NBAA has released an updated version of its Federal Excise Taxes Guide: Details on Air Transportation and Fuel Taxes. Last published in 2005 as the NBAA Federal Excise Tax Handbook, the new guide includes areas that have seen changes–such as the application of FET on fractional aircraft ownership operations; IRS legal interpretations regarding aircraft service and pilot service agreements; and reimbursement under the “Schwab re-interpretation,” based upon the latest information from the IRS, and other sources.
Internal Revenue Service
NBAA released its new Federal Excise Taxes Guide late last week, marking the first time the guidelines have been updated since 2005. It is intended to provide business aircraft owners, flight departments and charter operators with a basic understanding of the federal excise taxes (FET) that apply to business aircraft activity.
NBAA has issued a new resource about the net investment income tax (NIIT), having now fully reviewed the U.S. Treasury Department and IRS regulations on this tax, which was enacted as part of the 2010 healthcare overhaul. Beginning this year, the law imposes a 3.8-percent tax on the investment income of certain individuals, and it will affect many common airplane leasing arrangements, NBAA said.
The U.S. Internal Revenue Service has agreed to suspend possible tax assessments against aircraft management companies now undergoing federal excise tax (FET) audits.
On March 26 an NBAA and NATA working group met with Internal Revenue Service (IRS) officials to discuss the Federal Excise Tax (FET) issue. IRS auditors are applying the FET to management fees and expenses paid by Part 91 (non-commercial) operators to management companies.
With the growing complexity of myriad federal, state and local taxes and fees, and the increasing intensity with which they are enforced, there was plenty to discuss at the Commercial Operators Tax (COT) seminar, held September 7 and 8 in Scottsdale, Ariz. Co-sponsored by Conklin & de Decker and the National Air Transportation Association (NATA), the event attracted business aircraft owners, operators and management companies.
Owners and operators of business aircraft were disappointed last month when the IRS issued final regulations disallowing certain deductions for “entertainment” use of company aircraft.
The provisions were originally contained in the “American Jobs Creation Act of 2004.”
Under the new rules, the difference between the actual cost of personal entertainment flights provided for “specified individuals” and the amount included as income for the individual is disallowed as a deduction to the corporation.
After five years in proposed form, the IRS issued its final rule today disallowing tax deductions for “entertainment” (non-business) use of business aircraft. The rules apply whether the company owns, leases or charters the aircraft.
The U.S government’s Internal Revenue Service (IRS) is auditing aircraft management firms and trying to impose the federal excise tax (FET) on fees charged by the firms to aircraft owners. According to industry sources, IRS agents are targeting major charter/management firms, although the firms allegedly being audited didn’t wish to speak to AIN about their experience with the IRS.
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