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.
Taxation in the United States
The debate rages on.
Should general aviation pay more toward the cost of the nation’s air traffic control system, especially if it would hasten the implementation of the NextGen air traffic control (ATC) system and depoliticize FAA funding? If so, is the current system of fuel and excise taxes the best way to do it?
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.
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.
Aviation finance and consulting firm Conklin & de Decker (Booth No. N3525) marked the opening of Heli-Expo ’13 with the introduction of its latest general aviation tax resource. The company also unveiled a new educational seminar.
Whether you call it a user fee or a tax, the White House proposal to levy a $100 charge each and every time a turbine-powered, fixed-wing aircraft departs an airport is not sitting well with business aviation. “Technically, it’s a tax–by definition,” said NBAA president and CEO Ed Bolen. And he pointed out that the industry has been fighting user fees on an almost day-to-day basis for most of the past half decade.
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.
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 Italian government has approved an amendment to the contentious tax on business aircraft that it made law on April 29. Now, foreign-registered aircraft operated privately will incur the tax only if they stay for 45 consecutive days, rather than the 48-hour threshold in effect until now. The amendment, which is expected to be endorsed by the Italian parliament, would also reduce the rate of the tax by 50 percent.
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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