IRS Chief Counsel - Tonnage tax exclusion for certain qualifying shipping activities 

September 30: The IRS today posted a Chief Counsel Advice memorandum* concerning how to determine whether certain qualifying shipping activities are “core qualifying activities” under section 1356(b) or “qualifying secondary activities” under section 1356(c), as they pertain to the tonnage tax exclusion under section 1357. AM2013-005 (release date September 27, 2013, and dated September 18, 2013).

Read the Chief Counsel advice memo [PDF 78 KB]


The IRS Chief Counsel memo concludes that:


  • Terminal activity, logistics activity, and other supportive functions such as maintenance and repair that are performed while the qualifying vessel is at a port terminal, or otherwise stationary, are classified as qualifying secondary activities under section 1356(c).
  • Certain otherwise supportive functions, such as maintenance and repair, undertaken by a qualifying vessel operator in the course of transportation by vessel (i.e., physical conveyance) of goods or passengers between a place in the United States and a foreign place, or between foreign places, constitute core qualifying activities under section 1356(b).
  • Inland haulage of cargo, such as trucking, performed as an integral part of U.S. foreign trade, whether preceding or following transportation by a qualifying vessel, is qualifying secondary activity.

*The memorandum is legal advice, signed by executives in the National Office of the Office of Chief Counsel and issued to IRS personnel who are national program executives and managers. The memo is issued to assist IRS personnel in administering their programs by providing authoritative legal opinions on certain matters, such as industry-wide issues. It is not to be used or cited as precedent.




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