NATA Commends Senate Finance Committee for Inclusion of Aircraft Management Services Legislation in Tax Overhaul

The Senate Finance Committee released the modified chairman's mark for the Tax Cuts and Jobs Act, legislation to reform and simplify the nation’s tax code.  The revised legislation now contains a provision, sought by NATA, clarifying that aircraft management services are not subject to air transportation taxes. The new section is based on bipartisan legislation (S.321) sponsored by Senators Rob Portman (R-OH) and Sherrod Brown (D-OH).  Earlier this week, Senator Portman filed the legislation for consideration as an amendment.

The provision 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 prior precedent and left many small businesses open to retroactive taxes, interest and fines.

The following can be attributed to NATA President Martin H. Hiller:

“NATA deeply appreciates Chairman Hatch’s inclusion of this common-sense provision in the landmark tax overhaul legislation. 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. We will continue to work with the committee on this issue as the legislation moves forward. Senator Portman has been a tireless advocate for aviation businesses and we thank him for his efforts on their behalf.”