[Congressional Record (Bound Edition), Volume 161 (2015), Part 13]
[Extensions of Remarks]
[Page 18898]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        IN SUPPORT OF H.R. 3608

                                 ______
                                 

                         HON. PATRICK J. TIBERI

                                of ohio

                    in the house of representatives

                       Monday, November 30, 2015

  Mr. TIBERI. Mr. Speaker, I rise to advocate for a bill I introduced, 
H.R. 3608, which would right a wrong that has impacted over 750 
businesses in the United States, including in my home state of Ohio, 
for more than three years. My bill simply clarifies that the tax on 
commercial air transportation, also called the ``ticket tax,'' doesn't 
apply to aircraft management services (AMS) for general aviation 
flights that don't use tickets.
  Aviation has been a source of pride and jobs for Ohio ever since the 
Wright Brothers invented and built their aircraft in the state. Ohioans 
build aircraft engines, supply aluminum for aircraft frames, design and 
manufacture sophisticated avionics, and maintain and fly the planes in 
the largest business aircraft fleets in the country. All across 
America, thousands of companies use general aviation and aircraft 
management services to help ensure the safe and efficient operation of 
their aircraft.
  In March 2012, the Internal Revenue Service's chief counsel released 
a memorandum stating that services provided in support of aviation are 
taxable as if the services are transportation itself. The IRS said that 
the ticket tax applies to AMS businesses that supply pilots, mechanics, 
maintenance, scheduling and navigation, and the other services provided 
to general aviation flights, and that is contradictory to Congressional 
intent.
  For decades it has been clear that commercial aviation is required to 
pay the ticket tax, while general aviation pays the fuel tax. Congress 
noted this in the Airports and Airways Revenue Act of 1970, when it 
stated that ``the fuel tax on general aviation is a measure of its use 
of the airway system, since general aviation . . . will not be subject 
to the passenger and cargo taxes.'' However, the chief counsel of the 
IRS ignored this simple statement and seeks to impose a tax where 
Congress expressly chose not to apply one. Additionally, general 
aviation already pays taxes through the excise tax on fuel. The fuel 
tax is paid into the Airports and Airways Trust Fund to pay for runway 
maintenance and improvement and air traffic control.
  The IRS can implement the tax laws, but it can't create a new tax. 
The IRS cannot mandate that general aviation pay the ticket tax after 
Congress expressly chose not to apply the tax to general aviation or 
AMS that help people fly their own airplane. AMS are not 
transportation, but rather services in support of transportation, and 
thus should not be taxed as transportation. For more than three years, 
AMS companies have tried to explain that to the IRS, but the IRS has 
refused to acknowledge their mistake and withdraw their opinion.
  Meanwhile, businesses have been audited by the IRS and told they owe 
taxes based on the IRS memorandum. Many AMS companies are small 
businesses who cannot afford to wage multi-year arguments with the IRS. 
Recently the U.S. District Court in Columbus, Ohio, decided a case to 
prevent the IRS from collecting this tax. The court's decision states 
that the IRS did not provide ``precise and not speculative notice'' of 
an AMS company's potential obligation to collect the ticket tax from 
its customers. I'm pleased the court got it right, but if the IRS won't 
correct its mistake, it's time for Congress to do it for them, and in a 
way that will last. That's why my bill provides clarity that payments 
for AMS are exempt from the ticket tax. I hope my colleagues will join 
me in support of the bill to ensure its prompt enactment.

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