A-43877, AUGUST 25, 1932, 12 COMP. GEN. 284

A-43877: Aug 25, 1932

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TAXES - TELEPHONE CALLS - FEDERAL TELEPHONE CALLS UPON OFFICIAL BUSINESS ARE NOT SUBJECT TO THE FEDERAL TAX UNDER SECTION 701 OF THE REVENUE ACT OF 1932. UNTIL THE COMMISSIONER OF INTERNAL REVENUE SHALL HAVE PRESCRIBED SOME PRACTICAL METHOD OF OBTAINING EXEMPTION WHEN MAKING LONG-DISTANCE CALLS. WHO MAKES SUCH CALLS WHILE IN A TRAVEL STATUS AND IS REQUIRED TO PAY THE TAX. ONE TRAVELER HAS BEEN ADVISED BY THE TELEPHONE COMPANY THAT IT WILL BE NECESSARY FOR HIM TO EXECUTE A TAX-EXEMPTION CERTIFICATE FOR THE PURPOSE OF OBTAINING A REFUND OF THE AMOUNT OF TAX INCLUDED IN THE TOLL CHARGE FOR SUCH LONG-DISTANCE CALL. YOUR DECISION IS RESPECTFULLY REQUESTED AS TO WHETHER AN EMPLOYEE OF THE DEPARTMENT.

A-43877, AUGUST 25, 1932, 12 COMP. GEN. 284

TAXES - TELEPHONE CALLS - FEDERAL TELEPHONE CALLS UPON OFFICIAL BUSINESS ARE NOT SUBJECT TO THE FEDERAL TAX UNDER SECTION 701 OF THE REVENUE ACT OF 1932, BUT UNTIL THE COMMISSIONER OF INTERNAL REVENUE SHALL HAVE PRESCRIBED SOME PRACTICAL METHOD OF OBTAINING EXEMPTION WHEN MAKING LONG-DISTANCE CALLS, AN OFFICER OR EMPLOYEE, WHO MAKES SUCH CALLS WHILE IN A TRAVEL STATUS AND IS REQUIRED TO PAY THE TAX, MAY BE REIMBURSED THEREFOR.

COMPTROLLER GENERAL MCCARL TO THE ATTORNEY GENERAL, AUGUST 25, 1932:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 4, 1932, AS FOLLOWS:

IT QUITE FREQUENTLY BECOMES NECESSARY FOR EMPLOYEES OF THIS DEPARTMENT, WHILE TRAVELING IN THE FIELD AND AWAY FROM HEADQUARTERS, TO MAKE LONG- DISTANCE TELEPHONE CALLS FROM A PUBLIC PAY STATION. IN SUCH INSTANCES THE TELEPHONE COMPANY REQUIRES, OF COURSE, THE TRAVELER TO DEPOSIT A SUM OF MONEY IN THE AUTOMATIC SLOT MACHINE ATTACHED TO THE TELEPHONE TO COVER THE TELEPHONE COMPANY'S CHARGE FOR SUCH SERVICE AND IN ADDITION THERETO THE AMOUNT OF TAX IMPOSED BY THE GOVERNMENT. UPON INQUIRY, ONE TRAVELER HAS BEEN ADVISED BY THE TELEPHONE COMPANY THAT IT WILL BE NECESSARY FOR HIM TO EXECUTE A TAX-EXEMPTION CERTIFICATE FOR THE PURPOSE OF OBTAINING A REFUND OF THE AMOUNT OF TAX INCLUDED IN THE TOLL CHARGE FOR SUCH LONG-DISTANCE CALL. IN VIEW OF THE SMALL AMOUNT INVOLVED AND OF THE FACT THAT THE TAX ACCRUES TO THE GOVERNMENT, IT DOES NOT APPEAR TO BE DESIRABLE OR ECONOMICAL TO EXECUTE SUCH EXEMPTION CERTIFICATE. IN VIEW THEREOF, YOUR DECISION IS RESPECTFULLY REQUESTED AS TO WHETHER AN EMPLOYEE OF THE DEPARTMENT, WHILE TRAVELING IN THE FIELD AND AWAY FROM HEADQUARTERS, MAY BE REIMBURSED FOR THE AMOUNT OF TAX IMPOSED UPON THE TELEPHONE COMPANY BY THE GOVERNMENT AND WHICH THE TELEPHONE COMPANY IN TURN REQUIRES THE PERSON MAKING THE CALL TO PAY, AND IF YOUR ANSWER IS IN THE AFFIRMATIVE, KINDLY FURNISH THIS OFFICE WITH A COPY OF SUCH EXEMPTION CERTIFICATE.

SECTION 701 OF THE REVENUE ACT OF 1932 PROVIDES:

(A) ON AND AFTER THE FIFTEENTH DAY AFTER THE DATE OF THE ENACTMENT OF THIS ACT THERE SHALL BE IMPOSED---

(1) IN THE CASE OF EACH TELEGRAPH, TELEPHONE, CABLE, OR RADIO DISPATCH, MESSAGE, OR CONVERSATION, WHICH ORIGINATES ON OR AFTER SUCH DATE AND BEFORE JULY 1, 1934, WITHIN THE UNITED STATES, A TAX AT THE FOLLOWING RATES:

(A) TELEPHONE CONVERSATIONS FOR WHICH THE CHARGE IS 50 CENTS OR MORE AND LESS THAN $1, 10 CENTS; FOR WHICH THE CHARGE IS $1 OR MORE AND LESS THAN $2, 15 CENTS; FOR WHICH THE CHARGE IS $2 OR MORE, 20 CENTS;

(B) NO TAX SHALL BE IMPOSED UNDER THIS SECTION UPON ANY PAYMENT RECEIVED FOR SERVICES OR FACILITIES FURNISHED TO THE UNITED STATES OR TO ANY STATE OR TERRITORY, OR POLITICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, NOR UPON ANY PAYMENT RECEIVED FROM ANY PERSON FOR SERVICES OR FACILITIES UTILIZED IN THE COLLECTION OF NEWS FOR THE PUBLIC PRESS OR IN THE DISSEMINATION OF NEWS THROUGH THE PUBLIC PRESS, IF THE CHARGE FOR SUCH SERVICES OR FACILITIES IS BILLED IN WRITING TO SUCH PERSON. THE RIGHT TO EXEMPTION UNDER THIS SUBSECTION SHALL BE EVIDENCED IN SUCH MANNER AS THE COMMISSIONER, WITH THE APPROVAL OF THE SECRETARY, MAY BY REGULATION PRESCRIBE.

WHILE A LONG-DISTANCE TELEPHONE CALL UPON OFFICIAL BUSINESS OF THE UNITED STATES DOES NOT APPEAR TO BE SUBJECT TO FEDERAL TAX, THE MATTER OF SECURING EXEMPTION THEREFROM IS PLACED UNDER THE JURISDICTION OF THE COMMISSIONER OF INTERNAL REVENUE, SUBJECT TO APPROVAL BY THE SECRETARY OF THE TREASURY. ACCORDINGLY, UNTIL THE COMMISSIONER SHALL HAVE PRESCRIBED SOME PRACTICAL METHOD OF OBTAINING EXEMPTION WHEN MAKING SUCH LONG- DISTANCE CALLS, AN OFFICER OR EMPLOYEE WHO MAKES SUCH CALLS AND IS REQUIRED TO PAY THE TAX THEREON WHILE IN A TRAVEL STATUS MAY BE REIMBURSED FOR THE FULL AMOUNT SO PAID.