IRS To Shelve Pending Audits on Aircraft Management Fees

 - July 17, 2017, 10:32 AM

The IRS has decided to drop existing audits involving the assessment of commercial federal excise taxes (FET) on aircraft management activities, the National Air Transportation Association (NATA) said, lauding the move as a victory for aircraft management firms.

The IRS has audited numerous aircraft management companies, but previously agreed to suspend the assessments while it developed guidance on the tax treatment of aircraft management issues. “Recognizing that these tax audits have been ongoing for several years, often in a suspension status, the IRS confirmed to NATA that it is in the process of informing taxpayers that FET audits on the aircraft management fee issue will be closed in the interest of sound tax administration,” the association said.

“NATA appreciates the IRS’s recognition of the urgent need to provide tax relief to impacted companies. It is a significant step toward the ultimate resolution of the FET applicability issue,” said NATA president Martin Hiller.

A number of companies have already received the notification, NATA said, adding that others should receive written notification shortly. The association cautioned, though, that the notifications apply only to management fees, not other open audit matters. While the IRS is no longer pursuing past audits, the industry continues to work with Congress and the IRS on a permanent solution to the tax treatment of management fees.