Rev. Rul. 58-541

Advice has been requested whether, for the purposes of the exemption from the communications tax provided by section 4253(b) of the Internal Revenue Code of 1954, a racing news publication qualifies as the `public press,' and whether a racing news wire service qualifies as `a news ticker service furnishing a general news service similar to that of the public press.

A company publishes a paper which is devoted predominantly to horse racing news and related information. The company also transmits racing information to subscribers over wires leased from a telegraph company. The subscribers pay the racing news company for this service. The company collects, by wires leased from a telegraph company, the news and information which it publishes in its paper and transmits over its wire service.

Section 4251 of the Code imposes a tax on the amounts paid for certain communication services or facilities, including `leased wire, teletypewriter, or talking circuit special service,' and `wire and equipment service.' Section 4253(b) of the Code provides that no tax shall be imposed under section 4251, except with respect to local telephone service, upon any payment received from any person for services or facilities utilized in the collection of news for the public press, or a news ticker service furnishing a general news service similar to that of the public press, or radio broadcasting, or in the dissemination of news through the public press, or a news ticker service furnishing a general news service similar to that of the public press, or by means of radio broadcasting, if the charge for such services or facilities is billed in writing to such person.

Section 130.45(a) of Regulations 42, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, states that the exemption provided by section 4253(b) of the Code applies only with respect to payments for services and facilities which are utilized exclusively (1) in the collection of news for the public press or radio broadcasting or in the dissemination of news through the public press or by means of radio broadcasting, or (2) in the collection or dissemination of news by news ticker service furnishing a general news service similar to that of the public press. Section 130.45(c) of the regulations provides that the exemption does not extend to the collection and dissemination of information or matter for publication in magazines, periodicals, and trade and scientific publications issued to supply information on certain subjects of interest to particular groups.

Horse racing news is considered to be of interest only to a particular group of people and is not news of general interest to the public at large. Accordingly, since the publication in the instant case is devoted predominantly to racing news and related subjects, it is held that the racing news publication does not qualify as the `public press.' It is further held that the racing news wire service furnished by the same company does not qualify as `a news ticker service furnishing a general news service similar to that of the public press.' Therefore, the exemption from the communications tax provided by section 4253(b) of the Code does not apply to payments made by the company for the collection of racing news, by means of wire, to be disseminated through the company's publication or wire service.