Rev. Rul. 58-158

Advice has been requested whether the period of limitation upon assessment provided by section 3312(a) of the Internal Revenue Code of 1939 prohibits an assessment of the tax on the transportation of property under the circumstances described below.

A shipper contracted with various persons to transport property for him. Neither the shipper nor the other persons realized that the amounts paid for such transportation were subject to the tax on the transportation of property imposed by section 3475(a) of the Code. Consequently, no taxes were collected from the shipper, and no returns were filed by the persons transporting the property.

Section 3475(c) of the Code requires that the person making a taxable transportation payment shall pay the tax to the person receiving such payment who, in turn, shall file a return and pay the taxes so collected to the Government. Inasfar as it is applicable to the excise taxes, section 3312(a) of the Code provides the general rule that such taxes shall be assessed within four years after such taxes became due. However, section 3312(b) of the Code provides that in case of a failure to file a return within the time required by law, the tax may be assessed at any time.

The tax imposed upon the amount paid for the transportation of property is one of the so-called `collected' excise taxes, which are those excise taxes imposed upon the person making the payment subject to the tax. Other taxes included in this category are the taxes on admissions, club dues, communications, transportation of persons, and safe deposit boxes.

Under the provisions of the statute, the person making the payment subject to tax has a duty to pay the tax, while the person receiving the taxable payment for the facilities or services has a duty to collect such tax, to file a return, and to remit to the Government the tax thus collected. There is, therefore, a bipartisan obligation to see that the Government receives the tax. Either party can dispose of his obligation to the Government by performing the acts required of him and, having performed the required acts, will not be held liable for the other's failures.

For example, in this case, had the shipper paid the tax to the carrier at the time the charges for transportation were paid, the Government would be able to assess the tax against the carrier at any time, since no return was filed. On the other hand, had the carrier filed returns and reported that it was unable to collect the tax from the shipper the Government would have been able to assess the tax directly against the shipper within the statutory period of limitations provided by section 3312(a) of the Code.

It is held that, with respect to `collected' excise taxes, where no return has been filed and there has been no attempt by either party to see that the tax is received by the Government, the period of limitation upon assessment provided by section 3312(a) of the Code is not applicable. Accordingly, in this case, the tax may be assessed directly against the shipper at any time.