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Free tax filing h&r block Internal Revenue Bulletin:  2010-9  March 1, 2010  Rev. Free tax filing h&r block Proc. Free tax filing h&r block 2010-18 Table of Contents SECTION 1. Free tax filing h&r block PURPOSE SECTION 2. Free tax filing h&r block BACKGROUND SECTION 3. Free tax filing h&r block SCOPE SECTION 4. Free tax filing h&r block APPLICATION SECTION 5. Free tax filing h&r block EFFECTIVE DATE SECTION 6. Free tax filing h&r block DRAFTING INFORMATION SECTION 1. Free tax filing h&r block PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2010, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2010, including a separate table of inclusion amounts for lessees of trucks and vans. Free tax filing h&r block The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Free tax filing h&r block SECTION 2. Free tax filing h&r block BACKGROUND . Free tax filing h&r block 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Free tax filing h&r block Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. Free tax filing h&r block The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Free tax filing h&r block This change reflects the higher rate of price inflation for trucks and vans since 1988. Free tax filing h&r block . Free tax filing h&r block 02 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Free tax filing h&r block The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Free tax filing h&r block Under § 1. Free tax filing h&r block 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. Free tax filing h&r block One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Free tax filing h&r block Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Free tax filing h&r block SECTION 3. Free tax filing h&r block SCOPE . Free tax filing h&r block 01 The limitations on depreciation deductions in section 4. Free tax filing h&r block 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2010, and continue to apply for each taxable year that the passenger automobile remains in service. Free tax filing h&r block . Free tax filing h&r block 02 The tables in section 4. Free tax filing h&r block 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2010. Free tax filing h&r block Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Free tax filing h&r block See Rev. Free tax filing h&r block Proc. Free tax filing h&r block 2005-13, 2005-1 C. Free tax filing h&r block B. Free tax filing h&r block 759, for passenger automobiles first leased before calendar year 2006; Rev. Free tax filing h&r block Proc. Free tax filing h&r block 2006-18, 2006-1 C. Free tax filing h&r block B. Free tax filing h&r block 645, for passenger automobiles first leased during calendar year 2006; Rev. Free tax filing h&r block Proc. Free tax filing h&r block 2007-30, 2007-1 C. Free tax filing h&r block B. Free tax filing h&r block 1104, for passenger automobiles first leased during calendar year 2007; Rev. Free tax filing h&r block Proc. Free tax filing h&r block 2008-22, 2008-12 I. Free tax filing h&r block R. Free tax filing h&r block B. Free tax filing h&r block 658, for passenger automobiles first leased during calendar year 2008; and Rev. Free tax filing h&r block Proc. Free tax filing h&r block 2009-24, 2009-17 I. Free tax filing h&r block R. Free tax filing h&r block B. Free tax filing h&r block 885, for passenger automobiles first leased during calendar year 2009. Free tax filing h&r block SECTION 4. Free tax filing h&r block APPLICATION . Free tax filing h&r block 01 Limitations on Depreciation Deductions for Certain Automobiles. Free tax filing h&r block (1) Amount of the inflation adjustment. Free tax filing h&r block (a) Passenger automobiles (other than trucks or vans). Free tax filing h&r block Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Free tax filing h&r block The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Free tax filing h&r block The new car component of the CPI was 115. Free tax filing h&r block 2 for October 1987 and 137. Free tax filing h&r block 851 for October 2009. Free tax filing h&r block The October 2009 index exceeded the October 1987 index by 22. Free tax filing h&r block 651. Free tax filing h&r block Therefore, the automobile price inflation adjustment for 2010 for passenger automobiles (other than trucks and vans) is 19. Free tax filing h&r block 66 percent (22. Free tax filing h&r block 651/115. Free tax filing h&r block 2 x 100%). Free tax filing h&r block The dollar limitations in § 280F(a) are multiplied by a factor of 0. Free tax filing h&r block 1966, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2010. Free tax filing h&r block This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2010. Free tax filing h&r block (b) Trucks and vans. Free tax filing h&r block To determine the dollar limitations for trucks and vans first placed in service during calendar year 2010, the new truck component of the CPI is used instead of the new car component. Free tax filing h&r block The new truck component of the CPI was 112. Free tax filing h&r block 4 for October 1987 and 140. Free tax filing h&r block 897 for October 2009. Free tax filing h&r block The October 2009 index exceeded the October 1987 index by 28. Free tax filing h&r block 497. Free tax filing h&r block Therefore, the automobile price inflation adjustment for 2010 for trucks and vans is 25. Free tax filing h&r block 35 percent (28. Free tax filing h&r block 497/112. Free tax filing h&r block 4 x 100%). Free tax filing h&r block The dollar limitations in § 280F(a) are multiplied by a factor of 0. Free tax filing h&r block 2535, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Free tax filing h&r block This adjustment applies to all trucks and vans that are first placed in service in calendar year 2010. Free tax filing h&r block (2) Amount of the limitation. Free tax filing h&r block Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2010. Free tax filing h&r block Use Table 1 for a passenger automobile (other than a truck or van) and Table 2 for a truck or van placed in service in calendar year 2010. Free tax filing h&r block REV. Free tax filing h&r block PROC. Free tax filing h&r block 2010-18 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Free tax filing h&r block PROC. Free tax filing h&r block 2010-18 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 . Free tax filing h&r block 02 Inclusions in Income of Lessees of Passenger Automobiles. Free tax filing h&r block A taxpayer must follow the procedures in § 1. Free tax filing h&r block 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2010. Free tax filing h&r block In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 3 of this revenue procedure, while lessees of trucks and vans should use Table 4 of this revenue procedure. Free tax filing h&r block REV. Free tax filing h&r block PROC. Free tax filing h&r block 2010-18 TABLE 3 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $16,700 $17,000 3 7 10 11 14 17,000 17,500 4 8 13 15 16 17,500 18,000 5 10 16 19 21 18,000 18,500 6 13 18 23 26 18,500 19,000 7 15 22 26 31 19,000 19,500 8 17 25 30 35 19,500 20,000 9 19 29 34 39 20,000 20,500 10 21 32 38 44 20,500 21,000 11 23 35 42 48 21,000 21,500 12 26 38 45 53 21,500 22,000 13 28 41 50 57 22,000 23,000 14 31 46 56 63 23,000 24,000 16 36 52 63 73 24,000 25,000 18 40 59 71 81 25,000 26,000 20 44 66 78 90 26,000 27,000 22 49 71 86 100 27,000 28,000 24 53 78 94 108 28,000 29,000 26 57 85 101 118 29,000 30,000 28 61 92 109 126 30,000 31,000 30 66 97 117 135 31,000 32,000 32 70 104 125 144 32,000 33,000 34 74 111 132 153 33,000 34,000 36 79 117 140 161 34,000 35,000 38 83 123 148 171 35,000 36,000 40 87 130 156 179 36,000 37,000 42 92 136 163 188 37,000 38,000 44 96 143 170 198 38,000 39,000 46 100 149 179 206 39,000 40,000 48 105 155 186 215 40,000 41,000 50 109 162 194 224 41,000 42,000 52 113 169 201 233 42,000 43,000 54 118 174 210 241 43,000 44,000 56 122 181 217 251 44,000 45,000 58 126 188 225 259 45,000 46,000 60 131 194 232 269 46,000 47,000 61 135 201 240 277 47,000 48,000 63 140 207 248 286 48,000 49,000 65 144 213 256 295 49,000 50,000 67 148 220 263 304 50,000 51,000 69 153 226 271 313 51,000 52,000 71 157 232 279 322 52,000 53,000 73 161 239 287 331 53,000 54,000 75 166 245 294 340 54,000 55,000 77 170 252 302 348 55,000 56,000 79 174 258 310 358 56,000 57,000 81 178 265 318 366 57,000 58,000 83 183 271 325 375 58,000 59,000 85 187 278 333 384 59,000 60,000 87 191 284 341 393 60,000 62,000 90 198 294 352 406 62,000 64,000 94 207 306 368 424 64,000 66,000 98 215 320 382 443 66,000 68,000 102 224 332 398 460 68,000 70,000 106 232 346 413 478 70,000 72,000 110 241 358 429 496 72,000 74,000 114 250 371 444 513 74,000 76,000 118 258 384 460 531 76,000 78,000 122 267 396 476 549 78,000 80,000 126 276 409 491 566 80,000 85,000 132 291 432 518 598 85,000 90,000 142 313 464 556 643 90,000 95,000 152 334 497 594 687 95,000 100,000 162 356 528 634 731 100,000 110,000 177 388 577 691 798 110,000 120,000 196 432 641 768 887 120,000 130,000 216 475 705 846 976 130,000 140,000 236 518 770 922 1,065 140,000 150,000 256 561 834 1,000 1,154 150,000 160,000 275 605 898 1,077 1,243 160,000 170,000 295 648 963 1,153 1,333 170,000 180,000 315 691 1,027 1,231 1,421 180,000 190,000 334 735 1,091 1,308 1,510 190,000 200,000 354 778 1,155 1,386 1,599 200,000 210,000 374 821 1,220 1,462 1,688 210,000 220,000 393 865 1,284 1,539 1,777 220,000 230,000 413 908 1,348 1,617 1,866 230,000 240,000 433 951 1,413 1,693 1,956 240,000 and up 453 995 1,476 1,771 2,044 REV. Free tax filing h&r block PROC. Free tax filing h&r block 2010-18 TABLE 4 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later 17,000 17,500 3 6 9 10 11 17,500 18,000 4 8 12 14 16 18,000 18,500 5 10 15 18 21 18,500 19,000 6 12 19 22 24 19,000 19,500 7 15 21 26 29 19,500 20,000 8 17 25 29 34 20,000 20,500 9 19 28 33 38 20,500 21,000 10 21 31 37 43 21,000 21,500 11 23 35 41 47 21,500 22,000 12 25 38 45 51 22,000 23,000 13 29 42 51 58 23,000 24,000 15 33 49 58 67 24,000 25,000 17 37 56 66 76 25,000 26,000 19 42 62 73 85 26,000 27,000 21 46 68 82 93 27,000 28,000 23 50 75 89 103 28,000 29,000 25 55 81 97 111 29,000 30,000 27 59 88 104 121 30,000 31,000 29 63 94 113 129 31,000 32,000 31 68 100 120 138 32,000 33,000 33 72 107 127 148 33,000 34,000 35 76 114 135 156 34,000 35,000 37 81 119 143 165 35,000 36,000 39 85 126 151 174 36,000 37,000 41 89 133 158 183 37,000 38,000 43 94 139 166 191 38,000 39,000 45 98 145 174 201 39,000 40,000 47 102 152 182 209 40,000 41,000 49 106 159 189 218 41,000 42,000 51 111 164 198 227 42,000 43,000 53 115 171 205 236 43,000 44,000 55 119 178 213 245 44,000 45,000 57 124 184 220 254 45,000 46,000 59 128 190 228 263 46,000 47,000 60 133 197 235 272 47,000 48,000 62 137 203 244 280 48,000 49,000 64 142 209 251 290 49,000 50,000 66 146 216 259 298 50,000 51,000 68 150 223 266 308 51,000 52,000 70 154 229 275 316 52,000 53,000 72 159 235 282 325 53,000 54,000 74 163 242 290 334 54,000 55,000 76 167 249 297 343 55,000 56,000 78 172 254 305 352 56,000 57,000 80 176 261 313 361 57,000 58,000 82 180 268 320 370 58,000 59,000 84 185 274 328 378 59,000 60,000 86 189 280 336 388 60,000 62,000 89 195 291 347 401 62,000 64,000 93 204 303 363 418 64,000 66,000 97 213 315 379 436 66,000 68,000 101 221 329 394 454 68,000 70,000 105 230 341 410 472 70,000 72,000 109 239 354 424 490 72,000 74,000 113 247 367 440 508 74,000 76,000 117 256 380 455 526 76,000 78,000 121 264 393 471 543 78,000 80,000 125 273 406 486 561 80,000 85,000 131 289 428 513 592 85,000 90,000 141 310 461 552 636 90,000 95,000 151 332 492 591 681 95,000 100,000 161 353 525 629 726 100,000 110,000 176 386 573 686 793 110,000 120,000 195 430 637 763 882 120,000 130,000 215 473 701 841 971 130,000 140,000 235 516 766 918 1,059 140,000 150,000 255 559 830 995 1,149 150,000 160,000 274 603 894 1,072 1,238 160,000 170,000 294 646 958 1,150 1,326 170,000 180,000 314 689 1,023 1,226 1,416 180,000 190,000 333 733 1,087 1,303 1,505 190,000 200,000 353 776 1,151 1,381 1,594 200,000 210,000 373 819 1,216 1,457 1,683 210,000 220,000 392 863 1,280 1,534 1,772 220,000 230,000 412 906 1,344 1,612 1,861 230,000 240,000 432 949 1,409 1,689 1,949 240,000 and up 452 992 1,473 1,766 2,039 SECTION 5. Free tax filing h&r block EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. Free tax filing h&r block SECTION 6. Free tax filing h&r block DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Free tax filing h&r block Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Free tax filing h&r block For further information regarding this revenue procedure, contact Mr. Free tax filing h&r block Harvey at (202) 622-4930 (not a toll-free call). Free tax filing h&r block Prev  Up  Next   Home   More Internal Revenue Bulletins
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Free tax filing h&r block 4. Free tax filing h&r block   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. Free tax filing h&r block Private communication service. Free tax filing h&r block Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. Free tax filing h&r block If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. Free tax filing h&r block If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. Free tax filing h&r block See chapter 14, later. Free tax filing h&r block Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. Free tax filing h&r block The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. Free tax filing h&r block Regular method taxpayers. Free tax filing h&r block   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. Free tax filing h&r block Alternative method taxpayers. Free tax filing h&r block   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. Free tax filing h&r block See Alternative method in  chapter 11. Free tax filing h&r block Where to file. Free tax filing h&r block    Do not file the uncollected tax report with Form 720. Free tax filing h&r block Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. Free tax filing h&r block  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. Free tax filing h&r block Local telephone service. Free tax filing h&r block   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. Free tax filing h&r block Local telephone service also includes any facility or services provided in connection with this service. Free tax filing h&r block The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. Free tax filing h&r block Local-only service. Free tax filing h&r block   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. Free tax filing h&r block Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. Free tax filing h&r block Private communication service. Free tax filing h&r block   Private communication service is not local telephone service. Free tax filing h&r block Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. Free tax filing h&r block However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. Free tax filing h&r block Teletypewriter exchange service. Free tax filing h&r block   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. Free tax filing h&r block Figuring the tax. Free tax filing h&r block   The tax is based on the sum of all charges for local telephone service included in the bill. Free tax filing h&r block However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. Free tax filing h&r block The tax on the remaining items not included in any group is based on the charge for each item separately. Free tax filing h&r block Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. Free tax filing h&r block Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. Free tax filing h&r block Nontaxable service. Free tax filing h&r block   Nontaxable service means bundled service and long distance service. Free tax filing h&r block Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. Free tax filing h&r block Bundled service. Free tax filing h&r block   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. Free tax filing h&r block Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. Free tax filing h&r block Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. Free tax filing h&r block If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. Free tax filing h&r block   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. Free tax filing h&r block Long distance service. Free tax filing h&r block   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. Free tax filing h&r block Pre-paid telephone cards (PTC). Free tax filing h&r block   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. Free tax filing h&r block Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. Free tax filing h&r block The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. Free tax filing h&r block The transferee is the person liable for the tax and is eligible to request a credit or refund. Free tax filing h&r block For more information, see Regulations section 49. Free tax filing h&r block 4251-4. Free tax filing h&r block   The holder is the person that purchases a PTC to use and not to resell. Free tax filing h&r block Holders are not liable for the tax and cannot request a credit or refund. Free tax filing h&r block Pre-paid cellular telephones. Free tax filing h&r block   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. Free tax filing h&r block The transferee is the person eligible to request the credit or refund. Free tax filing h&r block Installation charges. Free tax filing h&r block   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. Free tax filing h&r block However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. Free tax filing h&r block Answering services. Free tax filing h&r block   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. Free tax filing h&r block Mobile radio telephone service. Free tax filing h&r block   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. Free tax filing h&r block Coin-operated telephones. Free tax filing h&r block   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. Free tax filing h&r block But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. Free tax filing h&r block Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. Free tax filing h&r block Telephone-operated security systems. Free tax filing h&r block   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. Free tax filing h&r block In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. Free tax filing h&r block News services. Free tax filing h&r block   The tax on teletypewriter exchange service does not apply to charges for the following news services. Free tax filing h&r block Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. Free tax filing h&r block Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. Free tax filing h&r block This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). Free tax filing h&r block For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. Free tax filing h&r block Services not exempted. Free tax filing h&r block   The tax applies to amounts paid by members of the news media for local telephone service. Free tax filing h&r block International organizations and the American Red Cross. Free tax filing h&r block   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. Free tax filing h&r block Nonprofit hospitals. Free tax filing h&r block   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. Free tax filing h&r block Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. Free tax filing h&r block Nonprofit educational organizations. Free tax filing h&r block   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. Free tax filing h&r block A nonprofit educational organization is one that satisfies all the following requirements. Free tax filing h&r block It normally maintains a regular faculty and curriculum. Free tax filing h&r block It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. Free tax filing h&r block It is exempt from income tax under section 501(a). Free tax filing h&r block This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. Free tax filing h&r block Qualified blood collector organizations. Free tax filing h&r block   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. Free tax filing h&r block A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. Free tax filing h&r block Federal, state, and local government. Free tax filing h&r block   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. Free tax filing h&r block Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. Free tax filing h&r block Exemption certificate. Free tax filing h&r block   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. Free tax filing h&r block See Regulations section 49. Free tax filing h&r block 4253-11. Free tax filing h&r block File the certificate with the provider of the communication services. Free tax filing h&r block An exemption certificate is not required for nontaxable services. Free tax filing h&r block   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. Free tax filing h&r block The American National Red Cross and other international organizations. Free tax filing h&r block Nonprofit hospitals. Free tax filing h&r block Nonprofit educational organizations. Free tax filing h&r block Qualified blood collector organizations. Free tax filing h&r block State and local governments. Free tax filing h&r block   The federal government does not have to file any exemption certificate. Free tax filing h&r block   All other organizations must furnish exemption certificates when required. Free tax filing h&r block Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Free tax filing h&r block Alternatively, the person who paid the tax may claim a refund. Free tax filing h&r block For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Free tax filing h&r block Collectors. Free tax filing h&r block   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Free tax filing h&r block These requirements also apply to nontaxable service refunds. Free tax filing h&r block Collectors using the regular method for deposits. Free tax filing h&r block   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Free tax filing h&r block Collectors using the alternative method for deposits. Free tax filing h&r block   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Free tax filing h&r block For more information, see the Instructions for Form 720. Free tax filing h&r block Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. Free tax filing h&r block Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. Free tax filing h&r block Percentage tax. Free tax filing h&r block   A tax of 7. Free tax filing h&r block 5% applies to amounts paid for taxable transportation of persons by air. Free tax filing h&r block Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. Free tax filing h&r block Mileage awards. Free tax filing h&r block   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. Free tax filing h&r block For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. Free tax filing h&r block   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. Free tax filing h&r block Until regulations are issued, the following rules apply to mileage awards. Free tax filing h&r block Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. Free tax filing h&r block For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Free tax filing h&r block Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. Free tax filing h&r block Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. Free tax filing h&r block Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. Free tax filing h&r block Domestic-segment tax. Free tax filing h&r block   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. Free tax filing h&r block However, see Rural airports, later. Free tax filing h&r block A segment is a single takeoff and a single landing. Free tax filing h&r block The amount of the domestic-segment tax is in the Instructions for Form 720. Free tax filing h&r block Charter flights. Free tax filing h&r block    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. Free tax filing h&r block Rural airports. Free tax filing h&r block   The domestic-segment tax does not apply to a segment to or from a rural airport. Free tax filing h&r block An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. Free tax filing h&r block   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. Free tax filing h&r block   An updated list of rural airports can be found on the Department of Transportation website at www. Free tax filing h&r block dot. Free tax filing h&r block gov and enter the phrase “Essential Air Service” in the search box. Free tax filing h&r block Taxable transportation. Free tax filing h&r block   Taxable transportation is transportation by air that meets either of the following tests. Free tax filing h&r block It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). Free tax filing h&r block It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. Free tax filing h&r block Round trip. Free tax filing h&r block   A round trip is considered two separate trips. Free tax filing h&r block The first trip is from the point of departure to the destination. Free tax filing h&r block The second trip is the return trip from that destination. Free tax filing h&r block Uninterrupted international air transportation. Free tax filing h&r block   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. Free tax filing h&r block For a special rule that applies to military personnel, see Exemptions, later. Free tax filing h&r block Transportation between the continental U. Free tax filing h&r block S. Free tax filing h&r block and Alaska or Hawaii. Free tax filing h&r block   This transportation is partially exempt from the tax on transportation of persons by air. Free tax filing h&r block The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. Free tax filing h&r block Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. Free tax filing h&r block 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. Free tax filing h&r block Therefore, this transportation is subject to the percentage tax on the part of the trip in U. Free tax filing h&r block S. Free tax filing h&r block airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. Free tax filing h&r block Transportation within Alaska or Hawaii. Free tax filing h&r block   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. Free tax filing h&r block The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). Free tax filing h&r block Package tours. Free tax filing h&r block   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. Free tax filing h&r block The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. Free tax filing h&r block ” This rule also applies to the tax on the use of international air travel facilities, discussed later. Free tax filing h&r block Liability for tax. Free tax filing h&r block   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. Free tax filing h&r block However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. Free tax filing h&r block    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. Free tax filing h&r block However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. Free tax filing h&r block An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. Free tax filing h&r block For more information on resellers of air transportation, see Revenue Ruling 2006-52. Free tax filing h&r block You can find Revenue Ruling 2006-52 on page 761 of I. Free tax filing h&r block R. Free tax filing h&r block B. Free tax filing h&r block 2006-43 at www. Free tax filing h&r block irs. Free tax filing h&r block gov/pub/irs-irbs/irb06-43. Free tax filing h&r block pdf. Free tax filing h&r block   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. Free tax filing h&r block But see Certain helicopter uses, later. Free tax filing h&r block   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. Free tax filing h&r block   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. Free tax filing h&r block Exemptions. Free tax filing h&r block   The tax on transportation of persons by air does not apply in the following situations. Free tax filing h&r block See also Special Rules on Transportation Taxes, later. Free tax filing h&r block Military personnel on international trips. Free tax filing h&r block   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. Free tax filing h&r block However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. Free tax filing h&r block The trip must begin or end outside the United States and the 225-mile zone. Free tax filing h&r block Certain helicopter uses. Free tax filing h&r block   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. Free tax filing h&r block Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. Free tax filing h&r block Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free tax filing h&r block Providing emergency medical transportation. Free tax filing h&r block   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free tax filing h&r block For item (1), treat each flight segment as a separate flight. Free tax filing h&r block Fixed-wing aircraft uses. Free tax filing h&r block   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. Free tax filing h&r block Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free tax filing h&r block Providing emergency medical transportation. Free tax filing h&r block The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Free tax filing h&r block   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free tax filing h&r block Skydiving. Free tax filing h&r block   The tax does not apply to any air transportation exclusively for the purpose of skydiving. Free tax filing h&r block Seaplanes. Free tax filing h&r block   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. Free tax filing h&r block Bonus tickets. Free tax filing h&r block   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. Free tax filing h&r block However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. Free tax filing h&r block International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. Free tax filing h&r block However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. Free tax filing h&r block This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. Free tax filing h&r block It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. Free tax filing h&r block See the Instructions for Form 720 for the tax rates. Free tax filing h&r block Transportation of Property by Air A tax of 6. Free tax filing h&r block 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. Free tax filing h&r block The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. Free tax filing h&r block The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. Free tax filing h&r block The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. Free tax filing h&r block Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. Free tax filing h&r block Exemptions. Free tax filing h&r block   The tax on transportation of property by air does not apply in the following situations. Free tax filing h&r block See also Special Rules on Transportation Taxes, later. Free tax filing h&r block Cropdusting and firefighting service. Free tax filing h&r block   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. Free tax filing h&r block Exportation. Free tax filing h&r block    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. Free tax filing h&r block See Form 1363 for more information. Free tax filing h&r block Certain helicopter and fixed-wing air ambulance uses. Free tax filing h&r block   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. Free tax filing h&r block   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. Free tax filing h&r block The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Free tax filing h&r block Skydiving. Free tax filing h&r block   The tax does not apply to any air transportation exclusively for the purpose of skydiving. Free tax filing h&r block Excess baggage. Free tax filing h&r block    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. Free tax filing h&r block Surtax on fuel used in a fractional ownership program aircraft. Free tax filing h&r block   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. Free tax filing h&r block Alaska and Hawaii. Free tax filing h&r block   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). Free tax filing h&r block But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. Free tax filing h&r block The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. Free tax filing h&r block Liability for tax. Free tax filing h&r block   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. Free tax filing h&r block   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. Free tax filing h&r block Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. Free tax filing h&r block Aircraft used by affiliated corporations. Free tax filing h&r block   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. Free tax filing h&r block However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. Free tax filing h&r block Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. Free tax filing h&r block   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. Free tax filing h&r block Small aircraft. Free tax filing h&r block   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. Free tax filing h&r block However, the taxes do apply if the aircraft is operated on an established line. Free tax filing h&r block “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. Free tax filing h&r block However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. Free tax filing h&r block   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. Free tax filing h&r block   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. Free tax filing h&r block Mixed load of persons and property. Free tax filing h&r block   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. Free tax filing h&r block The allocation must be reasonable and supported by adequate records. Free tax filing h&r block Credits or refunds. Free tax filing h&r block   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Free tax filing h&r block Alternatively, the person who paid the tax may claim a refund. Free tax filing h&r block For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Free tax filing h&r block Prev  Up  Next   Home   More Online Publications