NBAA is challenging the IRS’s position that the 7.5-percent ticket tax applies to Part 91 operations where the aircraft owner retains a management company. It has taken the dispute to the IRS itself, as well as the Treasury Department and Congress, saying these aircraft owners “simply hired a management company to provide certain support services” and shouldn’t be viewed as commercial operations subject to the ticket tax.
Taxation in the United States
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.
Flight Dept Advantage (FDA), a provider of start-up and operational services for flight departments, launched a program that “relieves an aircraft owner of all direct obligations related to payroll taxes, benefits and workers compensation while addressing IRS, FAA and other regulatory pitfalls.” Called FDA HR Advantage, it works with clients’ professional advisors to create a customized solution specific to each aircraft owner’s operation, business structure and goals.
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.
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.
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