B-50812, JULY 18, 1945, 25 COMP. GEN. 61

B-50812: Jul 18, 1945

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EVEN THOUGH THE TAX MAY HAVE BEEN REPORTED TO A COLLECTOR OF INTERNAL REVENUE. JULY 18. 1945: I HAVE A LETTER OF JUNE 30. IS REPORTED TO THE POST OFFICE DEPARTMENT BY THE POSTAL ACCOUNTS DIVISION. A LETTER WAS RECEIVED FROM MR. WHICH IS ATTACHED HERETO. THE RAILROAD COMPANY PAYS THE TAX TWICE AS THEY ARE ALSO REPORTED TO THE INTERNAL REVENUE BUREAU. IT WILL BE APPRECIATED IF YOU WILL ADVISE THE DEPARTMENT WHETHER IN THE FUTURE THAT PLAN MAY BE FOLLOWED IN ORDER THAT THE RAILROADS INVOLVED MAY NOT BE DOUBLY CHARGED WITH THE TRANSPORTATION TAX. THE REFERRED-TO LETTER FROM THE SUPERINTENDENT OF MAIL TRAFFIC OF THE BALTIMORE AND OHIO RAILROAD COMPANY IS DATED JUNE 25. WE WERE ADVISED BY THE DEPARTMENT THAT $6.00 WOULD BE DEDUCTED FROM OUR COMPENSATION FOR THE MONTH OF APRIL.

B-50812, JULY 18, 1945, 25 COMP. GEN. 61

TRANSPORTATION CHARGES - POSTAL SERVICE EMPLOYEES - ERRONEOUS COLLECTION BY RAILROADS WHERE, CONTRARY TO THE PROVISIONS OF THE ACT OF JULY 28, 1916, REQUIRING RAILROADS ENGAGED IN CARRYING THE MAILS TO TRANSPORT WITHOUT CHARGE CERTAIN POSTAL SERVICE EMPLOYEES TRAVELING ON OFFICIAL BUSINESS, A RAILROAD COMPANY HAS CHARGED SUCH EMPLOYEES FOR THEIR TRANSPORTATION PLUS THE FEDERAL TRANSPORTATION TAX, THE ENTIRE AMOUNT SO CHARGED, INCLUDING THE TAX, MUST BE COLLECTED FROM THE RAILROAD FOR RECREDIT TO THE POSTAL APPROPRIATION WHICH BORE THE ERRONEOUS CHARGE, EVEN THOUGH THE TAX MAY HAVE BEEN REPORTED TO A COLLECTOR OF INTERNAL REVENUE--- THE MATTER OF TAX REFUND BEING ONE BETWEEN THE RAILROAD AND THE BUREAU OF INTERNAL REVENUE.

ACTING COMPTROLLER GENERAL YATES TO THE POSTMASTER GENERAL, JULY 18. 1945:

I HAVE A LETTER OF JUNE 30, 1945 (REFERENCE 21), FROM YOUR PREDECESSOR IN OFFICE, AS FOLLOWS:

WHERE TRAVEL EXPENSE ACCOUNTS OF POST OFFICE INSPECTORS AND OTHER POSTAL EMPLOYEES TRAVELING ON GOVERNMENT BUSINESS CONTAIN CLAIMS FOR TRAVEL IN SLEEPING OR PARLOR CARS OWNED AND OPERATED BY CERTAIN RAILROADS, THE AMOUNT OF SUCH FARE, PLUS TAX, IS REPORTED TO THE POST OFFICE DEPARTMENT BY THE POSTAL ACCOUNTS DIVISION, GENERAL ACCOUNTING OFFICE, WITH A REQUEST THAT A FINE BE IMPOSED AGAINST THE RAILROAD COMPANY INVOLVED IN ACCORDANCE WITH YOUR DECISION A-22916, JUNE 1, 1928 (7 C.G. 759).

A LETTER WAS RECEIVED FROM MR. T. E. REESE, SUPERINTENDENT MAIL TRAFFIC OF THE BALTIMORE AND OHIO RAILROAD COMPANY, WHICH IS ATTACHED HERETO, IN WHICH HE COMPLAINS THAT BY INCLUDING THE TAX IN THE DEDUCTION, THE RAILROAD COMPANY PAYS THE TAX TWICE AS THEY ARE ALSO REPORTED TO THE INTERNAL REVENUE BUREAU.

IT WOULD APPEAR THAT A DEDUCTION OF THE AMOUNT PAID FOR SLEEPING CAR OR PARLOR CAR FARE ONLY SHOULD BE DEDUCTED FROM THE PAY OTHERWISE DUE THE RAILROAD FOR TRANSPORTATION OF THE MAIL. IT WILL BE APPRECIATED IF YOU WILL ADVISE THE DEPARTMENT WHETHER IN THE FUTURE THAT PLAN MAY BE FOLLOWED IN ORDER THAT THE RAILROADS INVOLVED MAY NOT BE DOUBLY CHARGED WITH THE TRANSPORTATION TAX. ALSO WHETHER ADJUSTMENTS MAY BE MADE IN ALL CASES WHERE THE TRANSPORTATION TAX HAS BEEN INCLUDED IN THE AMOUNT OF DEDUCTIONS PREVIOUSLY MADE.

THE REFERRED-TO LETTER FROM THE SUPERINTENDENT OF MAIL TRAFFIC OF THE BALTIMORE AND OHIO RAILROAD COMPANY IS DATED JUNE 25, 1945, AND READS:

OUR ATTENTION HAS BEEN DIRECTED TO A DUAL TAXATION PAID BY THIS COMPANY ON THE PURCHASE OF PARLOR CAR ACCOMMODATIONS BY DEPARTMENTAL REPRESENTATIVES IN COMPANY OWNED AND OPERATED CARS.

AS AN EXAMPLE, WE WERE ADVISED BY THE DEPARTMENT THAT $6.00 WOULD BE DEDUCTED FROM OUR COMPENSATION FOR THE MONTH OF APRIL, 1945, ROUTE 105749- -- THIS TO COVER PURCHASE BY INSPECTORS OF EIGHT SEATS AT 75 CENTS EACH (INCLUDING TAX) IN COMPANY PARLOR CARS BETWEEN CINCINNATI AND LOUISVILLE, TRAIN 63, DURING JANUARY, 1945.

THE PARLOR CAR SEAT RATE BETWEEN STATIONS MENTIONED IS 65 CENTS EACH PLUS 15 PERCENT TAX, OR 9.75 CENTS, WHICH EQUALS THE 75 CENTS DEDUCTIONS IN QUESTION.

GENERAL PASSENGER AGENT E. N. THORN TO WHOM WE FURNISHED ADVICE COVERING THESE DEDUCTIONS, ADVISES THAT TAX FROM THESE PARLOR SEAT SALES ARE ALSO REPORTED TO THE GOVERNMENT AND THAT WE SHOULD NOT ASSUME BOTH.

AS IT IS OUR UNDERSTANDING THE DEPARTMENTAL REPRESENTATIVES HAVE BEEN PAYING GOVERNMENT TAXES ON SEAT PURCHASES A LITTLE OVER A YEAR, THE THOUGHT PREVAILS THE COMPANY IS ENTITLED TO CREDIT THROUGH SOME ADJUSTMENT, AS IT WAS NOT INTENDED IT SHOULD PAY A DOUBLE TAX ON THESE SALES.

SHALL APPRECIATE IT IF, IN VIEW OF WHAT HAS BEEN STATED HEREIN, YOU WILL GIVE CONSIDERATION TO OUR PROBLEM AND ADVISE WHAT ADJUSTMENT CAN BE MADE TO HAVE THE COMPANY REIMBURSED FOR OVERPAYMENT OF TAXES IN QUESTION.

THE ACT OF JULY 28, 1916, 39 STAT. 419, AS INCORPORATED IN THE CODE, 39 U.S.C. 523, PROVIDES:

EVERY RAILROAD COMPANY CARRYING THE MAILS SHALL CARRY ON ANY TRAIN IT OPERATES AND WITHOUT EXTRA CHARGE THEREFOR THE PERSONS IN CHARGE OF THE MAILS AND WHEN ON DUTY AND TRAVELING TO AND FROM DUTY, AND ALL DULY ACCREDITED AGENTS AND OFFICERS OF THE POST OFFICE DEPARTMENT AND THE RAILWAY MAIL SERVICE AND POST OFFICE INSPECTORS WHILE TRAVELING ON OFFICIAL BUSINESS, UPON THE EXHIBITION OF THEIR CREDENTIALS ( JULY 28, 1916, CH. 261 SECTION 1, 39 STAT. 419).

SECTION 3469 (F) (1) OF THE INTERNAL REVENUE CODE, AS AMENDED BY SECTION 307 (8) OF THE ACT OF FEBRUARY 25, 1944, 58 STAT. 64, 65, REMOVES THE EXEMPTION FROM TAXATION FORMERLY APPLICABLE TO THE TRANSPORTATION OF OFFICERS AND EMPLOYEES OF THE UNITED STATES ON OFFICIAL BUSINESS. HOWEVER, WHEN THE RAILROAD COMPANY ERRONEOUSLY CHARGES POSTAL EMPLOYEES FOR THEIR TRANSPORTATION PLUS TAX, NECESSITATING REIMBURSEMENT TO THE EMPLOYEE FROM THE POSTAL APPROPRIATIONS, IT FOLLOWS THAT THE ENTIRE AMOUNT INCLUDING THE TAX MUST BE COLLECTED FROM THE RAILROAD TO MAKE WHOLE THE POSTAL APPROPRIATION. 7 COMP. GEN. 759; 8 ID. 93. IF, AS A RESULT OF THIS, THE RAILROAD PAID TO THE COLLECTOR OF INTERNAL REVENUE THE TAX SO ERRONEOUSLY COLLECTED FROM THE EMPLOYEE, THE MATTER OF OBTAINING A REFUND OF SUCH TAX IS ONE BETWEEN THE RAILROAD COMPANY AND THE BUREAU OF INTERNAL REVENUE. HOWEVER, THERE IS, IN FACT, NO DOUBLE TAXATION INVOLVED, AS ALLEGED.

IN THE CIRCUMSTANCES, THE PRACTICE OF COLLECTING FROM THE RAILROAD COMPANIES THE ENTIRE AMOUNT PAID TO THEM FOR TRANSPORTATION OF POSTAL EMPLOYEES APPEARS CORRECT, AND THE CONTINUATION, IN SUCH CASES, OF THE COLLECTION OF SUCH AMOUNTS, INCLUDING TAX, FROM THE RAILROAD COMPANIES IS REQUIRED.