Royce

This is an appeal from an adverse judgment in a suit by appellant taxpayers to recover transportation taxes assessed and collected under § 3469 of the Internal Revenue Code, 26 U.S.C.A.Int.Rev.Code, § 3469, for the period October 1941, through September of 1944. 1 A claim for refund was *251 rejected by the Commissioner and the suit followed.

Taxpayers, under the name of Gray Line Tours, were in the business of transporting passengers by motor vehicle in and in the neighborhood of Seattle. They entered into agreements with several airlines operating out of Seattle in which they undertook to provide transportation by limousine to and from the several airports. The limousines, so far as they figure in this controversy, had a seating capacity of less than ten adult passengers. Fares were paid by the passengers directly to the limousine drivers. The record shows and the court found that when the statute became effective taxpayers increased the fare to cover the tax, and as the tax rates were increased by amendments to the revenue laws like fare increases were made. In the case of inquiries by passengers it was the practice of the drivers to state that the fare paid included the tax.…