The U.S. Internal Revenue Service has agreed to suspend possible tax assessments against aircraft management companies now undergoing federal excise tax (FET) audits.
Staffers from NBAA and the National Air Transportation Association, along with NATA treasurer Marion Epps and Nel Stubbs of Conklin & de Decker, recently met with senior IRS officials from the Small Business/Self Employed Division to make the case for clear and precise guidance on the scope of FETs on owner-operated use of aircraft that are being used under an aircraft management agreement. The IRS indicated that it would move forward developing new guidelines on the application of FETs with respect to the issue, and the industry participants anticipate that additional guidance will be issued in the coming months.
During the meeting, NBAA and NATA explained that previous guidance on FET applicable to management companies is unclear, and members of both associations face uncertainty regarding their potential retroactive and future tax liability. Since the release of an audit technique guide in 2008 and a chief counsel advice memorandum in 2012, the IRS has become more aggressive in audits of aircraft management companies and charter operators.