment to a possession of the United States, in accordance with the applicable requirements of the regulations. In accordance with section 143.32 of the regulations, an amount paid for the transportation of property shipped direct from a point within the United States to a point outside the United States under a through bill of lading, a through export bill of lading, or a domestic bill of lading showing the name of the foreign consignee and the ultimate foreign destination, will be treated as exempt from the transportation tax without further evidence of actual exportation.

It is held that where a car containing both export and domestic shipments is consigned to a point outside the United States on a through carload rate with stopoff instructions on the bill of lading for partial unloading at a point in the United States, the tax on the transportation of property does not apply to the amount paid for the transportation of the portion of the carload shipment delivered to the consignee outside the United States. However, the tax does apply to the amount paid for the transportation of that portion of the carload shipment which is unloaded at the stopoff point in the United States, including any additional amount paid for the stopoff privilege.

With respect to shipments of the kind described above, it is understood that the charges for the transportation of those portions which are delivered to consignees outside the United States as a rule are not shown separately, on the shipping papers. Where the charges are not shown separately the tax is collectible by the carrier on the total transportation charges. However, where the shipping papers indicate the portion of the carload that is being delivered to the consignee outside the United States, then, even though the charges are not shown separately, the carrier may allocate the charges on the basis of the weights of the respective portions and collect the tax only on the portion of the shipment unloaded at the stopoff point in the United States.

If the carrier collects the tax on the total transportation charges, the payor may file Form 843, Claim, for refund with the proper District Director of Internal Revenue and attach thereto the original receipt issued by the carrier showing payment of the tax on the carload shipment involved and documentary evidence establishing the charges allocable to the shipment delivered to the consignee outside the United States.

In a case where a shipment intended for export and a shipment to a domestic destination move on the same bill of lading, but not on one of the bills of lading described in section 143.32 of the regulations, the carrier may likewise allocate the transportation charges on the basis of the weights of the respective portions and collect the tax only on the domestic portion of the shipment, provided (1) the person paying the transportation charges files with the carrier Form 1363, Export Exemption Certificate, covering the transportation charges allocable to the portion of the shipment intended for export, and (2) obtains proof of exportation as required by section 143.34 of the regulations. Where, with respect to such a shipment, the carrier does not allocate the transportation charges but collects the tax on the total transportation charges, the payor is likewise privileged to file Form 843, Claim, for refund and attach thereto, in addition to the receipt issued by the carrier and evidence establishing the charges allocable to the shipment intended for export, a description of documentary evidence in his possession showing that such shipment was actually exported