Rev. Rul. 59-306

The Internal Revenue Service has been asked whether interest is due on the amount of delinquent payments of the so-called `collected' excise taxes when made by a taxpayer to a collecting agency and, if such interest is due, whether the collecting agency is responsible for collection of the interest.

The term `collected' excise taxes refers to those miscellaneous excise taxes under Chapter 33 of the Internal Revenue Code of 1954 which are imposed upon payments for specified facilities and services. The person paying for the facilities and services is liable for payment of the tax; accordingly, that person is the `taxpayer.' The person receiving payment for the facilities and services is required to collect the tax and is known as the `collecting agency.' The `collected' excise taxes are those imposed upon payments for admission, club dues and initiation fees, communications, transportation of persons, and leases of safe deposit boxes. The tax on transportation of property also was included in this category prior to the repeal of that tax, effective August 1, 1958.

M Company performed transportation services for A , but through error did not collect any tax at the time A paid for the services. Subsequently, when M Company's records were examined by an agent of the Internal Revenue Service, it was determined that A's transportation payment was subject to the tax imposed by section 4261 of the Code upon payments for the transportation of persons. M Company, acting as the collecting agency, immediately billed A for the tax due. A paid the tax without any interest to M Company before a proposed direct assessment of the delinquent tax was made against him by the Service.

Section 6601(a) of the Code provides that if any amount of tax imposed by the Code (whether required to be shown on a return, or to be paid by stamp or by some other method) is not paid on or before the last date prescribed for payment, interest on such amount at the rate of six percent per annum shall be paid for the period from such last date to the date paid. Under the provisions of section 6601(c)(4) of the Code in the case of taxes payable by stamp and in all other cases in which the last date for payment is not otherwise prescribed, the last date for payment is deemed to be the date the liability for the tax arises. Under the provisions of section 6601(f)(1) of the Code, the interest prescribed in section 6601 of the Code on any tax shall be paid upon notice and demand, and shall be assessed, collected, and paid in the same manner as taxes.

The date the liability for a `collected' excise tax arises is the date on which the taxpayer makes payment to the collecting agency for the services rendered. See Rev. Rul. 58-300, C.B. 1958-1, 454. Accordingly, interest on delinquent payments of the `collected' excise taxes is computed from the date payment is made for the facilities or services to the date the tax is paid. Such interest on a delinquent payment is due regardless of whether the tax is collected by direct assessment or by voluntary payment to a collecting agency. Where a direct assessment of the delinquent tax is made by the Service against the person liable for the tax, the interest due normally will be included in this assessment. Where the taxpayer makes a delinquent payment of a `collected' excise tax to a collecting agency, the Service will then directly assess the taxpayer for interest due as required in section 6601(f)(1) of the Code.

It is held, therefore, that interest is due on a delinquent tax payment of the so-called `collected' excise taxes regardless of whether the person liable for the tax makes payment to a collecting agency, or whether payment is made directly to the Internal Revenue Service after direct assessment of such tax. Accordingly, in the example above, A is liable for interest on the unpaid amount of tax due from the time the tax should have been paid until payment of the tax was made to the collecting agency. The same result would follow in similar situations involving any of the other `collected' excise taxes.

Interest due on a delinquent tax payment may be assessed only by the Service as prescribed in section 6601(f)(1) of the Code. Accordingly, the collecting agency has no responsibility for enforcing the collection of such interest.

Revenue Ruling 58-300, supra , is hereby amplified.