Rev. Rul. 61-4

Advice has been requested whether amounts paid for the use of a so-called `wireless translator system' are subject to the communications tax on `leased wire, teletypewriter, or talking circuit special service,' imposed by section 4251 of the Internal Revenue Code of 1954, prior to its amendment by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, C.B. 1958-3, 92.

The wireless translator system is designed for use in conferences and assemblies where a number of languages are spoken. Interpreters in soundproof booths translate the speaker's words which come to them over a wired circuit from the speaker's microphone, and their translations are carried to the listeners over the wireless translator system. The system furnishes several channels for simultaneous interpretation of a speaker's words into as many languages as there are channels furnished. The channel transmitters are connected to a closed loop antenna placed around a conference room. Each person in the room is furnished with a battery operated receiving set, which is equipped with earphones and an antenna loop. Power in the transmitting loop is very low, being just sufficient to be picked up by the individual receivers worn by each person in the field of the loop within the conference room.

Section 4251 of the Code, prior to its amendment by the Excise Tax Technical Changes Act of 1958, imposed a tax on amounts paid for certain communication services and facilities, including `leased wire, teletypewriter, or talking circuit special service.'

Section 42.4252-5 of the Facilities and Services Excise Tax Regulations provides that, in general, the term `leased wire, teletypewriter, or talking circuit special service' relates to private line or private channel service where channels, equipment, and other facilities are furnished to enable users to communicate between specified locations continuously or for specified periods, as distinguished from the sending of single dispatches, messages, and conversations by telephone, radio telephone, telegraph, cable, or radio for which tolls are charged by the carrier. The communications may be telephonic, in Morse or similar code, or may be reproduced at the terminating end in the form of a typewritten page or tape, or picture or facsimile.

In the instant case, it is held that, since the wireless translator system is primarily used for translation purposes and the communications features are secondary, the system is not a taxable communications system within the scope of the applicable law and regulations. Therefore, amounts paid by subscribers for leasing a wireless translator system were not subject to the tax on `leased wire, teletypewriter, or talking circuit special service,' imposed by section 4251 of the Code, prior to its amendment by the Excise Tax Technical Changes Act of 1958.

The tax on `leased wire, teletypewriter, or talking circuit special service' was redesignated by the Excise Tax Technical Changes Act of 1958 as `teletypewriter exchange service' and `wire mileage service.' This change, however, has no bearing on the substantive result noted above.