United States v. State Road Department of Florida

• Decision Date: 16 May 1958
• Docket Number: No. 17066.,17066.
• Citation: 255 F.2d 516
• Parties: UNITED STATES of America, Appellant, v. STATE ROAD DEPARTMENT OF State of FLORIDA, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

255 F.2d 516 (1958)

UNITED STATES of America, Appellant, v. STATE ROAD DEPARTMENT OF State of FLORIDA, Appellee.

No. 17066.

United States Court of Appeals Fifth Circuit.

May 16, 1958.

Charles K. Rice, Asst. Atty. Gen., Carter Bledsoe, Lee A. Jackson, Melva M. Graney, Attys., Dept. of Justice, Washington, D, C., Edith House, Asst. U. S. Atty., Jacksonville, Fla., James L. Guilmartin, U. S. Atty., Miami, Fla., for appellant.

Charles T. Boyd, Jr., Jacksonville, Fla., Richard B. Austin, Tallahassee, Fla., Ross H. Stanton, Jr., Resident Atty., Tallahassee, Fla., State Road Department of the State of Florida, for appellee.

Jennings P. Felix, Seattle, Wash., John J. O'Connell, Atty. Gen., Paul L. Adams, Atty. Gen., Samuel J. Torina, Sol. Gen., Lansing, Mich., T. Carl Holbrook, William D. Dexter, Asst. Attys. Gen., amici curiae.

Before TUTTLE, BROWN and WISDOM, Circuit Judges.

TUTTLE, Circuit Judge.

This appeal presents the question whether the Federal Transportation Tax is applicable to transportation furnished to highway-using vehicles as a part of the state highway system of a ferry operated for a charge by the Florida State Road Department.

The statutes in question are Sections 4271, 4272, 4291 and 6672, of the Internal Revenue Code of 1954, as follows:

"§ 4271. Imposition of tax.

"(a) Property other than coal. — There is hereby imposed upon the amount paid within or without the United States for the transportation of property, except coal, by rail, motor vehicle, water, or air from one point in the United States to another, a tax equal to 3 percent of the amount so paid.

* * * * * *

"(d) By whom paid. — The taxes imposed by this section shall be paid by the person making the payment subject to the tax." 26 U.S.C. 1952 ed., Supp. II, Sec. 4271.

"§ 4272. Exemptions.

"(a) Not in business for hire. — The tax imposed under section 4271 shall apply only to amounts paid to a person engaged in the business of transporting property for hire, including amounts paid to a freight forwarder, express company, or similar person, but not including amounts paid by a freight forwarder, express company, or similar person for transportation with respect to which a tax has previously been paid under such section.

* * * * * *

"(e) Post Office Department. — The tax imposed by section 4271 shall not apply to amounts paid to the Post Office Department for the transportation of property." 26 U. S.C. 1952 ed., Supp. II, Sec. 4272.

"§ 4291. Cases where persons receiving payment must collect tax.

"Every person receiving any payment for facilities for services on which a tax is imposed upon the payor thereof under this chapter, shall collect the amount of the tax from the person making such payment, * * *." 26 U.S.C. Sec. 4291.

"§ 6672. Failure to collect and pay over tax, or attempt to evade or defeat tax.

"Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. No penalty shall be imposed under section 6653 for any offense to which this section is applicable." 26 U.S.C. 1952 ed., Supp. II, Sec. 6672.

For the purpose of this appeal it is agreed that the appellee Road Department operates a ferry near the mouth of the St. Johns River near Jacksonville, Florida, which is an essential link in the state highway A1A from Key West to Fernandina, Florida. It charges for the services according to classifications of vehicles from bicycles to trailer tractors. It has collected substantial fares during the years in question and has failed to collect from the users of the ferry the 3 percent tax and has thus failed to pay such tax to the United States.

It appears from briefs permitted to be filed as amici curiae by the States of Michigan and Washington that similar situations exist in those two states and perhaps in others. The states contend that such ferry service is rendered by the state as traditionally and historically a fundamental governmental function of maintaining a system of state highways, and that in rendering this service the state is not "a person engaged in the business of transporting property for hire." In its pleadings and motion for summary judgment the State Road Department did not contend that the application of this tax to this function would be violative of the federal constitution. However, as an aid to the construction of the statute and an understanding of the intent of Congress in Section 4272 dealing with exemptions, the State asserts that to construe the...