Rev. Rul. 57-208

Advice has been requested concerning the applicability of the tax on the transportation of property to an amount paid to a carrier for the transportation of property while the property is within the custody of a state, county, or municipal court.

In connection with his official duties in enforcing the orders and decrees of various courts, a law enforcement officer of a municipal government engages trucking companies to transport property belonging to persons named as defendants in processes issuing from the courts. The officer does not pay for such transportation from governmental funds but arranges to pay the carrier after collecting the amount from the plaintiff who obtained the court order. In some instances, he arranges to have the plaintiff make the payment directly to the carrier.

Section 4271(a) of the Internal Revenue Code of 1954 imposes a tax upon the amount paid within or without the United States for the transportation of property by rail, motor vehicle, water, or air from one point in the United States to another. Section 4292 of the Code provides that the tax shall not apply to amounts paid for the transportation of property to or from the government of a State, Territory of the United States, or any political subdivision of the foregoing, or the District of Columbia.

Under the circumstances described above, the issuance of the court order has the effect of bringing the property within the custody of the court. Therefore, it is held that any necessary transportation of such property while it is within the custody of a state, county, or municipal court constitutes transportation to or from the government of a state, etc., within the meaning of section 4292 of the Code. Accordingly, the tax on the transportation of property will not apply to the amount paid to a carrier for such transportation, provided the shipping papers clearly show that the property is consigned to or by the state or political subdivision thereof.