PLR 200521017: Licensed ambulance provider qualifies for public-sector excise tax exemptions

Plain-English summary

A charitable corporation licensed by a local hospital authority provided emergency medical and ambulance services to everyone in its city and county regardless of ability to pay. It asked whether it could use excise tax exemptions available to state and local governments. The IRS compared its operations with volunteer rescue and ambulance organizations covered by earlier revenue rulings. It concluded that the provider qualified for the specified exemptions on fuel, taxable articles, communications services, and highway vehicle use when used as described in the letter.

Ruling snapshot

• Question: Could the licensed emergency medical provider use the listed governmental excise tax exemptions?
• Outcome: Approved for the specified purchases, services, and vehicle use.
• Key authorities: IRC §§ 4041(g)(2), 4221(a)(4), 4253(i), 4483(a); Rev. Rul. 77-387 and 77-388.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200521017
Third Party Communication: None
Release Date: 5/27/2005
Date of Communication: Not Applicable
Index Number: 4041.00-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B8
PLR-157805-04
In Re: ---------------------------------------- Date:
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March 01, 2005
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Legend:

Taxpayer = -----------------------------------------------------------------
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County = -----------------------------------

City = ----------------------

Authority = ------------------------------------------------------------

Dear ------------:

This responds to a letter ruling request submitted by Taxpayer asking whether Taxpayer qualifies for the excise tax exemptions allowed to state and local governments under '' 4041(g)(2), 4221(a)(4), 4253(i), and 4483(a) of the Internal Revenue Code.

The City organized the Authority, a political subdivision of the state. The Authority owns the only public hospital in the City and the County. The Authority has licensed Taxpayer, a ' 501(c)(3) corporation, to perform and provide emergency medical services that include ambulance care, mobile life support services, mobile cardiac care, and related emergency services to all persons in the City and the County regardless of their ability to pay. If the Authority determines that Taxpayer’s charges for these services are excessive, the Authority has the right to amend Taxpayer’s license to reduce the length of the license’s term. Upon Taxpayer’s dissolution and after payment of all its liabilities, Taxpayer’s assets become the property of the City.

Section 4041(g)(2) exempts from the taxes on special fuels imposed by ' 4041 sales for the exclusive use of any state, political subdivision of a state, or the District of Columbia. Comparable exemptions from the manufacturers excise taxes, the tax on communications, and the highway use tax are provided by §§ 4221(a)(4), 4253(i), and 4483(a), respectively.
PLR-157805-04
2

Rev. Rul. 77-387, 1977-2 C.B. 364, holds that where taxable articles are sold, or communications services and facilities are furnished, to a nonprofit volunteer rescue squad for their exclusive use, such articles and services come within the exemptions under §§ 4041(g), 4221(a)(4) and 4253(i). Further, the exemption provided from the highway use tax by § 4483 applies to the operation of vehicles by such organizations in performing their rescue functions. Rev. Rul. 77-387 addresses volunteer rescue squads that provide non-emergency ambulance service as well as emergency rescue and ambulance service. The volunteer rescue squads, in many cases, although not necessarily in every case, receive assistance from governmental units and this assistance may consist of direct grants of funds or equipment, or the use of public property, equipment, and supplies, either provided free or at a nominal charge. Their operations may also be financed through a variety of fund-raising projects and drives.

Rev. Rul. 77-388, 1977-2 C.B. 365, holds that taxable articles sold or communications facilities and services furnished to a volunteer ambulance association for its exclusive use come within the exemptions under §§ 4041(g), 4221(a)(4), and 4253(i). Rev. Rul. 77-388 addresses a volunteer ambulance association that provides emergency services in an area where no other ambulance service is available. The association does not charge for its services or the use of its equipment. The association=s only source of income is an annual fund raising drive and contributions.

The operations of Taxpayer under the above-described license from the Authority are similar to the operations of the rescue squad in Rev. Rul. 77-387 and the ambulance association in Rev. Rul. 77-388. Accordingly, in the case of taxable articles sold to Taxpayer for its exclusive use, communications services and facilities furnished to Taxpayer, or the use of any highway vehicle by Taxpayer, Taxpayer qualifies for the excise tax exemptions allowed to state and local governments under '' 4041(g)(2), 4221(a)(4), 4253(i), and 4483(a).

This letter ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) provides that it shall not be used or cited as precedent.

Sincerely,

Associate Chief Counsel
(Passthroughs and Special Industries)

Frank Boland
Chief, Branch 8
Enclosures (2):
Copy of this letter
Copy for ' 6110 purposes