Writer Criticizes Proposed Shipping and Aircraft Regs

[1] In February, the Department of the Treasury released proposed regulations under Internal Revenue Code (IRC) section 883 dealing with U.S. income taxation of the international operation of ships, aircraft, and railroad rolling stock. ¹ These proposed regulations were the subject of a public hearing on June 8, 2000. At the hearing and in written comments, many affected shippers criticized the proposed regulations as a significant narrowing of the tax exemption provided by section 883. ²

[2] These proposed regulations do not specifically apply to Union Pacific. Nevertheless, Union Pacific is very concerned about the potential disruptive impact the proposed regulations could have on the efficient intermodal transportation system that has developed in the U.S. Many of our international customers are concerned that the proposed regulations impose U.S. income taxes on operations previously considered exempt, and also impose new regulatory burdens that will have a negative impact on this system.

[3] In light of the controversy that has arisen, Union Pacific respectfully asks that the Department of the Treasury reconsider the proposed regulations to make certain that they do not contradict the intent of IRC section 883 and do not create unnecessary burdens on international commerce.

Sincerely,

² Union Pacific did not submit comments on the proposed regulations.