Rep. Thomas Petri (R-Wis.) sent a letter early last week to Dave Camp, chairman of the House Ways and Means Committee, asking for clarification of Congress’s intent on applying the Federal Excise Tax (FET) to managed aircraft. “There is concern that as a result of a recent Chief Counsel Advice memo,” he wrote, “the IRS may be expanding the scope of operations covered by commercial taxes and imposing an additional tax on monthly management fees.”
Petri’s letter added, “The IRS appears to have reinterpreted what is ‘taxable transportation’ and whether monthly management fees paid by the owner to the management company are subject to additional tax. I understand that there have recently been some audits where the IRS is applying this new interpretation to the previous seven years, resulting in huge fees. I would appreciate your review as to whether it is the intent of Congress that flights on private aircraft that involve aircraft management companies be considered commercial flights for IRS tax purposes.”
Meanwhile, an NATA-NBAA excise tax working group met with IRS officials last week. The group “presented a detailed analysis and review of existing IRS guidance and case law for the agency to consider.” NATA is holding a series of three webinars about the FET issue, beginning July 11.