
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC4251]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                 Subtitle D--Miscellaneous Excise Taxes
 
                   CHAPTER 33--FACILITIES AND SERVICES
 
                      Subchapter B--Communications
 
Sec. 4251. Imposition of tax


(a) Tax imposed

                           (1) In general

        There is hereby imposed on amounts paid for communications 
    services a tax equal to the applicable percentage of amounts so 
    paid.

                         (2) Payment of tax

        The tax imposed by this section shall be paid by the person 
    paying for such services.

(b) Definitions

    For purposes of subsection (a)--

                     (1) Communications services

        The term ``communications services'' means--
            (A) local telephone service;
            (B) toll telephone service; and
            (C) teletypewriter exchange service.

                      (2) Applicable percentage

        The term ``applicable percentage'' means 3 percent.

(c) Special rule

    For purposes of subsections (a) and (b), in the case of 
communications services rendered before November 1 of a calendar year 
for which a bill has not been rendered before the close of such year, a 
bill shall be treated as having been first rendered on December 31 of 
such year.

(d) Treatment of prepaid telephone cards

                           (1) In general

        For purposes of this subchapter, in the case of communications 
    services acquired by means of a prepaid telephone card--
            (A) the face amount of such card shall be treated as the 
        amount paid for such communications services, and
            (B) that amount shall be treated as paid when the card is 
        transferred by any telecommunications carrier to any person who 
        is not such a carrier.

      (2) Determination of face amount in absence of specified 
                                dollar amount

        In the case of any prepaid telephone card which entitles the 
    user other than to a specified dollar amount of use, the face amount 
    shall be determined under regulations prescribed by the Secretary.

                     (3) Prepaid telephone card

        For purposes of this subsection, the term ``prepaid telephone 
    card'' means any card or any other similar arrangement which permits 
    its holder to obtain communications services and pay for such 
    services in advance.

(Aug. 16, 1954, ch. 736, 68A Stat. 503; Pub. L. 85-859, title I, 
Sec. 133(a), Sept. 2, 1958, 72 Stat. 1289; Pub. L. 86-75, Sec. 5, June 
30, 1959, 73 Stat. 158; Pub. L. 86-564, title II, Sec. 202(a)(2), June 
30, 1960, 74 Stat. 290; Pub. L. 87-72, Sec. 3(a)(2), June 30, 1961, 75 
Stat. 193; Pub. L. 87-508, Sec. 3(a)(2), June 28, 1962, 76 Stat. 114; 
Pub. L. 88-52, Sec. 3(a)(2), June 29, 1963, 77 Stat. 72; Pub. L. 88-348, 
Sec. 2(a)(2), June 30, 1964, 78 Stat. 237; Pub. L. 89-44, title III, 
Sec. 302, title VII, Sec. 701(b)(2)(B), June 21, 1965, 79 Stat. 145, 
156; Pub. L. 89-368, title II, Sec. 202(a), Mar. 15, 1966, 80 Stat. 66; 
Pub. L. 90-285, Sec. 1(a)(3), Apr. 12, 1968, 82 Stat. 92; Pub. L. 90-
364, title I, Sec. 105(b)(1), (2), June 28, 1968, 82 Stat. 265; Pub. L. 
91-172, title VII, Sec. 702(b)(1), (2), Dec. 30, 1969, 83 Stat. 660; 
Pub. L. 91-614, title II, Sec. 201(b)(1), (2), Dec. 31, 1970, 84 Stat. 
1843; Pub. L. 96-499, title XI, Sec. 1151, Dec. 5, 1980, 94 Stat. 2694; 
Pub. L. 97-34, title VIII, Sec. 821, Aug. 13, 1981, 95 Stat. 351; Pub. 
L. 97-248, title II, Sec. 282(a), Sept. 3, 1982, 96 Stat. 568; Pub. L. 
98-369, div. A, title I, Sec. 26, July 18, 1984, 98 Stat. 507; Pub. L. 
99-514, title XVIII, Sec. 1801(b), Oct. 22, 1986, 100 Stat. 2785; Pub. 
L. 100-203, title X, Sec. 10501, Dec. 22, 1987, 101 Stat. 1330-438; Pub. 
L. 101-508, title XI, Sec. 11217(a), Nov. 5, 1990, 104 Stat. 1388-437; 
Pub. L. 105-34, title X, Sec. 1034(a), Aug. 5, 1997, 111 Stat. 937; Pub. 
L. 105-206, title VI, Sec. 6010(i), July 22, 1998, 112 Stat. 815.)

                                 Repeal

        This subchapter, relating to the tax on communications, was 
    repealed by Pub. L. 90-364, title I, Sec. 105(b)(3), June 28, 1968, 
    82 Stat. 266, as amended by Pub. L. 91-172, title VII, 
    Sec. 702(b)(3), Dec. 30, 1969, 83 Stat. 660; Pub. L. 91-614, title 
    II, Sec. 201(b)(3), Dec. 31, 1970, 84 Stat. 1843, effective with 
    respect to amounts paid pursuant to bills first rendered on or after 
    Jan. 1, 1982. In the case of communications services rendered before 
    Nov. 1, 1981, for which a bill has not been rendered before Jan. 1, 
    1982, a bill shall be treated as having been first rendered on Dec. 
    31, 1981.
        Pub. L. 96-499, title XI, Sec. 1151, Dec. 5, 1980, 94 Stat. 
    2694; Pub. L. 97-34, title VIII, Sec. 821, Aug. 13, 1981, 95 Stat. 
    351; Pub. L. 97-248, title II, Sec. 282(a), Sept. 3, 1982, 96 Stat. 
    568; Pub. L. 98-369, div. A, title I, Sec. 26, July 18, 1984, 98 
    Stat. 507; Pub. L. 99-514, title XVIII, Sec. 1801(b), Oct. 22, 1986, 
    100 Stat. 2785; Pub. L. 100-203, title X, Sec. 10501, Dec. 22, 1987, 
    101 Stat. 1330-438; Pub. L. 101-508, title XI, Sec. 11217(a), Nov. 
    5, 1990, 104 Stat. 1388-437, amended section 4251 of this title, 
    relating to the imposition of the tax on communications, extending 
    the date in (and finally eliminating) provisions which had reduced 
    the tax to zero after a specified date, without amending Pub. L. 90-
    364, title I, Sec. 105(b)(3), June 28, 1968, 82 Stat. 266, which, as 
    amended, had repealed this subchapter, effective with respect to 
    amounts paid pursuant to bills first rendered on or after Jan. 1, 
    1982.


                               Amendments

    1998--Subsec. (d)(3). Pub. L. 105-206 substituted ``any other 
similar arrangement'' for ``other similar arrangement''.
    1997--Subsec. (d). Pub. L. 105-34 added subsec. (d).
    1990--Subsec. (b)(2). Pub. L. 101-508 substituted ``percent.'' for 
``percent; except that, with respect to amounts paid pursuant to bills 
first rendered after 1990, the applicable percentage shall be zero.''
    1987--Subsec. (b)(2). Pub. L. 100-203 amended par. (2) generally. 
Prior to amendment, par. (2) read as follows: ``The term `applicable 
percentage' means--

``With respect to amount paid pur-
  suant to bills first rendered:                      The percentage is:
    During 1983, 1984, 1985, 1986, or 
    1987................................                             3  
    During 1988 or thereafter...........                            0.''

    1986--Subsec. (b)(2). Pub. L. 99-514 inserted ``1985,'' after 
``1984,'' in table.
    1984--Subsec. (b)(2). Pub. L. 98-369 substituted ``During 1983, 
1984, 1986, or 1987'' for ``During 1983, 1984, or 1985'' in item 
relating to an applicable percentage of 3 and substituted ``During 1988 
or thereafter'' for ``During 1986 or thereafter'' in item relating to an 
applicable percentage of 0.
    1982--Subsec. (a). Pub. L. 97-248 added subsec. (a) and struck out 
former subsec. (a) which provided that there was a tax on communication 
services specified as local telephone service, toll telephone service, 
and teletypewriter exchange service, directed that the tax was to be 
paid by the person paying for such services, and designated the tax as 
the percentage of the amount paid for the services as set out in the 
following table:


   ``Amounts paid pursuant to   bills first rendered--       Percent--

  ``Before January 1, 1973..............................              10
  During 1973...........................................               9
  During 1974...........................................               8
  During 1975...........................................               7
  During 1976...........................................               6
  During 1977...........................................               5
  During 1978...........................................               4
  During 1979...........................................               3
  During 1980 or 1981...................................               2
  During 1982, 1983, or 1984............................             1''


    Subsec. (b). Pub. L. 97-248 added subsec. (b) and struck out former 
subsec. (b) which provided that the tax imposed by former subsec. (a) 
would not apply to amounts paid pursuant to bills first rendered on or 
after January 1, 1985.
    1981--Subsec. (a)(2). Pub. L. 97-34, Sec. 821(a), substituted 
``During 1982, 1983, or 1984'' for ``During 1982'' in table.
    Subsec. (b). Pub. L. 97-34, Sec. 821(b), extended termination date 
to Jan. 1, 1985, from Jan. 1, 1983.
    1980--Subsec. (a)(2). Pub. L. 96-499, Sec. 1151(a), substituted 
``During 1980 or 1981'' for ``During 1980'' and ``During 1982'' for 
``During 1981'' in table.
    Subsec. (b). Pub. L. 96-499, Sec. 1151(b), substituted ``1983'' for 
``1982''.
    1970--Subsec. (a)(2). Pub. L. 91-614, Sec. 201(b)(1), substituted 
provisions providing the rate of tax on amounts paid for communication 
services pursuant to bills first rendered before Jan. 1, 1973 is 10% of 
such amount, amounts paid pursuant to bills first rendered during 1973 
is 9% of such amount, during 1974 is 8% of such amount, during 1975 is 
7% of such amount, during 1976 is 6% of such amount, during 1977 is 5% 
of such amount, during 1978 is 4% of such amount, during 1979 is 3% of 
such amount, during 1980 is 2% of such amount, and during 1981 is 1% of 
such amount for provisions providing the rate of tax on amounts paid for 
communication services pursuant to bills first rendered before Jan. 1, 
1971 is 10% of such amount, amounts paid pursuant to bills first 
rendered during 1971 is 5% of such amount, during 1972 is 3% of such 
amount, and during 1973 is 1% of such amount.
    Subsec. (b). Pub. L. 91-614, Sec. 201(b)(2), substituted ``January 
1, 1982'' for ``January 1, 1974''.
    1969--Subsec. (a)(2). Pub. L. 91-172, Sec. 702(b)(1), increased rate 
of tax on amounts paid for communication services from 5 to 10 percent 
during 1970, from 3 to 5 percent during 1971, from 1 to 3 percent during 
1972, and imposed a 1 percent tax on amounts paid for communication 
services during 1973.
    Subsec. (b). Pub. L. 91-172, Sec. 702(b)(2), substituted ``January 
1, 1974'' for ``January 1, 1973''.
    1968--Subsec. (a)(2). Pub. L. 90-364, Sec. 105(b)(1), extended from 
April 30, 1968, through the end of 1969 the period for the imposition of 
the 10 percent rate, thereby increasing the rate from 1 percent to 10 
percent for the period May 1, 1968, through the end of 1968 and from 0 
percent to 10 percent for 1969, and imposed a rate of 5 percent during 
1970, a rate of 3 percent during 1971, and a rate of 1 percent during 
1972.
    Pub. L. 90-285 substituted ``April 30, 1968'' and ``May 1, 1968'' 
for ``March 31, 1968'' and ``April 1, 1968'' respectively.
    Subsec. (b). Pub. L. 90-364, Sec. 105(b)(2), substituted ``1973'' 
for ``1969''.
    Subsec. (c). Pub. L. 90-364, Sec. 105(b)(2), extended provisions 
calling for treatment of bills not rendered before the end of a year for 
service rendered before November 1 of that year as having been first 
rendered on December 31 of that year so as to include years subsequent 
to 1968 and struck out special provision for the application of subsec. 
(a) in the case of communication services rendered before March 1, 1968, 
for which a bill was not rendered before May 1, 1968.
    Pub. L. 90-285 substituted ``March 1, 1968,'' for ``February 1, 
1968'', ``May 1, 1968'' for ``April 1, 1968'', ``April 30, 1968'' for 
``March 31, 1968'', and ``February 29, 1968'' for ``January 31, 1968''.
    1966--Subsec. (a)(2). Pub. L. 89-368, Sec. 202(a)(1), increased to 
10 percent the schedule of rates for tax imposed for the period up to 
April 1, 1968, and authorized a reduction to 1 percent for the period 
after March 31, 1968, and before January 1, 1969.
    Subsec. (c). Pub. L. 89-368, Sec. 202(a)(2), conformed subsection to 
rate reduction schedule alterations by providing that, in the case of 
communications services rendered before February 1, 1968, for which a 
bill has not been rendered before April 1, 1968, the bill shall be 
treated as having been first rendered on March 31, 1968, and, in the 
case of services rendered after January 31, 1968, and before November 1, 
1968, for which a bill has not been rendered before January 1, 1969, the 
bill shall be treated as having first been rendered on December 31, 
1968.
    1965--Subsec. (a). Pub. L. 89-44, Sec. 302, substituted local 
telephone service, toll telephone service, and teletypewriter exchange 
service, for general telephone service, toll telephone service, 
telegraph service, teletypewriter exchange service, wire mileage 
service, and wire and equipment service as the taxed services and 
reduced the rate of tax to 3 percent during 1966, 2 percent during 1967, 
and 1 percent during 1968.
    Subsec. (b). Pub. L. 89-44, Sec. 302, added subsec. (b). Pub. L. 89-
44, Sec. 701(b)(2)(B), repealed former subsec. (b), as in effect June 
30, 1965, effective on and after July 1, 1965. Such repealed provision 
had called for termination of the tax on general telephone service as of 
July 1, 1965.
    Subsec. (c). Pub. L. 89-44, Sec. 302, added subsec. (c).
    1964--Subsec. (b)(2). Pub. L. 88-348 substituted ``July 1, 1965'' 
for ``July 1, 1964'' in two places.
    1963--Subsec. (b)(2). Pub. L. 88-52 substituted ``July 1, 1964'' for 
``July 1, 1963'' in two places.
    1962--Subsec. (b)(2). Pub. L. 87-508 substituted ``July 1, 1963'' 
for ``July 1, 1962'' in two places.
    1961--Subsec. (b)(2). Pub. L. 87-72 substituted ``July 1, 1962'' for 
``July 1, 1961'' in two places.
    1960--Subsec. (b)(2). Pub. L. 86-564 substituted ``July 1, 1961'' 
for ``July 1, 1960'' in two places.
    1959--Pub. L. 86-75 designated former provisions as subsec. (a) and 
added subsec. (b).
    1958--Pub. L. 85-859 redesignated ``local telephone service'' as 
``general telephone service'', ``long distance telephone service'' as 
``toll telephone service'' and ``leased wire, teletypewriter or talking 
circuit special service'' as ``teletypewriter exchange service'' and 
``wire mileage service''.


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-206 effective, except as otherwise 
provided, as if included in the provisions of the Taxpayer Relief Act of 
1997, Pub. L. 105-34, to which such amendment relates, see section 6024 
of Pub. L. 105-206, set out as a note under section 1 of this title.


                    Effective Date of 1997 Amendment

    Section 1034(b) of Pub. L. 105-34 provided that: ``The amendments 
made by this section [amending this section] shall apply to amounts paid 
in calendar months beginning more than 60 days after the date of the 
enactment of this Act [Aug. 5, 1997].''


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 effective, except as otherwise provided, 
as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 
98-369, div. A, to which such amendment relates, see section 1881 of 
Pub. L. 99-514, set out as a note under section 48 of this title.


                    Effective Date of 1982 Amendment

    Section 282(b) of Pub. L. 97-248 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply with respect to 
amounts paid for communications services pursuant to bills first 
rendered after December 31, 1982.''


                    Effective Date of 1968 Amendments

    Amendment by Pub. L. 90-364 effective Apr. 30, 1968, see section 
105(c) of Pub. L. 90-364, set out as a note under section 6412 of this 
title.
    Amendment by Pub. L. 90-285 effective Mar. 31, 1968, see section 
1(b) of Pub. L. 90-285, set out as a note under section 6412 of this 
title.


                    Effective Date of 1966 Amendment

    Section 202(c) of Pub. L. 89-368 provided that: ``The amendments 
made by subsections (a) [amending this section] and (b) [amending 
section 4253 of this title] shall apply to amounts paid pursuant to 
bills first rendered on or after April 1, 1966, for services rendered on 
or after such date. In the case of amounts paid pursuant to bills 
rendered on or after such date for services which were rendered before 
such date and for which no previous bill was rendered, such amendments 
shall apply except with respect to such services as were rendered more 
than 2 months before such date. In the case of services rendered more 
than 2 months before such date, the provisions of subchapter B of 
chapter 33 of the Code in effect at the time such services were 
rendered, subject to the provision of section 701(b)(2) of the Excise 
Tax Reduction Act of 1965 [see Effective Date of 1965 Amendment note 
below], shall apply to the amounts paid for such services.''


                    Effective Date of 1965 Amendment

    Section 701(b)(2)(A) of Pub. L. 89-44 provided that: ``The 
amendments made by section 302 [amending this section and sections 4252, 
4253, and 4254 of this title] (relating to communication services) shall 
apply to amounts paid pursuant to bills rendered on or after January 1, 
1966, for services rendered on or after such date. In the case of 
amounts paid pursuant to bills rendered on or after January 1, 1966, for 
services which were rendered before such date and for which no previous 
bill was rendered, such amendments shall apply except with respect to 
such services as were rendered more than 2 months before such date. In 
the case of services rendered more than 2 months before such date, the 
provisions of subchapter B of chapter 33 of the Code in effect at the 
time such services were rendered shall apply to the amounts paid for 
such services.''


                    Effective Date of 1958 Amendment

    Section 133(b) of Pub. L. 85-859, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) Subject to the provisions of paragraph (2), the amendment made 
by subsection (a) [amending this section and sections 4252 to 4254 of 
this title] shall apply with respect to amounts paid on or after the 
effective date prescribed in section (1)(c) of this Act for services 
rendered on or after such date.
    ``(2) The amendment made by subsection (a) [amending this section 
and sections 4252 to 4254 of this title] shall not apply with respect to 
amounts paid pursuant to bills rendered before the effective date 
prescribed in section 1(c) of this Act. In the case of amounts paid 
pursuant to bills rendered on or after such date for services for which 
no previous bill was rendered, such amendments shall apply except with 
respect to such services as were rendered more than 2 months before such 
date. In the case of services rendered more than 2 months before such 
date the provisions of subchapter B of chapter 33 of the Internal 
Revenue Code of 1986 [formerly I.R.C. 1954] in effect at the time such 
services were rendered shall apply to the amounts paid for such 
services.''


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in sections 4253, 4254, 6302, 6415 of 
this title.
