Rev. Rul. 54-54

Advice is requested concerning the application of the tax on the transportation of property imposed by section 3475 of the Internal Revenue Code under the following circumstances.

M Company receives inquiries from shippers as to the cost and availability of equipment to transport produce. It also receives inquiries from haulers as to the availability of loads. Shippers contract with the company for the transportation of their produce and the company then assigns the loads to haulers for delivery at an agreed price. After delivery of the loads the haulers return signed papers to the company indicating acceptance of delivery and are paid the agreed price. The company then bills the shippers for the contract price. The gross earnings of M Company are represented by the difference between the charges collected from the shippers and the amounts paid to the haulers.

Under the provisions of section 3475(a) of the Code the tax applies to amounts paid to a person engaged in the business of transporting property for hire, including amounts paid to a freight forwarder, express company, or similar person, but not including amounts paid by a freight forwarder, express company, or similar person for transportation with respect to which a tax has previously been paid under that section.

The term `person engaged in the business of transporting property for hire' for the purpose of the tax imposed by section 3475(a) of the Code, includes not only a carrier who actually transports the property but also a person who holds himself out to the public as one who for compensation sells, provides, procures, furnishes, or arranges for the transportation of property.

Under the circumstances stated above it is held that M Company is engaged in the business of transporting property for hire within the meaning of section 3475(a) of the Code. Accordingly, the tax applies to amounts paid to M Company by the shippers for the transportation of their produce and such company should collect the tax and make return thereof to the Government. However, the tax does not apply to amounts paid by M Company to haulers for transportation with respect to which the tax is payable to such company.