Prohibiting All Collection Agents and Other Officers Concerned from Accepting Payments of the Compensating Tax on Motor Vehicles Purchased from Tax-Exempt Persons or Agencies

April 7, 1965 REVENUE MEMORANDUM CIRCULAR NO. 22-65 SUBJECT : Prohibiting All Collection Agents and Other Officers Concerned from Accepting Payments of the Compensating Tax on Motor Vehicles Purchased from Tax-Exempt Persons or Agencies TO : All Collection Agents and Others Concerned It has come to the knowledge of this office that collection agents in the Regional Offices are accepting payments of the compensating tax on cars purchased by non-exempt persons and entities from tax-exempt persons, entities or agencies. Under Section 190 of the National Internal Revenue Code, the compensating tax is computed on the total value of the car at the time it is received, including freight, postage, insurance commission and all similar charges. The customs duty and special import tax are among the similar charges which form part of the total landed cost for purposes of determining the compensating tax. Accordingly, the customs duty has to be ascertained first in order that the amount of compensating tax to be paid by the purchaser can be determined. Inasmuch as the Commissioner of Customs has ruled that the cars in question are subject to customs duty, and as the collection of such customs duty falls within his jurisdiction, this Office is not in a position to determine the correct amount of compensating tax due on such cars. Every internal revenue officer is, therefore, directed not to accept payment of the compensating tax on motor vehicles purchased from tax-exempt persons, entities or agencies. aisadc (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue