The National Business Aviation (NBAA) has welcomed the introduction of bipartisan congressional legislation that puts an end to the improper application in the US of commercial airline ticket taxes to aircraft management companies. The legislation makes clear that management services provided to assist a business aircraft owner in the operation of its aircraft are non-commercial and are subject to the aviation fuel tax.
Existing law states that non-commercial flights are generally subject to the 21.9 cents per gallon tax on jet fuel, and not the 7.5% commercial ticket tax on amounts paid. However, IRS guidance has sought to impose the commercial ticket tax on flights where an aircraft owner obtained support services from a management company, treating the owners as if they were conducting airline or air charter operations.
As outlined by Representative Pat Tiberi and Senator Sherrod Brown, the new legislation states that services such as crew scheduling and dispatching, flight planning services, insurance and aircraft maintenance are not subject to the ticket tax. Only non-commercial flights by the owner on its aircraft or an aircraft obtained through a qualifying lease apply.
Ed Bolen, CEO and president, NBAA, said, “The NBAA is committed to resolving this challenging tax issue for the nearly 1,000 aircraft management companies, many of which are small to mid-size businesses, and we are grateful to Representative Tiberi and Senator Brown for introducing this critical legislation.”