Title 26 — Internal Revenue CodeRelease 119-73
§4254 Computation of tax
Title 26 › Subtitle Subtitle D— - Miscellaneous Excise Taxes › Chapter CHAPTER 33— - FACILITIES AND SERVICES › Subchapter Subchapter B— - Communications › § 4254
Summary
When a customer gets a bill for local or long-distance phone service, the tax is figured on the charges shown. If the bill groups items together, tax for each group is based on that group’s total and any items not grouped are taxed separately. If the tax on long-distance calls is paid in a pay phone, round the tax to the nearest 5 cents and round up if it’s exactly halfway. State or local taxes listed separately on the bill are not counted when figuring this tax.
Full Legal Text
Title 26, §4254
Internal Revenue Code — Source: USLM XML via OLRC
(a)If a bill is rendered the taxpayer for local telephone service or toll telephone service—
(1)the amount on which the tax with respect to such services shall be based shall be the sum of all charges for such services included in the bill; except that
(2)if the person who renders the bill groups individual items for purposes of rendering the bill and computing the tax, then (A) the amount on which the tax with respect to each such group shall be based shall be the sum of all items within that group, and (B) the tax on the remaining items not included in any such group shall be based on the charge for each item separately.
(b)If the tax imposed by section 4251 with respect to toll telephone service is paid by inserting coins in coin-operated telephones, tax shall be computed to the nearest multiple of 5 cents, except that, where the tax is midway between multiples of 5 cents, the next higher multiple shall apply.
(c)For purposes of this subchapter, in determining the amounts paid for communications services, there shall not be included the amount of any State or local tax imposed on the furnishing or sale of such services, if the amount of such tax is separately stated in the bill.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Codification This subchapter, relating to the tax on communications was repealed by Pub. L. 90–364, title I, § 105(b)(3), June 28, 1968, 82 Stat. 266, as amended by Pub. L. 91–172, title VII, § 702(b)(3), Dec. 30, 1969, 83 Stat. 660; Pub. L. 91–614, title II, § 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. Repeal of this subchapter was not executed in view of the
Amendments
to section 4251 of this title by Pub. L. 96–499, Pub. L. 97–34, Pub. L. 97–248, Pub. L. 98–369, Pub. L. 99–514, Pub. L. 100–203, and Pub. L. 101–508, extending the date in (and finally eliminating) provisions which had reduced the tax to zero after a specified date.
Amendments
1977—Subsec. (c). Pub. L. 95–172 added subsec. (c). 1965—Subsec. (a). Pub. L. 89–44 substituted “local telephone service or toll telephone service” for “general telephone service, toll telephone service, or telegraph service”. Subsec. (b). Pub. L. 89–44 substituted “toll telephone service” for “toll telephone service or telegraph service” in catchline and text. 1958—Subsec. (a). Pub. L. 85–859 provided that if the person who renders the bill groups individual items for purposes of rendering the bill and computing the tax, then the amount on which the tax with respect to each group shall be based shall be the sum of all items within that group, and the tax on remaining items not included in any such group shall be based on the charge of each item separately. Subsec. (b). Pub. L. 85–859 substituted “toll telephone service” for “long distance telephone service”.
Statutory Notes and Related Subsidiaries
Effective Date
of 1977 Amendment Pub. L. 95–172, § 2(b), Nov. 12, 1977, 91 Stat. 1358, provided that: “The amendment made by this section [amending this section] shall take effect only with respect to amounts paid pursuant to bills first rendered on or after the first day of the first month which begins more than 20 days after the date of the enactment of this Act [Nov. 12, 1977]. For purposes of the preceding sentence, in the case of communications services rendered more than 2 months before the
Effective Date
provided in the preceding sentence, no bill shall be treated as having been first rendered on or after such
Effective Date
.”
Effective Date
of 1965 AmendmentAmendment by Pub. L. 89–44 applicable to amounts paid pursuant to bills rendered on or after
January 1, 1966, for service rendered on or after such date, but, in the case of amounts paid pursuant to bills rendered after
January 1, 1966, for services rendered before such date for which no previous bill had been rendered, applicable except with respect to such services as were rendered more than two months before such date, see section 701(b)(2)(A) of Pub. L. 89–44, set out as a note under section 4251 of this title.
Effective Date
of 1958 AmendmentFor
Effective Date
of amendment made by Pub. L. 85–859, see section 133(b) of Pub. L. 85–859, set out as a note under section 4251 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 4254
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73