[Congressional Record Volume 163, Number 210 (Friday, December 22, 2017)]
[Extensions of Remarks]
[Pages E1757-E1758]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   APPLICABILITY OF THE FEDERAL EXCISE TAX ON AIR TRANSPORTATION TO 
                 AIRCRAFT MANAGEMENT SERVICES COMPANIES

                                 ______
                                 

                         HON. JAMES B. RENACCI

                                of ohio

                    in the house of representatives

                       Friday, December 22, 2017

  Mr. RENACCI. Mr. Speaker, as a member of the Ways and Means 
Committee, I rise today to speak on the Congressional intent behind the 
exemption for aircraft management services (AMS) companies from the 
federal excise tax (FET) on air transportation included in Section 
13822 of H.R. 1. This provision is based on H.R. 896, sponsored by 
Congressman Tiberi and co-sponsored by myself.
  AMS companies are paid to manage and maintain fleets of private 
aircraft, a service that is non-commercial. The FET on air 
transportation, on the other hand, is considered an airline ticket tax 
which commercial airline customers pay when they purchase a commercial 
airline ticket. Congress is exempting AMS companies from the FET on air 
transportation because fees paid for the maintenance and management of 
private aircraft are not analogous to the purchase of a commercial 
airline ticket. Likewise, Federal Aviation Regulation (FAR) Part 91 
recognizes that AMS companies provide non-commercial aircraft 
operations and thus are generally only subject to federal fuel taxes, 
and not the FET on air transportation.
  We included Sec. 13822 in H.R. 1 because the IRS has pursued a number 
of AMS companies for collection of the FET on air transportation. The 
result has been inconsistent outcomes, creating winners and losers 
among similarly situated AMS companies. To clarify the law, which has 
become quite muddled in this area, H.R. 1 seeks to set the record 
straight regarding the applicability of the FET on air transportation 
to AMS companies.
  In conjunction with prior legislation, H.R. 1 makes clear that the 
FET on air transportation is not applicable to payments for the 
management of aircraft that are wholly-owned, fractionally owned, or 
that belong to a fractional program. As such, with the enactment of 
H.R. 1, the IRS should cease its efforts to collect the FET on air 
transportation from AMS companies.
  The IRS should not infer that Congress believes the FET on air 
transportation did apply to management fees paid to AMS companies prior 
to enactment of H.R. 1. On the contrary, Congress is finally clarifying 
an area of law that has become muddled, resulted in inconsistent 
enforcement, and created winners and losers among similarly situated 
AMS companies.

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