An Act to provide a 1-year extension of the existing corporate normal tax rate and of certain excise tax rates, and for other purposes
PL 87-508 (H.R.11879), enacted 06/28/1962

114 
PUBLIC LAW 87-508-JUNE 28, 1962 
[76 STAT. 
Public Law 87-508 
:0c-3v'i. 
o'Miy 
June 28, 1962 
[H. R. 11879] 
Tax Rate Exten-
sion Act of 1962. 
75 Stat. 193. 
26 u s e 11, 821. 
26 use 4061-
5701. 
26 use 5063. 
26 u s e 5707. 
26 u s e 6412. 
26 use 5701 
note. 
AN ACT 
To provide a one-year extension of the existing corporate normal-tax rate and 
of c*ertain excise-tax rates, and for other purposes. 
Be a enacted hy the Senate and House of Representatives 
of the 
United /States of America in Congress assembled, That this Act may 
be cited as the "Tax Rate Extension Act of 1962". 
SEC. 2. ONE-YEAR EXTENSION OF CORPORATE NORMAL-TAX RATE. 
Section 11(b) (relating to corporate normal tax), section 821(a) 
(1) (A) (relating to mutual insurance companies other than interin-
surers), and section 821(b) (1) (relating to inter 
insurers) of the In-
ternal Revenue Code of 1954 are amended as follows: 
(1) By striking out "JULY i, i962" each place it appears and 
inserting in lieu thereof "JULY i, i963"; 
(2) By striking out "July 1, 1962" each place it appears and 
inserting in lieu thereof "July 1, 1963"; 
(3) By striking out "JUNE 30, 1902" each place it appears and 
inserting in lieu thereof "JUNE 30, 1963"; and 
(4) By striking out "June 30, 1962" each place it appears and 
inserting in lieu thereof "June 30,1963". 
SEC. 3. ONE-YEAR EXTENSION OF CERTAIN EXCISE-TAX RATES. 
(a) EXTENSION OF RATES.—The following provisions of the Inter-
nal Revenue Code of 1954 are amended by striking out "July 1,1962" 
each place it appears and inserting in lieu thereof "July 1, 1963"— 
(1) section 4061 (relating to motor vehicles) ; 
(2) section 4251 (b) (2) (relating to termination of tax on gen-
eral telephone service); 
(3) section 5001(a)(1) 
(4) section 5001(a) (3) 
taining distilled spirits) ; 
(5) section 5022 (relating to cordials and liqueurs containing 
wine); 
(6) section 5041(b) (relating to wines); 
(7) section 5051 (a) (relating to beer) ; and 
(8) section 5701(c) (1) (relatingto cigarettes). 
(b) TECHNICAL AMENDMENTS.—The following provisions of the 
Internal Revenue (^ode of 1954 are amended as follows: 
(1) Section 5063 (relating to floor stocks refunds on distilled 
spirits, wnnes, cordials, and beer) is amended by striking out 
"July 1, 1962" each place it appears and inserting in lieu thereof 
"July 1,1963", and by striking out "October 1,1962" and inserting 
in lieu thereof "October 1,1963". 
(2) Subsections (a) and (b) of section 5707 (relating to floor 
stocks refunds on cigarettes) are amended by striking out "July 
1, 1962" each place it appears and inserting in lieu thereof 
"July 1,1963", and by striking out "October 1,1962" and inserting 
in lieu thereof "October 1,1963". 
(3) Section 6412(a)(1) (relating to floor stocks refunds on 
automobiles) is amended by striking out "July 1, 1962" each 
place it appears and inserting in lieu thereof "July 1, 1963", by 
striking out "October 1, 1962" and inserting in lieu thereof 
"October 1, 1963", and by striking out "November 10, 1962" each 
place it appears and inserting in lieu thereof "November 10,1963". 
Section 497 of the Revenue Act of 1951 (relating to refunds on articles 
from foreign trade zones), as amended, is amended by striking out 
"July 1, 1962" each place it appears and inserting in lieu thereof 
"July 1, 1963". 
(relating to distilled spirits) ; 
(relating to imported perfumes con-
76 STAT. ] 
PUBLIC LAW 87-508-JUNE 28, 1962 
115 
SEC. 4. EXEMPTION FROM COMMUNICATIONS TAX OF CERTAIN PRI-
VATE LINE SERVICES USED IN CONDUCT OF TRADE OR 
BUSINESS. 
(a) WIRE MILEAGE SERVICE.—Section 4252 (e) of the Internal Eeve-
nue Code of 1954 (relating to definition of wire mileage service) is 
72 stat. 1290. 
amended by striking out paragraphs (1) and (2) and inserting in lieu 
^^ "^^ '*^^-
thereof the following: 
"(1) any telephone or radiotelephone service not used in the 
conduct of a trade or business, and 
"(2) any other wire or radio circuit service not used in the 
conduct of a trade or business,". 
(b) GENERAL TELEPHONE SERVICE.—Section 4253 of such Code (re- 
26 use 4253. 
lating to exemptions from the communications tax) is amended by 
adding at the end thereof the following new subsection: 
"(j) CERTAIN PRIVATE COMMUNICATIONS SERVICES.—No tax shall 
be imposed under section 4251 on any amount paid for the use of any 
26 use 4251. 
telephone or radiotelephone line or channel which constitutes general 
telephone service (within tne meaning of section 4252 (a)), if— 
"(1) such line or channel is furnished between specified loca-
tions in different States or between specified locations in different 
counties, municipalities, or similar political subdivisions of a 
State, and 
"(2) such use is in the conduct of a trade or business."' 
(c) EFFECTIVE DATE.—The amendments made by subsections (a) 
and (b) shall apply with respect to services furnished on or after 
January 1,1963. 
SEC. 5. EXTENSION THROUGH NOVEMBER 15, 1962, OF TAX ON TRANS-
PORTATION OF PERSONS, AND FURTHER EXTENSION OF TAX 
ON TRANSPORTATION OF PERSONS BY AIR AT 5-PERCENT 
RATE FOR PERIOD NOVEMBER 16, 1962, THROUGH JUNE 30, 
1963. 
(a) TEMPORARY EXTENSION OF TAX.—Section 4261 of the Internal 
Revenue Code of 1954 (relating to the imposition of tax on the trans- 
7o stat. 644. 
portation of persons) is amended— 
^^ "^^ '*^^^-
(1) by striking out everything after "equal to" in subsections 
(a) and (b) and inserting in lieu thereof "10 percent of the 
amount so paid for transportation which begins before November 
16, 1962."; and 
(2) by striking out everything after "equivalent to" in sub-
section (c) and inserting in lieu thereof "10 percent of the amount 
esA stat. soe. 
so paid in connection with transportation which begins before 
November 16, 1962." 
(b) 
TAX APPLICABLE TO TRANSPORTATION OF PERSONS BY AIR FOR 
PERIOD NOVEMBER 16, 1962, TO JULY 1, 1963.—Effective with respect 
to transportation beginning after November 15,1962, subchapter C of 
chapter 33 of such Code (relating to the tax on the transportation of 
26 use 426i-
persons) is amended to read as follows: 
'*^^'*' 
"Subchapter C—Transportation of Persons by Air 
"Sec. 4261. Imposition of tax. 
"Sec. 4262. Definition of taxable transportation. 
"Sec. 4263. Exemptions. 
"Sec. 4264. Special rules. 
"SEC. 4261. IMPOSITION OF TAX. 
" (a) AMOUNTS PAID W I T H I N THE UNITED STATES.—There is hereby 
imposed upon the amount paid within the United States for taxable 
transportation (as defined in section 4262) of any person by air a tax 
Post, p. ne. 
equal to 5 percent of the amount so paid for transportation which 
begins after November 15,1962, and before July 1,1963. 
116 
PUBLIC LAW 87-508-JUNE 28, 1962 
[76 STAT. 
" (b) AMOUNTS PAID OUTSIDE THE UNITED STATES.—There is hereby 
imposed upon the amount paid without the United States for taxable 
transportation (as defined in section 4262) of any person by air, but 
only if such transportation begins and ends in the United States, a 
tax equal to 5 percent of the amount so paid for transportation which 
begins after November 15, 1962, and before July 1, 1963. 
"(c) SEATS, BERTHS, ETC.—There is hereby imposed upon the amount 
paid for seating or sleeping accommodations in connection with trans-
portation with respect to which a tax is imposed by subsection (a) or 
(b) a tax equivalent to 5 percent of the amount so paid in connection 
with transportation which begins after November 15,1962, and before 
July 1,1963. 
Poat. p. 117. 
"(d) B Y WHOM PAID.—Except as provided in section 4264, the 
taxes imposed by this section shall be paid by the person making the 
payment subject to the tax. 
"SEC 4262. DEFINITION OF TAXABLE TRANSPORTATION. 
" (a) TAXABLE TRANSPORTATION ; IN GENERAL.—For purposes of this 
subchapter, except as provided in subsection (b), the term 'taxable 
transportation' means— 
"(1) transportation which begins in the United States or in 
the 225-mile zone and ends in the United States or in the 225-mile 
zone; and 
"(2) in the case of transportation other than transportation 
described in paragraph (1), that portion of such transportation 
which 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 such portion is not a part of uninterrupted international 
air transportation (within the meaning of subsection (c) (3)). 
"(b) EXCLUSION OF CERTAIN TRAVEL.—For purposes of this sub-
chapter, the term 'taxable transportation' does not include that j)or-
tion of any transportation which meets all 4 of the following require-
ments : 
" (1) such portion is outside the United States; 
"(2) neither such portion nor any segment thereof is directly 
or indirectly— 
" (A) between (i) a point where the route of the transporta-
tion leaves or enters the continental United States, or (ii) a 
port or station in the 225-mile zone, and 
"(B) a port or station in the 225-mile zone; 
" (3) such portion— 
"(A) begins at either (i) the point where the route of the 
transportation leaves the United States, or (ii) a port or 
station in the 225-mile zone, and 
"(B) ends at either (i) the point where the route of the 
transportation enters the United States, or (ii) a port or 
station in the 225-mile zone; and 
"(4) a direct line from the point (or the port or station) speci-
fied in paragraph (3) (A), to the point (or the port or station) 
specified in paragraph (3) (B), passes through or over a point 
which is not within 225 miles of the United States. 
"(c) DEFINITIONS.—For purposes of this section— 
"(1) CONTINENTAL 
UNITED STATES.—The term 
'continental 
United States' means the District of Columbia and the States 
other than Alaska and Hawaii. 
"(2) 225-MILE ZONE.—The term '225-mile zone' means that por-
tion of Canada and Mexico which is not more than 225 miles from 
the nearest point in the continental United States. 
76 STAT.] 
PUBLIC LAW 87-508-JUNE 28, 1962 
117 
"(3) UNINTERRUPTED INTERNATIONAL AIR TRANSPORTATION.— 
The term 'uninterrupted international air transportation' means 
any transportation by air which is not transportation described in 
subsection (a) (1) and in which— 
"(A) the scheduled interval between (i) the beginning or 
end of the portion of such transportation which is directly or 
indirectly from one port or station in the United States to 
another port or station in the United States and (ii) the end 
or beginning of the other portion of such transportation is 
not more than 6 hours, and 
"(B) the scheduled interval between the beginning or end 
and the end or beginning of any two segments of the portion 
of such transportation referred to in subparagraph (A) (i) 
is not more than 6 hours. 
"SEC. 4263. EXEMPTIONS. 
"(a) COMMUTATION TRAVEL, ETC.—The tax imposed by section 4261 
Ante, p. iis. 
shall not apply to amounts paid for transportation which do not ex-
ceed 60 cents, to amounts paid for commutation or season tickets for 
single trips of less than 30 miles, or to amounts paid for commutation 
tickets for one month or less. 
"(b) CERTAIN ORGANIZATIONS.—The tax imposed by section 4261 
shall not apply to the payment for transportation or facilities fur-
nished to an international organization, or any corporation created by 
Act of Congress to act in matters of relief under the treaty of Geneva 
of August 22, 1864. 
22 stat. 940. 
"(c) MEMBERS OF THE ARMED FORCES.—The tax imposed by section 
4261 shall not apply to the payment for transportation or facilities 
furnished under special tariffs providing for fares of not more than 
2.5 cents per mile applicable to round-trip tickets sold to personnel of 
the U^nited States Army, Air Force, Navy, Marine Corps, and Coast 
Guard traveling in uniform of the United States at their own expense 
when on official leave, furlough, or pass, including authorized cadets 
and midshipmen, issued on presentation of properly executed certifi-
cate. 
"(d) SMALL AIRCRAFT ON NONESTABLISHED LINES.—The tax im-
posed by section 4261 shall not apply to transportation by aircraft 
having— 
"(1) a gross takeoff weight (as determined under regulations 
prescribed by the Secretary or his delegate) of less than 12,500 
pounds, and 
"(2) a passenger seating capacity of less than ten adult pas-
sengers, including the pilot, 
except when such aircraft is operated on an established line. 
"SEC. 4264. SPECIAL RULES. 
"(a) PAYMENTS MADE OUTSIDE THE UNITED STATES FOR PREPAID 
ORDERS.—If the payment upon which tax is imposed by section 4261 
is made outside the United States for a prepaid order, exchange order, 
or similar order, the person furnishing the initial transportation pur-
suant to such order shall collect the amount of the tax. 
"(b) TAX DEDUCTED UPON REFUNDS.—Every person w^ho refunds 
any amount with respect to a ticket or order which was purchased 
without payment of the tax imposed by section 4261 shall deduct from 
118 
PUBLIC LAW 87-508-JUNE 28, 1962 
[76 STAT. 
the amount refundable, to the extent available, any tax due under such 
section as a result of the use of a portion of the transportation pur-
chased in connection with such ticket or order, and shall report to 
the Secretary or his delegate the amount of any such tax remaining 
uncollected. 
Ante, p. lis. 
"(c) PAYMENT. OF TAX.—^Where any tax imposed by section 4261 
is not paid at the time payment for transportation is made, then, under 
regulations prescribed by the Secretary or his delegate, to the extent 
that such tax is not collected under any other provision of this sub-
chapter— 
" (1) such tax shall be paid by the person paying for the trans-
^ 
portation or by the person using the transportation; 
"(2) such tax shall be paid wifhin such time as the Secretary 
or his delegate shall prescribe by regulations after whichever of 
the following first occurs: 
, 3, ,f, 
"(A) the rights to the transportation expire; or 
"(B) the time when the transportation becomes subject to 
tax; and 
" (3) payment of such tax shall be made to the Secretary or his 
delegate, to the person to whom the payment for transportation 
was made, or, in the case of transportation other than transporta-
Ante, p. 116. 
tiou described in section 4262(a)(1), to any person furnishing 
any portion of such transportation. 
"(d) APPLICATION OF TAX.—The tax imposed by section 4261 shall 
vj 
. 
3,pply to any amount paid within the United States for transportation 
of any person by air unless the taxpayer establishes, pursuant to 
regulations prescribed by the Secretary or his delegate, at the time of 
payment for the transportation, that the transportation is not trans-
portation in respect of which tax is imposed by section 4261. 
"(e) ROUND TRIPS.—In applying this subchapter to a round trip, 
such round trip shall be considered to consist of transportation from 
the point of departure to the destination, and of separate transporta-
tion thereafter. 
"(f) 
TRANSPORTATION OUTSIDE THE NORTHERN PORTION OF THE 
WESTERN HEMISPHERE.—In applying this subchapter to transporta-
tion any part of which is outside the northern portion of the Western 
Hemisphere, if the route of such transportation leaves and reenters 
the northern portion of the Western Hemisphere, such transportation 
shall be considered to consist of transportation to a point outside such 
northern portion, and of separate transportation thereafter. 
For 
purposes of this subsection, the term 'northern portion of the Western 
Hemisphere' means the area lying west of the 30th meridian west of 
Greenwich, east of the international dateline, and north of the 
Equator, but not including any country of South America." 
(c) 
CONFORMING AMENDMENTS.— 
2
6 use prec. 
(1) The table of subchapters for chapter 33 of such Code is 
^^^^- 
amended by striking out 
"SuBCHAPTEB C. Transportation of persons." 
and inserting in lieu thereof 
' - 
"SuBCHAPTEE C. Transportation of persons by air." 
7
0 Stat. 394. 
(2) Sectlou 6421 of such Code (relating to gasoline used for 
2
6 use 6421. 
certain nonhighway purposes or by local transit systems) is 
amended as follows: 
(A) Subsection (b) 
(relating to use by local transit 
systems) is amended— 
76 STAT. ] 
PUBLIC LAW 87-508-JUNE 28, 1962 
119 
(i) by striking out "tax-exempt passenger 
fare 
revenue" and inserting in lieu thereof "commuter fare 
revenue" each place it appears therein; and 
(ii) by striking out "(not including the tax imposed 
by section 4261, relating to the tax on transportation of 
persons)" each place it appears therein. 
(B) Subsection (d)(2) (defining tax-exempt passenger 
fare revenue) is amended to read as follows: 
"(2) COMMUTER FARE REVENUE.—The term 'commuter fare 
revenue' means revenue attributable to fares derived from the 
transportation of persons and attributable to— 
" (A) amounts paid for transportation which do not exceed 
60 cents, 
"(B) amounts paid for commutation or season tickets for 
single trips of less than 30 miles, or 
"(C) amounts paid for commutation tickets for one month 
or less." 
(3) Section 6416(b) (2) (H) of such Code (relating to special 
72 stat. 1306. 
cases in which tax payments considered overpayments for credit 
^^ ^^^ ^'*^^-
or refund purposes) is amended— 
(A) by striking out "tax-exempt passenger fare revenue" 
and inserting in lieu thereof "commuter fare revenue"; and 
(B) by striking out "(not including the tax imposed by 
section 4261, relating to the tax on transportation of 
persons)". 
(d) EFFECTIVE DATES.—The amendment made by subsection (c) (1) 
shall apply only with respect to transportation beginning after Novem-
ber 15, 1962. The amendments made by subsection (c) (2) shall apply 
only in respect of claims filed with respect to gasoline used on or after 
November 16,1962. The amendments made by subsection (c) (3) shall 
apply only in respect to the use or sale of special fuels made on or 
after November 16, 1962. 
(e) SPECIAL CREDIT OR REFUND OF TRANSPORTATION TAX.—Notw^ith-
standing any other provision of law, in any case in which tax has been 
collected— 
(1) before November 16, 1962, for or in connection with the 
transportation of persons which begins on or after November 
16, 1962, or 
(2) after November 15, 1962, and before July 1, 1963, for or in 
connection with the transportation of persons by air which begins 
on or after July 1,1963, 
the person who collected the tax shall pay the same over to the United 
States; but credit or refund (without interest) of the tax collected in 
excess of that applicable (by reason of the >imendmeiits made by this 
section) shall be allowed to the person who collected the tax as if 
such credit or refund were a credit or refund under the applicable 
provision of the Internal Revenue Code of 1954, but only to the extent 
esA stat. 3. 
that, before the time such transportation has begun, he has repaid the 
^* ^^^ let seq. 
anaount of such excess to the person from whom he collected the tax, 
or has obtained the consent of such person to the allowance of the 
credit or refund. 
For the purpose of this subsection, transportation 
shall not be considered to have begun on or after November 16, 1962, 
or on or after July 1, 1963, as the case may be, if any part of the 
transportation paid for (or for which payment has been obligated) 
commenced before such date. 
Approved June 28, 1962.