Wayne Rizzi, the owner of 20-year-old air charter broker Air Royale International, pleaded guilty yesterday to “willfully failing to pay over collected Federal Excise Taxes [FET] to the IRS.” The IRS said that from Oct. 1, 2008, through Dec. 31, 2010 Air Royale collected FET from its customers totaling $489,784, but passed on only $29,286 of this amount to the agency.
Excise tax 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.
Volo Aviation announced today that it has been awarded a five-year contract to manage Sebring Flight Center, the municipally owned FBO at Sebring Regional Airport in Central Florida. To increase traffic at the field, the company plans to reach out to commercial and corporate clients who might be able to take advantage of Sebring’s designation as a U.S. Foreign Trade Zone. According to Volo, this designation allows operators departing Sebring on international flights to uplift fuel without having to pay federal excise taxes.
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.
A 1996 document issued by the House Committee on Ways and Means appears to underscore the intent of Congress regarding application of the so-called “ticket tax” (excise tax) to airline passengers. The document contradicts a March 9 Internal Revenue Service memo that seeks to apply the 7.5-percent excise tax to fees charged by aircraft management companies to aircraft owners flying in their own aircraft for their own business or personal reasons.
The release of an Internal Revenue Service (IRS) memo on March 9 outlining guidance on how to apply the federal excise tax (FET) to fees paid to aircraft management companies adds to business aviation’s burden at a time when the industry continues to suffer from weak demand, high fuel prices and public criticism of this form of travel. This memo isn’t the first time the IRS has attempted to apply the 7.5-percent FET to non-commercial Part 91 flight operations.
The IRS has countersued NetJets for more than $360 million in alleged uncollected excise taxes. In November, NetJets sued the federal government for what it said were wrongfully imposed taxes, interest and penalties totaling more than $642.7 million. NetJets claimed that as a manager of private aircraft, it was not required to pay a “ticket tax” because its services were not taxable transportation.
A new 10-hour jet card is available from broker Magellan Jets. The card costs $34,950 and imposes no daily minimum flight times, federal excise taxes, positioning charges within the base service area, blackout dates or fuel surcharges. The card includes 10 hours in an Eclipse 500 very light jet for flights in the Northeast U.S.
The Government Accountability Office (GAO) warned last month that the excise taxes that feed the Airport and Airway Trust Fund have been lower than previously forecast, while estimates of future revenues have declined because of a drop in passenger traffic, fares and fuel consumption. Meanwhile, the uncommitted balance in the trust fund has been decreasing since Fiscal Year 2001.
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