# § 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.
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**Source Credit**: (Aug. 16, 1954, ch. 736, 68A Stat. 503; Pub. L. 85–859, title I, § 133(a), Sept. 2, 1958, 72 Stat. 1289; Pub. L. 86–75, § 5, June 30, 1959, 73 Stat. 158; Pub. L. 86–564, title II, § 202(a)(2), June 30, 1960, 74 Stat. 290; Pub. L. 87–72, § 3(a)(2), June 30, 1961, 75 Stat. 193; Pub. L. 87–508, § 3(a)(2), June 28, 1962, 76 Stat. 114; Pub. L. 88–52, § 3(a)(2), June 29, 1963, 77 Stat. 72; Pub. L. 88–348, § 2(a)(2), June 30, 1964, 78 Stat. 237; Pub. L. 89–44, title III, § 302, title VII, § 701(b)(2)(B), June 21, 1965, 79 Stat. 145, 156; Pub. L. 89–368, title II, § 202(a), Mar. 15, 1966, 80 Stat. 66; Pub. L. 90–285, § 1(a)(3), Apr. 12, 1968, 82 Stat. 92; Pub. L. 90–364, title I, § 105(b)(1), (2), June 28, 1968, 82 Stat. 265; Pub. L. 91–172, title VII, § 702(b)(1), (2), Dec. 30, 1969, 83 Stat. 660; Pub. L. 91–614, title II, § 201(b)(1), (2), Dec. 31, 1970, 84 Stat. 1843; Pub. L. 96–499, title XI, § 1151, Dec. 5, 1980, 94 Stat. 2694; Pub. L. 97–34, title VIII, § 821, Aug. 13, 1981, 95 Stat. 351; Pub. L. 97–248, title II, § 282(a), Sept. 3, 1982, 96 Stat. 568; Pub. L. 98–369, div. A, title I, § 26, July 18, 1984, 98 Stat. 507; Pub. L. 99–514, title XVIII, § 1801(b), Oct. 22, 1986, 100 Stat. 2785; Pub. L. 100–203, title X, § 10501, Dec. 22, 1987, 101 Stat. 1330–438; Pub. L. 101–508, title XI, § 11217(a), Nov. 5, 1990, 104 Stat. 1388–437; Pub. L. 105–34, title X, § 1034(a), Aug. 5, 1997, 111 Stat. 937; Pub. L. 105–206, title VI, § 6010(i), July 22, 1998, 112 Stat. 815.)
## Editorial Notes
### Codification
This subchapter, relating to the tax on communications, was repealed by , , , as amended by , , ; , , , effective with respect to amounts paid pursuant to bills first rendered on or after . In the case of communications services rendered before , for which a bill has not been rendered before , a bill shall be treated as having been first rendered on .
, , ; , , ; , , ; , , ; , , ; , , ; , , , amended this section, 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 , , , which, as amended, had repealed this subchapter, effective with respect to amounts paid pursuant to bills first rendered on or after .
### Amendments
1998—Subsec. (d)(3). substituted “any other similar arrangement” for “other similar arrangement”.
1997—Subsec. (d). added subsec. (d).
1990—Subsec. (b)(2). 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). amended par. (2) generally. Prior to amendment, par. (2) read as follows: “The term ‘applicable percentage’ means—
| “With respect to amount paid pursuant to bills first rendered: | The percentage is: |
| --- | --- |
| During 1983, 1984, 1985, 1986, or 1987 | 3 |
| During 1988 or thereafter | 0.” |
1986—Subsec. (b)(2). inserted “1985,” after “1984,” in table.
1984—Subsec. (b)(2). 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). 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). 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 .
1981—Subsec. (a)(2). , substituted “During 1982, 1983, or 1984” for “During 1982” in table.
Subsec. (b). , extended termination date to , from .
1980—Subsec. (a)(2). , substituted “During 1980 or 1981” for “During 1980” and “During 1982” for “During 1981” in table.
Subsec. (b). , substituted “1983” for “1982”.
1970—Subsec. (a)(2). , substituted provisions providing the rate of tax on amounts paid for communication services pursuant to bills first rendered before 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 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). , substituted “” for “”.
1969—Subsec. (a)(2). , 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). , substituted “” for “”.
1968—Subsec. (a)(2). , extended from , 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 , 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.
substituted “” and “” for “” and “” respectively.
Subsec. (b). , substituted “1973” for “1969”.
Subsec. (c). , 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 , for which a bill was not rendered before .
substituted “,” for “”, “” for “”, “” for “”, and “” for “”.
1966—Subsec. (a)(2). , increased to 10 percent the schedule of rates for tax imposed for the period up to , and authorized a reduction to 1 percent for the period after , and before .
Subsec. (c). , conformed subsection to rate reduction schedule alterations by providing that, in the case of communications services rendered before , for which a bill has not been rendered before , the bill shall be treated as having been first rendered on , and, in the case of services rendered after , and before , for which a bill has not been rendered before , the bill shall be treated as having first been rendered on .
1965—Subsec. (a). , 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). , added subsec. (b). , repealed former subsec. (b), as in effect , effective on and after . Such repealed provision had called for termination of the tax on general telephone service as of .
Subsec. (c). , added subsec. (c).
1964—Subsec. (b)(2). substituted “” for “” in two places.
1963—Subsec. (b)(2). substituted “” for “” in two places.
1962—Subsec. (b)(2). substituted “” for “” in two places.
1961—Subsec. (b)(2). substituted “” for “” in two places.
1960—Subsec. (b)(2). substituted “” for “” in two places.
1959— designated former provisions as subsec. (a) and added subsec. (b).
1958— 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”.
## Statutory Notes and Related Subsidiaries
### Effective Date of 1998 Amendment
Amendment by effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, , to which such amendment relates, see , set out as a note under .
### Effective Date of 1997 Amendment
> “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 [
>
> ].”
, , , provided that:
### Effective Date of 1986 Amendment
Amendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .
### Effective Date of 1982 Amendment
> “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
>
> .”
, , , provided that:
### Effective Date of 1968 Amendments
Amendment by effective , see , set out as a note under .
Amendment by effective , see , set out as a note under .
### Effective Date of 1966 Amendment
> “The amendments made by subsections (a) [amending this section] and (b) [amending
>
> ] shall apply to amounts paid pursuant to bills first rendered on or after
>
> , 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.”
, , , provided that:
### Effective Date of 1965 Amendment
> “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
>
> , for services rendered on or after such date. In the case of amounts paid pursuant to bills rendered on or after
>
> , 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.”
, , , provided that:
### Effective Date of 1958 Amendment
> **“(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.”
, , , as amended by , , , provided that:
### 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 [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of 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 , see , as amended, set out as a note under .