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NATA Releases

Federal Excise Tax Working Group Update


Member Update
Federal Excise Tax Working Group Update

March 28, 2013

NATA scheduled and held an IRS-FET working group meeting with the Internal Revenue Service (IRS) on March 26th to discuss the conclusions reached by the Service that are contrary to several long-standing commercial Federal Excise Tax (FET) revenue rulings – namely that commercial FET is applicable to the amounts paid by aircraft owners for contracted aircraft management services.

The NATA and NBAA working group was fortunate to have the expertise and counsel of Marian Epps of Epps Aviation, and Nel Stubbs of Conklin & de Decker on-hand to join the group.

After a productive meeting, IRS officials now concur that there is a need to provide clear and precise guidance and that the current set of available official documents are not adequate.

In our most productive meeting to date, the working group explained in great detail how the aviation services industry functions, the interrelationships with FAA standards (Part 91 versus Part 135), and how the owner of an aircraft interacts with a management company, in contrast to a charter customer.

The working group will now propose that this issue be placed on the Agency’s Guidance Priority List. This list is used by the IRS to prioritize tax issues that need to be addressed through regulations, revenue rulings, revenue procedures, notices and other forms of official guidance.

In addition, NATA is scheduling an upcoming meeting for the working group and the IRS audit division to discuss the possibilities of putting a hold on audits until the IRS issues clarity and precision for our industry.

A special thanks to Marian Epps and Nel Stubbs for their time, expertise, and engagement on this matter.

We will keep you updated on our efforts.

Jim Coon
Executive Vice President
(703) 845-9000