Aircraft management services would not be subject to air transportation taxes under revisions made by the Senate Finance Committee to S.321, the Tax Cuts and Jobs Act. The provision, which was sought by NATA, was inserted into the tax bill.
It directly responds to a March 2012 IRS Chief Counsel Advice Memorandum that concluded aircraft owners employing aircraft management services and allowing the use of the aircraft for occasional charter operations should apply the 7.5 percent Federal Excise Tax (FET) on amounts paid for those management services. That stance contradicted precedent and left many small businesses open to retroactive taxes, interest and fines, NATA said.
“NATA deeply appreciates [the] inclusion of this common-sense provision in the landmark tax overhaul legislation,” said NATA president Martin Hiller. “Tax reform legislation has a long way to go, but this is an important step and small aviation businesses are appreciative of the inclusion of this provision, which provides them the tax certainty they have long sought.”