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.
Taxation in the United States
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.
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.
A new study–written by Nexa Advisors and commissioned by NBAA in conjunction with the “No Plane, No Gain” campaign–shows that local, state and federal government use of business aircraft increases agency or departmental efficiency and provides significant taxpayer value.
Elliott Aviation of Moline, Ill., is waiting for the outcome of a vote on Illinois House Bill 4110 before making an expansion decision. It would grant tax-exempt status on two parcels of ground the MRO leases on Quad-City International Airport, as well as exemption from future property taxes on new improvements. The company released a statement saying it would evaluate other areas of the country for expansion if the bill failed to pass.
Italy’s parliament passed proposed changes to the aircraft luxury tax today, according to NBAA.
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.