[House Report 118-105]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {    Report
                        HOUSE OF REPRESENTATIVES
  1st Session     }                                     {    118-105

======================================================================

 
 TO PROVIDE FOR THE EXTENSION OF TAXES FUNDING THE AIRPORT AND AIRWAY 
TRUST FUND AND TO REQUIRE THE DESIGNATION OF CERTAIN AIRPORTS AS PORTS 
                                OF ENTRY

                                _______
                                

 June 12, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Missouri, from the Committee on Ways and Means, submitted 
                             the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3796]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3796) to provide for the extension of taxes funding 
the Airport and Airway Trust Fund and to require the 
designation of certain airports as ports of entry, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     3
          C. Legislative History.................................     3
          D. Committee History...................................     3
 II. EXPLANATION OF THE BILL..........................................4
          A. Extension of Taxes Funding Airport and Airway Trust 
              Fund (sec. 1 of H.R. 3796 and secs. 4043, 4081, 
              4083, 4261, and 4271 of the Code)..................     4
          B. Clarification of Criteria for Designating Certain 
              Primary, Commercial Airports as Ports of Entry 
              (sec. 2 of H.R. 3796)..............................     5
III. VOTE OF THE COMMITTEE............................................5
 IV. BUDGET EFFECTS OF THE BILL.......................................7
          A. Committee Estimate of Budgetary Effects.............     7
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     7
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     7
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......7
          A. Committee Oversight Findings and Recommendations....     7
          B. Statement of General Performance Goals and 
              Objectives.........................................     7
          C. Information Relating to Unfunded Mandates...........     7
          D. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................     8
          E. Tax Complexity Analysis.............................     8
          F. Duplication of Federal Programs.....................     8
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............8
          A. Text of Existing Law Amended or Repealed by the 
              Bill, as Reported..................................     8
          B. Changes in Existing Law Proposed by the Bill, as 
              Reported...........................................     8
VII. DISSENTING VIEWS................................................21

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. EXTENSION OF TAXES FUNDING AIRPORT AND AIRWAYS TRUST FUND.

  (a) Fuel Taxes.--Section 4081(d)(2)(B) of the Internal Revenue Code 
of 1986 is amended by striking ``September 30, 2023'' and inserting 
``September 30, 2028''.
  (b) Ticket Taxes.--
          (1) Persons.--Section 4261(k)(1)(A)(ii) of such Code is 
        amended by striking ``September 30, 2023'' and inserting 
        ``September 30, 2028''.
          (2) Property.--Section 4271(d)(1)(A)(ii) of such Code is 
        amended by striking ``September 30, 2023'' and inserting 
        ``September 30, 2028''.
  (c) Fractional Ownership Programs.--
          (1) Fuel tax.--Section 4043(d) of such Code is amended by 
        striking ``September 30, 2023'' and inserting ``September 30, 
        2028''.
          (2) Treatment as noncommercial aviation.--Section 4083(b) of 
        such Code is amended by striking ``October 1, 2023'' and 
        inserting ``October 1, 2028''.
          (3) Exemption from ticket tax.--Section 4261(j) of such Code 
        is amended by striking ``September 30, 2023'' and inserting 
        ``September 30, 2028''.

SEC. 2. DESIGNATION OF CERTAIN AIRPORTS AS PORTS OF ENTRY.

  (a) In General.--The President shall--
          (1) pursuant to the Act of August 1, 1914 (38 Stat. 623, 
        chapter 223; 19 U.S.C. 2), designate each airport described in 
        subsection (b) as a port of entry; and
          (2) terminate the application of the user fee requirement 
        under section 236 of the Trade and Tariff Act of 1984 (19 
        U.S.C. 58b) with respect to the airport.
  (b) Airports Described.--An airport described in this subsection is 
an airport that--
          (1) is a primary airport (as defined in section 47102 of 
        title 49, United States Code);
          (2) is located not more than 30 miles from the northern or 
        southern international land border of the United States;
          (3) is associated, through a formal, legal instrument, 
        including a valid contract or governmental ordinance, with a 
        land border crossing or a seaport not more than 30 miles from 
        the airport; and
          (4) through such association, meets the numerical criteria 
        considered by U.S. Customs and Border Protection for 
        establishing a port of entry, as set forth in--
                  (A) Treasury Decision 82-37 (47 Fed. Reg. 10137; 
                relating to revision of customs criteria for 
                establishing ports of entry and stations), as revised 
                by Treasury Decisions 86-14 (51 Fed. Reg. 4559) and 87-
                65 (52 Fed. Reg. 16328); or
                  (B) any successor guidance or regulation.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    Section 1 of H.R. 3796, ``Extension of taxes funding 
Airport and Airway Trust Fund,'' as ordered reported by the 
Committee on Ways and Means on June 7, 2023, extends the 
expiring excise taxes funding the Airport and Airway Trust 
Fund, at their current rates, through September 30, 2028.
    Section 2 of H.R. 3796 requires the President to designate 
certain primary, commercial service airports as ports of entry 
if they are within 30 miles from the international land border 
of the United States, and meet the numerical criteria 
established by U.S. Customs and Border Protection (CBP) for 
establishing a port of entry, while terminating the application 
of the user fee requirement for airports that receive this 
designation.

                 B. Background and Need for Legislation

    The Airport and Airway Trust Fund is the primary source of 
funding for Federal aviation programs. The taxes that support 
the trust fund are currently set to expire after September 30, 
2023.
    Under present law, CBP has discretion whether to designate 
any airport a port of entry pursuant to 19 U.S.C. Sec. 1644a. 
In its regulations, CBP has established certain numerical 
criteria for determining whether to designate an airport as a 
port of entry. However, even if an airport meets these 
criteria, the designation decision is up to agency discretion.
    U.S. CBP already has discretion to designate any airport a 
port of entry if it meets these criteria. This section of H.R. 
3796 would simply remove discretion and require the designation 
for any qualifying airports.

                         C. Legislative History


Background

    H.R. 3796 was introduced on June 5, 2023, and was referred 
to the Committee on Ways and Means.

Committee hearings

    On May 9, 2023, the Committee held a ``Field Hearing on 
Trade in America: Securing Supply Chains and Protecting the 
American Worker--Staten Island.''
    On May 25, 2023, the Trade Subcommittee held a ``Hearing on 
Modernizing Customs Policies to Protect American Workers and 
Secure Supply Chains.''

Committee action

    The Committee on Ways and Means marked up H.R. 3796, ``To 
provide for the extension of taxes funding the Airport and 
Airway Trust Fund and to require the designation of certain 
airports as ports of entry,'' on June 7, 2023, and ordered the 
bill, as amended, favorably reported (with a quorum being 
present).

                          D. Committee History

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearings were used to develop and consider H.R. 3796:
    On May 9, 2023, the Committee held a ``Field Hearing on 
Trade in America: Securing Supply Chains and Protecting the 
American Worker--Staten Island.''
    On May 25, 2023, the Trade Subcommittee held a ``Hearing on 
Modernizing Customs Policies to Protect American Workers and 
Secure Supply Chains.''

                      II. EXPLANATION OF THE BILL


A. Extension of Taxes Funding Airport and Airway Trust Fund (Sec. 1 of 
   H.R. 3796 and Secs. 4043, 4081, 4083, 4261, and 4271 of the Code)


                              PRESENT LAW

Revenues dedicated to the Airport and Airway Trust Fund

    Excise taxes are imposed on amounts paid for commercial air 
passenger and freight transportation and on fuels used in 
commercial and noncommercial (i.e., transportation that is not 
``for hire'') aviation to fund the Airport and Airway Trust 
Fund.\1\ The present-law aviation excise taxes are as follows:
---------------------------------------------------------------------------
    \1\Air transportation through U.S. airspace that neither lands in 
nor takes off from a point in the United States (or the 225-mile zone) 
is exempt from the aviation excise taxes, but the transportation 
provider is subject to certain ``overflight fees'' imposed by the FAA 
pursuant to Congressional authorization. The term ``225-mile zone'' 
refers to the portion of Canada and Mexico that is not more than 225 
miles from the nearest point in the continental United States. Sec. 
4262(c)(2).
    \2\A segment consists of a single takeoff and a single landing 
which is taxable transportation. The domestic flight segment portion of 
the tax is adjusted annually for inflation (effective each January 1). 
Sec. 3.45 of Rev. Proc. 2022 38, 2022 45 I.R.B. 445.
    \3\The international arrival and departure tax rate is adjusted 
annually for inflation. For a domestic segment that begins or ends in 
Alaska or Hawaii, a reduced tax per person applies only to departures. 
For calendar year 2023, that reduced rate is $10.60 per departure (to/
from the mainland United States). Ibid.

------------------------------------------------------------------------
          Tax (and Code section)                      Tax Rates
------------------------------------------------------------------------
a. Domestic air passengers (sec. 4261)....  7.5 percent of fare, plus
                                             $4.80 (2023) per domestic
                                             flight segment generally\2\
b. International air passengers (sec.       $21.10 (2023) per arrival or
 4261).                                      departure\3\
c. Amounts paid for right to award free or  7.5 percent of amount paid
 reduced rate passenger air transportation
 (sec. 4261).
d. Air cargo (freight) transportation       6.25 percent of amount
 (sec. 4271).                                charged for domestic
                                             transportation; no tax on
                                             international cargo
                                             transportation
e. Aviation fuels (sec. 4081):\4\
    i. Commercial aviation................  4.3 cents per gallon
    ii. Non-commercial (general) aviation:
        Aviation gasoline.................  19.3 cents per gallon
        Jet fuel..........................  21.8 cents per gallon
f. Surtax on fuel used in fractional        14.1 cents per gallon
 ownership program aircraft (sec. 4043).
------------------------------------------------------------------------

    The Airport and Airway Trust Fund excise taxes (except for 
4.3 cents per gallon of the taxes on aviation fuels) are 
scheduled to expire after September 30, 2023. The 4.3-cents-
per-gallon fuels tax rate is permanent.
---------------------------------------------------------------------------
    \4\Kerosene generally is taxed at 24.3 cents per gallon. For 
kerosene used in aviation, these reduced rates apply when the kerosene 
is removed directly from the terminal into the fuel tank of an aircraft 
for use in commercial or noncommercial aviation. Under certain 
conditions, refueler trucks, tankers, and tank wagons are treated as 
terminals. There is no tax on kerosene removed directly into the fuel 
tank of an aircraft for use in foreign trade. In addition, like most 
other taxable motor fuels, aviation fuels are subject to an additional 
0.1 cent-per-gallon excise tax to fund the Leaking Underground Storage 
Tank Trust Fund. For kerosene removed directly into the fuel tank of an 
aircraft for a use exempt from tax under section 4041(c) (such as use 
in an aircraft for the exclusive use of a State or local government), 
the rate of tax is 0.1 cent per gallon.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee notes that the Airport and Airway Trust Fund 
excise taxes provide crucial revenue for funding the 
maintenance and operations of U.S. airports. The Committee 
believes that the extension of these taxes is necessary to keep 
the country's airports and airways safe and secure. Further, 
the Committee also believes that the extension of these taxes 
is vital to ensuring America's airports and air infrastructure 
remain competitive with the rest of the world and supports 
economic growth for American families, farmers, workers, and 
small businesses.

                        EXPLANATION OF PROVISION

    The provision extends through September 30, 2028, all of 
the expiring taxes dedicated to the Airport and Airway Trust 
Fund.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

     B. Clarification of Criteria for Designating Certain Primary, 
      Commercial Airports as Ports of Entry (Sec. 2 of H.R. 3796)


                              PRESENT LAW

    Under present law, U.S. CBP has discretion whether to 
designate any airport a port of entry pursuant to 19 U.S.C. 
Sec.  1644a. In its regulations, CBP has established certain 
numerical criteria for determining whether to designate an 
airport as a port of entry. However, even if an airport meets 
these criteria, the designation decision is up to agency 
discretion.

                           REASONS FOR CHANGE

    Users of primary, commercial airports near the U.S. 
northern or southern land border that have not been designated 
as ports of entry incur user-fee costs related to services 
provided by CBP that are not faced by users of similarly 
situated airports that have received this designation. Such 
disparate treatment can place these airports and their 
surrounding communities at a competitive disadvantage.

                        EXPLANATION OF PROVISION

    This provision establishes that primary, commercial service 
airports within 30 miles of the northern or southern land 
border that meet numerical criteria set by CBP for establishing 
ports of entry must be designated as ports of entry while 
terminating their user-fee designation.

                             EFFECTIVE DATE

    This provision is effective on the date of enactment.

                      III. VOTES OF THE COMMITTEE

    In compliance with the Rules of the House of 
Representatives, the following statement is made concerning the 
vote of the Committee on Ways and Means during the markup 
consideration of H.R. 3796, ``To provide for the extension of 
taxes funding the Airport and Airway Trust Fund and to require 
the designation of certain airports as ports of entry,'' on 
June 7, 2023.
    The vote on the amendment offered by Mr. Pascrell to the 
amendment in the nature of a substitute to H.R. 3796, which 
would strike the provisions of the bill designating certain 
airports as ports of entry was not agreed to by a roll call 
vote of 18 yeas to 23 nays (with a quorum being present). The 
vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO).................  ........        X   .........  Mr. Neal.........        X   ........  .........
Mr. Buchanan...................  ........        X   .........  Mr. Doggett......        X   ........  .........
Mr. Smith (NE).................  ........  ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Kelly......................  ........        X   .........  Mr. Larson.......        X   ........  .........
Mr. Schweikert.................  ........        X   .........  Mr. Blumenauer...        X   ........  .........
Mr. LaHood.....................  ........        X   .........  Mr. Pascrell.....        X   ........  .........
Dr. Wenstrup...................  ........        X   .........  Mr. Davis........        X   ........  .........
Mr. Arrington..................  ........        X   .........  Ms. Sanchez......        X   ........  .........
Dr. Ferguson...................  ........        X   .........  Mr. Higgins......        X   ........  .........
Mr. Estes......................  ........        X   .........  Ms. Sewell.......        X   ........  .........
Mr. Smucker....................  ........        X   .........  Ms. DelBene......        X   ........  .........
Mr. Hern.......................  ........        X   .........  Ms. Chu..........        X   ........  .........
Ms. Miller.....................  ........        X   .........  Ms. Moore........        X   ........  .........
Dr. Murphy.....................  ........        X   .........  Mr. Kildee.......        X   ........  .........
Mr. Kustoff....................  ........        X   .........  Mr. Beyer........        X   ........  .........
Mr. Fitzpatrick................  ........        X   .........  Mr. Evans........        X   ........  .........
Mr. Steube.....................  ........  ........  .........  Mr. Schneider....        X   ........  .........
Ms. Tenney.....................  ........        X   .........  Mr. Panetta......        X   ........  .........
Mrs. Fischbach.................  ........        X   .........
Mr. Moore......................  ........        X   .........
Mrs. Steel.....................  ........        X   .........
Ms. Van Duyne..................  ........        X   .........
Mr. Feenstra...................  ........        X   .........
Ms. Malliotakis................  ........        X   .........
Mr. Carey......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    In compliance with the Rules of the House of 
Representatives, the following statement is made concerning the 
vote of the Committee on Ways and Means during the markup 
consideration of H.R. 3796, ``To provide for the extension of 
taxes funding the Airport and Airway Trust Fund and to require 
the designation of certain airports as ports of entry,'' on 
June 7, 2023.
    The vote on the amendment offered by Mr. Pascrell to the 
amendment in the nature of a substitute to H.R. 3796, which 
would strike the provisions of the bill designating certain 
airports as ports of entry was not agreed to by a roll call 
vote of 18 yeas to 23 nays (with a quorum being present). The 
vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO).................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Smith (NE).................  ........  ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Kelly......................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Schweikert.................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Mr. LaHood.....................        X   ........  .........  Mr. Pascrell.....  ........        X   .........
Dr. Wenstrup...................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Arrington..................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Dr. Ferguson...................        X   ........  .........  Mr. Higgins......  ........        X   .........
Mr. Estes......................        X   ........  .........  Ms. Sewell.......  ........        X   .........
Mr. Smucker....................        X   ........  .........  Ms. DelBene......  ........        X   .........
Mr. Hern.......................        X   ........  .........  Ms. Chu..........  ........        X   .........
Ms. Miller.....................        X   ........  .........  Ms. Moore........  ........        X   .........
Dr. Murphy.....................        X   ........  .........  Mr. Kildee.......  ........        X   .........
Mr. Kustoff....................        X   ........  .........  Mr. Beyer........  ........        X   .........
Mr. Fitzpatrick................        X   ........  .........  Mr. Evans........  ........        X   .........
Mr. Steube.....................  ........  ........  .........  Mr. Schneider....  ........        X   .........
Ms. Tenney.....................        X   ........  .........  Mr. Panetta......  ........        X   .........
Mrs. Fischbach.................        X   ........  .........
Mr. Moore......................        X   ........  .........
Mrs. Steel.....................        X   ........  .........
Ms. Van Duyne..................        X   ........  .........
Mr. Feenstra...................        X   ........  .........
Ms. Malliotakis................        X   ........  .........
Mr. Carey......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    With respect to the requirement of clause 3(d) of rule XIII 
of the Rules of the House of Representatives, a cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974 was not made 
available to the Committee in time for the filing of this 
report.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee states further that the bill involves no new or 
increased tax expenditures.

                   C. Cost Estimate Prepared by the 
                      Congressional Budget Office

    The Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether this bill contains any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives, the Committee made findings and 
recommendations that are reflected in this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill does not authorize funding, so no statement of general 
performance goals and objectives is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.
    In compliance with clause 9 of rule XXI of the Rules of the 
House of Representatives, this resolution, as reported, 
contains no congressional earmarks, limited tax benefits, or 
limited tariff benefits as defined in clause 9(e), 9(f), or 
9(g) of rule XXI.

                       E. Tax Complexity Analysis

    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Internal Revenue 
Code of 1986 and that have ``widespread applicability'' to 
individuals or small businesses, within the meaning of the 
rule.

                   F. Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED


      A. Changes in Existing Law Proposed by the Bill, as Reported

    With respect to the requirement of clause 3(e) of rule XIII 
of the Rules of the House of Representatives, changes in 
existing law made by the bill, as reported.

        B. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle D--Miscellaneous Excise Taxes

           *       *       *       *       *       *       *


CHAPTER 31--RETAIL EXCISE TAXES

           *       *       *       *       *       *       *


Subchapter B--SPECIAL FUELS

           *       *       *       *       *       *       *


SEC. 4043. SURTAX ON FUEL USED IN AIRCRAFT PART OF A FRACTIONAL 
                    OWNERSHIP PROGRAM.

  (a) In general.--There is hereby imposed a tax on any liquid 
used (during any calendar quarter by any person) in a 
fractional program aircraft as fuel--
          (1) for the transportation of a qualified fractional 
        owner with respect to the fractional ownership aircraft 
        program of which such aircraft is a part, or
          (2) with respect to the use of such aircraft on 
        account of such a qualified fractional owner, including 
        use in deadhead service.
  (b) Amount of tax.--The rate of tax imposed by subsection (a) 
is 14.1 cents per gallon.
  (c) Definitions and special rules.--For purposes of this 
section--
          (1) Fractional program aircraft.--The term 
        ``fractional program aircraft'' means, with respect to 
        any fractional ownership aircraft program, any aircraft 
        which--
                  (A) is listed as a fractional program 
                aircraft in the management specifications 
                issued to the manager of such program by the 
                Federal Aviation Administration under subpart K 
                of part 91 of title 14, Code of Federal 
                Regulations, and
                  (B) is registered in the United States.
          (2) Fractional ownership aircraft program.--The term 
        ``fractional ownership aircraft program'' means a 
        program under which--
                  (A) a single fractional ownership program 
                manager provides fractional ownership program 
                management services on behalf of the fractional 
                owners,
                  (B) there are 1 or more fractional owners per 
                fractional program aircraft, with at least 1 
                fractional program aircraft having more than 1 
                owner,
                  (C) with respect to at least 2 fractional 
                program aircraft, none of the ownership 
                interests in such aircraft are--
                          (i) less than the minimum fractional 
                        ownership interest, or
                          (ii) held by the program manager 
                        referred to in subparagraph (A),
                  (D) there exists a dry-lease aircraft 
                exchange arrangement among all of the 
                fractional owners, and
                  (E) there are multi-year program agreements 
                covering the fractional ownership, fractional 
                ownership program management services, and dry-
                lease aircraft exchange aspects of the program.
          (3) Definitions related to fractional ownership 
        interests.--
                  (A) Qualified fractional owner.--The term 
                ``qualified fractional owner'' means any 
                fractional owner which has a minimum fractional 
                ownership interest in at least one fractional 
                program aircraft.
                  (B) Minimum fractional ownership interest.--
                The term ``minimum fractional ownership 
                interest'' means, with respect to each type of 
                aircraft--
                          (i) a fractional ownership interest 
                        equal to or greater than 1/16 of at 
                        least 1 subsonic, fixed wing, or 
                        powered lift aircraft, or
                          (ii) a fractional ownership interest 
                        equal to or greater than 1/32 of at 
                        least 1 rotorcraft aircraft.
                  (C) Fractional ownership interest.--The term 
                ``fractional ownership interest'' means--
                          (i) the ownership of an interest in a 
                        fractional program aircraft,
                          (ii) the holding of a multi-year 
                        leasehold interest in a fractional 
                        program aircraft, or
                          (iii) the holding of a multi-year 
                        leasehold interest which is convertible 
                        into an ownership interest in a 
                        fractional program aircraft.
                  (D) Fractional owner.--The term ``fractional 
                owner'' means any person owning any interest 
                (including the entire interest) in a fractional 
                program aircraft.
          (4) Dry-lease aircraft exchange.--The term ``dry-
        lease aircraft exchange'' means an agreement, 
        documented by the written program agreements, under 
        which the fractional program aircraft are available, on 
        an as needed basis without crew, to each fractional 
        owner.
          (5) Special rule relating to use of fractional 
        program aircraft for flight demonstration, maintenance, 
        or training.--For purposes of subsection (a), a 
        fractional program aircraft shall not be considered to 
        be used for the transportation of a qualified 
        fractional owner, or on account of such qualified 
        fractional owner, when it is used for flight 
        demonstration, maintenance, or crew training.
          (6) Special rule relating to deadhead service.--A 
        fractional program aircraft shall not be considered to 
        be used on account of a qualified fractional owner when 
        it is used in deadhead service and a person other than 
        a qualified fractional owner is separately charged for 
        such service.
  (d) Termination.--This section shall not apply to liquids 
used as a fuel in an aircraft after [September 30, 2023] 
September 30, 2028.

           *       *       *       *       *       *       *


CHAPTER 32--MANUFACTURERS EXCISE TAXES

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Subchapter A--AUTOMOTIVE AND RELATED ITEMS

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PART III--PETROLEUM PRODUCTS

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Subpart A--MOTOR AND AVIATION FUELS

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SEC. 4081. IMPOSITION OF TAX.

  (a) Tax imposed.--
          (1) Tax on removal, entry, or sale.--
                  (A) In general.--There is hereby imposed a 
                tax at the rate specified in paragraph (2) on--
                          (i) the removal of a taxable fuel 
                        from any refinery,
                          (ii) the removal of a taxable fuel 
                        from any terminal,
                          (iii) the entry into the United 
                        States of any taxable fuel for 
                        consumption, use, or warehousing, and
                          (iv) the sale of a taxable fuel to 
                        any person who is not registered under 
                        section 4101 unless there was a prior 
                        taxable removal or entry of such fuel 
                        under clause (i), (ii), or (iii).
                  (B) Exemption for bulk transfers to 
                registered terminals or refineries.--
                          (i) In general.--The tax imposed by 
                        this paragraph shall not apply to any 
                        removal or entry of a taxable fuel 
                        transferred in bulk by pipeline or 
                        vessel to a terminal or refinery if the 
                        person removing or entering the taxable 
                        fuel, the operator of such pipeline or 
                        vessel (except as provided in clause 
                        (ii)), and the operator of such 
                        terminal or refinery are registered 
                        under section 4101.
                          (ii) Nonapplication of registration 
                        to vessel operators entering by deep-
                        draft vessel.--For purposes of clause 
                        (i), a vessel operator is not required 
                        to be registered with respect to the 
                        entry of a taxable fuel transferred in 
                        bulk by a vessel described in section 
                        4042(c)(1).
          (2) Rates of tax.--
                  (A) In general.--The rate of the tax imposed 
                by this section is--
                          (i) in the case of gasoline other 
                        than aviation gasoline, 18.3 cents per 
                        gallon,
                          (ii) in the case of aviation 
                        gasoline, 19.3 cents per gallon, and
                          (iii) in the case of diesel fuel or 
                        kerosene, 24.3 cents per gallon.
                  (B) Leaking Underground Storage Tank Trust 
                Fund tax.--The rates of tax specified in 
                subparagraph (A) shall each be increased by 0.1 
                cent per gallon. The increase in tax under this 
                subparagraph shall in this title be referred to 
                as the Leaking Underground Storage Tank Trust 
                Fund financing rate.
                  (C) Taxes imposed on fuel used in aviation.--
                In the case of kerosene which is removed from 
                any refinery or terminal directly into the fuel 
                tank of an aircraft for use in aviation, the 
                rate of tax under subparagraph (A)(iii) shall 
                be--
                          (i) in the case of use for commercial 
                        aviation by a person registered for 
                        such use under section 4101, 4.3 cents 
                        per gallon, and
                          (ii) in the case of use for aviation 
                        not described in clause (i), 21.8 cents 
                        per gallon.
                  (D) Diesel-water fuel emulsion.--In the case 
                of diesel-water fuel emulsion at least 14 
                percent of which is water and with respect to 
                which the emulsion additive is registered by a 
                United States manufacturer with the 
                Environmental Protection Agency pursuant to 
                section 211 of the Clean Air Act (as in effect 
                on March 31, 2003), subparagraph (A)(iii) shall 
                be applied by substituting ``19.7 cents'' for 
                ``24.3 cents''. The preceding sentence shall 
                not apply to the removal, sale, or use of 
                diesel-water fuel emulsion unless the person so 
                removing, selling, or using such fuel is 
                registered under section 4101.
          (3) Certain refueler trucks, tankers, and tank wagons 
        treated as terminal.--
                  (A) In general.--For purposes of paragraph 
                (2)(C), a refueler truck, tanker, or tank wagon 
                shall be treated as part of a terminal if--
                          (i) such terminal is located within 
                        an airport,
                          (ii) any kerosene which is loaded in 
                        such truck, tanker, or wagon at such 
                        terminal is for delivery only into 
                        aircraft at the airport in which such 
                        terminal is located,
                          (iii) such truck, tanker, or wagon 
                        meets the requirements of subparagraph 
                        (B) with respect to such terminal, and
                          (iv) except in the case of exigent 
                        circumstances identified by the 
                        Secretary in regulations, no vehicle 
                        registered for highway use is loaded 
                        with kerosene at such terminal.
                  (B) Requirements.--A refueler truck, tanker, 
                or tank wagon meets the requirements of this 
                subparagraph with respect to a terminal if such 
                truck, tanker, or wagon--
                          (i) has storage tanks, hose, and 
                        coupling equipment designed and used 
                        for the purposes of fueling aircraft,
                          (ii) is not registered for highway 
                        use, and
                          (iii) is operated by--
                                  (I) the terminal operator of 
                                such terminal, or
                                  (II) a person that makes a 
                                daily accounting to such 
                                terminal operator of each 
                                delivery of fuel from such 
                                truck, tanker, or wagon.
                  (C) Reporting.--The Secretary shall require 
                under section 4101(d) reporting by such 
                terminal operator of--
                          (i) any information obtained under 
                        subparagraph (B)(iii)(II), and
                          (ii) any similar information 
                        maintained by such terminal operator 
                        with respect to deliveries of fuel made 
                        by trucks, tankers, or wagons operated 
                        by such terminal operator.
                  (D) Applicable rate.--For purposes of 
                paragraph (2)(C), in the case of any kerosene 
                treated as removed from a terminal by reason of 
                this paragraph--
                          (i) the rate of tax specified in 
                        paragraph (2)(C)(i) in the case of use 
                        described in such paragraph shall apply 
                        if such terminal is located within a 
                        secured area of an airport, and
                          (ii) the rate of tax specified in 
                        paragraph (2)(C)(ii) shall apply in all 
                        other cases.
          (4) Liability for tax on kerosene used in commercial 
        aviation.--For purposes of paragraph (2)(C)(i), the 
        person who uses the fuel for commercial aviation shall 
        pay the tax imposed under such paragraph. For purposes 
        of the preceding sentence, fuel shall be treated as 
        used when such fuel is removed into the fuel tank.
  (b) Treatment of removal or subsequent sale by blender.--
          (1) In general.--There is hereby imposed a tax at the 
        rate determined under subsection (a) on taxable fuel 
        removed or sold by the blender thereof.
          (2) Credit for tax previously paid.--If--
                  (A) tax is imposed on the removal or sale of 
                a taxable fuel by reason of paragraph (1), and
                  (B) the blender establishes the amount of the 
                tax paid with respect to such fuel by reason of 
                subsection (a),
        the amount of the tax so paid shall be allowed as a 
        credit against the tax imposed by reason of paragraph 
        (1).
  (c) Later separation of fuel from diesel-water fuel 
emulsion.--If any person separates the taxable fuel from a 
diesel-water fuel emulsion on which tax was imposed under 
subsection (a) at a rate determined under subsection (a)(2)(D) 
(or with respect to which a credit or payment was allowed or 
made by reason of section 6427), such person shall be treated 
as the refiner of such taxable fuel. The amount of tax imposed 
on any removal of such fuel by such person shall be reduced by 
the amount of tax imposed (and not credited or refunded) on any 
prior removal or entry of such fuel.
  (d) Termination.--
          (1) In general.--The rates of tax specified in 
        clauses (i) and (iii) of subsection (a)(2)(A) shall be 
        4.3 cents per gallon after September 30, 2028.
          (2) Aviation fuels.--The rates of tax specified in 
        subsection (a)(2)(A)(ii) and (a)(2)(C)(ii) shall be 4.3 
        cents per gallon--
                  (A) after December 31, 1996, and before the 
                date which is 7 days after the date of the 
                enactment of the Airport and Airway Trust Fund 
                Tax Reinstatement Act of 1997, and
                  (B) after [September 30, 2023] September 30, 
                2028.
          (3) Leaking Underground Storage Tank Trust Fund 
        financing rate.--The Leaking Underground Storage Tank 
        Trust Fund financing rate under subsection (a)(2) shall 
        apply after September 30, 1997, and before October 1, 
        2028.
  (e) Refunds in certain cases.--Under regulations prescribed 
by the Secretary, if any person who paid the tax imposed by 
this section with respect to any taxable fuel establishes to 
the satisfaction of the Secretary that a prior tax was paid 
(and not credited or refunded) with respect to such taxable 
fuel, then an amount equal to the tax paid by such person shall 
be allowed as a refund (without interest) to such person in the 
same manner as if it were an overpayment of tax imposed by this 
section.

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SEC. 4083. DEFINITIONS; SPECIAL RULE; ADMINISTRATIVE AUTHORITY.

  (a) Taxable fuel.--For purposes of this subpart--
          (1) In general.--The term ``taxable fuel'' means--
                  (A) gasoline,
                  (B) diesel fuel, and
                  (C) kerosene.
          (2) Gasoline.--The term ``gasoline''--
                  (A) includes any gasoline blend, other than 
                qualified methanol or ethanol fuel (as defined 
                in section 4041(b)(2)(B)), partially exempt 
                methanol or ethanol fuel (as defined in section 
                4041(m)(2)), or a denatured alcohol, and
                  (B) includes, to the extent prescribed in 
                regulations--
                          (i) any gasoline blend stock, and
                          (ii) any product commonly used as an 
                        additive in gasoline (other than 
                        alcohol).
        For purposes of subparagraph (B)(i), the term 
        ``gasoline blend stock'' means any petroleum product 
        component of gasoline.
          (3) Diesel fuel.--
                  (A) In general.--The term ``diesel fuel'' 
                means--
                          (i) any liquid (other than gasoline) 
                        which is suitable for use as a fuel in 
                        a diesel-powered highway vehicle, or a 
                        diesel-powered train,
                          (ii) transmix, and
                          (iii) diesel fuel blend stocks 
                        identified by the Secretary.
                  (B) Transmix.--For purposes of subparagraph 
                (A), the term ``transmix'' means a byproduct of 
                refined products pipeline operations created by 
                the mixing of different specification products 
                during pipeline transportation.
  (b) Commercial aviation.--For purposes of this subpart, the 
term ``commercial aviation'' means any use of an aircraft in a 
business of transporting persons or property for compensation 
or hire by air, unless properly allocable to any transportation 
exempt from the taxes imposed by sections 4261 and 4271 by 
reason of section 4281 or 4282 or by reason of subsection (h) 
or (i) of section 4261. Such term shall not include the use of 
any aircraft before [October 1, 2023] October 1, 2028, if tax 
is imposed under section 4043 with respect to the fuel consumed 
in such use or if no tax is imposed on such use under section 
4043 by reason of subsection (c)(5) thereof.
  (c) Certain uses defined as removal.--If any person uses 
taxable fuel (other than in the production of taxable fuels or 
special fuels referred to in section 4041), such use shall for 
the purposes of this chapter be considered a removal.
  (d) Administrative authority.--
          (1) In general.--In addition to the authority 
        otherwise granted by this title, the Secretary may in 
        administering compliance with this subpart, section 
        4041, and penalties and other administrative provisions 
        related thereto--
                  (A) enter any place at which taxable fuel is 
                produced or is stored (or may be stored) for 
                purposes of--
                          (i) examining the equipment used to 
                        determine the amount or composition of 
                        such fuel and the equipment used to 
                        store such fuel,
                          (ii) taking and removing samples of 
                        such fuel, and
                          (iii) inspecting any books and 
                        records and any shipping papers 
                        pertaining to such fuel, and
                  (B) detain, for the purposes referred in 
                subparagraph (A), any container which contains 
                or may contain any taxable fuel.
          (2) Inspection sites.--The Secretary may establish 
        inspection sites for purposes of carrying out the 
        Secretary's authority under paragraph (1)(B).
          (3) Penalty for refusal of entry.--
                  (A) Forfeiture.--The penalty provided by 
                section 7342 shall apply to any refusal to 
                admit entry or other refusal to permit an 
                action by the Secretary authorized by paragraph 
                (1), except that section 7342 shall be applied 
                by substituting ``$1,000'' for ``$500'' for 
                each such refusal.
                  (B) Assessable penalty.--For additional 
                assessable penalty for the refusal to admit 
                entry or other refusal to permit an action by 
                the Secretary authorized by paragraph (1), see 
                section 6717.

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CHAPTER 33--FACILITIES AND SERVICES

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Subchapter C--TRANSPORTATION BY AIR

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PART I--PERSONS

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SEC. 4261. IMPOSITION OF TAX.

  (a) In general.--There is hereby imposed on the amount paid 
for taxable transportation of any person a tax equal to 7.5 
percent of the amount so paid.
  (b) Domestic segments of taxable transportation.--
          (1) In general.--There is hereby imposed on the 
        amount paid for each domestic segment of taxable 
        transportation by air a tax in the amount of $3.00.
          (2) Domestic segment.--For purposes of this section, 
        the term ``domestic segment'' means any segment 
        consisting of 1 takeoff and 1 landing and which is 
        taxable transportation described in section 4262(a)(1).
          (3) Changes in segments by reason of rerouting.--If--
                  (A) transportation is purchased between 2 
                locations on specified flights, and
                  (B) there is a change in the route taken 
                between such 2 locations which changes the 
                number of domestic segments, but there is no 
                change in the amount charged for such 
                transportation,
        the tax imposed by paragraph (1) shall be determined 
        without regard to such change in route.
  (c) Use of international travel facilities.--
          (1) In general.--There is hereby imposed a tax of 
        $12.00 on any amount paid (whether within or without 
        the United States) for any transportation of any person 
        by air, if such transportation begins or ends in the 
        United States.
          (2) Exception for transportation entirely taxable 
        under subsection (a).--This subsection shall not apply 
        to any transportation all of which is taxable under 
        subsection (a) (determined without regard to sections 
        4281 and 4282).
          (3) Special rule for Alaska and Hawaii.--In any case 
        in which the tax imposed by paragraph (1) applies to a 
        domestic segment beginning or ending in Alaska or 
        Hawaii, such tax shall apply only to departures and 
        shall be at the rate of $6.
  (d) By whom paid.--Except as provided in section 4263(a), the 
taxes imposed by this section shall be paid by the person 
making the payment subject to the tax.
  (e) Special rules.--
          (1) Segments to and from rural airports.--
                  (A) Exception from segment tax.--The tax 
                imposed by subsection (b)(1) shall not apply to 
                any domestic segment beginning or ending at an 
                airport which is a rural airport for the 
                calendar year in which such segment begins or 
                ends (as the case may be).
                  (B) Rural airport.--For purposes of this 
                paragraph, the term ``rural airport'' means, 
                with respect to any calendar year, any airport 
                if--
                          (i) there were fewer than 100,000 
                        commercial passengers departing by air 
                        (in the case of any airport described 
                        in clause (ii)(III), on flight segments 
                        of at least 100 miles) during the 
                        second preceding calendar year from 
                        such airport, and
                          (ii) such airport--
                                  (I) is not located within 75 
                                miles of another airport which 
                                is not described in clause (i),
                                  (II) is receiving essential 
                                air service subsidies as of the 
                                date of the enactment of this 
                                paragraph, or
                                  (III) is not connected by 
                                paved roads to another airport.
          (2) Amounts paid outside the United States.--In the 
        case of amounts paid outside the United States for 
        taxable transportation, the taxes imposed by 
        subsections (a) and (b) shall apply only if such 
        transportation begins and ends in the United States.
          (3) Amounts paid for right to award free or reduced 
        rate air transportation.--
                  (A) In general.--Any amount paid (and the 
                value of any other benefit provided) to an air 
                carrier (or any related person) for the right 
                to provide mileage awards for (or other 
                reductions in the cost of) any transportation 
                of persons by air shall be treated for purposes 
                of subsection (a) as an amount paid for taxable 
                transportation, and such amount shall be 
                taxable under subsection (a) without regard to 
                any other provision of this subchapter.
                  (B) Controlled group.--For purposes of 
                subparagraph (A), a corporation and all wholly 
                owned subsidiaries of such corporation shall be 
                treated as 1 corporation.
                  (C) Regulations.--The Secretary shall 
                prescribe rules which reallocate items of 
                income, deduction, credit, exclusion, or other 
                allowance to the extent necessary to prevent 
                the avoidance of tax imposed by reason of this 
                paragraph. The Secretary may prescribe rules 
                which exclude from the tax imposed by 
                subsection (a) amounts attributable to mileage 
                awards which are used other than for 
                transportation of persons by air.
          (4) Inflation adjustment of dollar rates of tax.--
                  (A) In general.--In the case of taxable 
                events in a calendar year after the last 
                nonindexed year, the $3.00 amount contained in 
                subsection (b) and each dollar amount contained 
                in subsection (c) shall be increased by an 
                amount equal to--
                          (i) such dollar amount, multiplied by
                          (ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for 
                        such calendar year by substituting the 
                        year before the last nonindexed year 
                        for ``calendar year 2016'' in 
                        subparagraph (A)(ii) thereof.
                If any increase determined under the preceding 
                sentence is not a multiple of 10 cents, such 
                increase shall be rounded to the nearest 
                multiple of 10 cents.
                  (B) Last nonindexed year.--For purposes of 
                subparagraph (A), the last nonindexed year is--
                          (i) 2002 in the case of the $3.00 
                        amount contained in subsection (b), and
                          (ii) 1998 in the case of the dollar 
                        amounts contained in subsection (c).
                  (C) Taxable event.--For purposes of 
                subparagraph (A), in the case of the tax 
                imposed by subsection (b), the beginning of the 
                domestic segment shall be treated as the 
                taxable event.
                  (D) Special rule for amounts paid for 
                domestic segments beginning after 2002.--If an 
                amount is paid during a calendar year for a 
                domestic segment beginning in a later calendar 
                year, then the rate of tax under subsection (b) 
                on such amount shall be the rate in effect for 
                the calendar year in which such amount is paid.
          (5) Amounts paid for aircraft management services.--
                  (A) In general.--No tax shall be imposed by 
                this section or section 4271 on any amounts 
                paid by an aircraft owner for aircraft 
                management services related to--
                          (i) maintenance and support of the 
                        aircraft owner's aircraft, or
                          (ii) flights on the aircraft owner's 
                        aircraft.
                  (B) Aircraft management services.--For 
                purposes of subparagraph (A), the term 
                ``aircraft management services'' includes--
                          (i) assisting an aircraft owner with 
                        administrative and support services, 
                        such as scheduling, flight planning, 
                        and weather forecasting,
                          (ii) obtaining insurance,
                          (iii) maintenance, storage and 
                        fueling of aircraft,
                          (iv) hiring, training, and provision 
                        of pilots and crew,
                          (v) establishing and complying with 
                        safety standards, and
                          (vi) such other services as are 
                        necessary to support flights operated 
                        by an aircraft owner.
                  (C) Lessee treated as aircraft owner.--
                          (i) In general.--For purposes of this 
                        paragraph, the term ``aircraft owner'' 
                        includes a person who leases the 
                        aircraft other than under a 
                        disqualified lease.
                          (ii) Disqualified lease.--For 
                        purposes of clause (i), the term 
                        ``disqualified lease'' means a lease 
                        from a person providing aircraft 
                        management services with respect to 
                        such aircraft (or a related person 
                        (within the meaning of section 
                        465(b)(3)(C)) to the person providing 
                        such services), if such lease is for a 
                        term of 31 days or less.
                  (D) Pro rata allocation.--In the case of 
                amounts paid to any person which (but for this 
                subsection) are subject to the tax imposed by 
                subsection (a), a portion of which consists of 
                amounts described in subparagraph (A), this 
                paragraph shall apply on a pro rata basis only 
                to the portion which consists of amounts 
                described in such subparagraph.
  (f) Exemption for certain uses.--No tax shall be imposed 
under subsection (a) or (b) on air transportation--
          (1) by helicopter for the purpose of transporting 
        individuals, equipment, or supplies in the exploration 
        for, or the development or removal of, hard minerals, 
        oil, or gas, or
          (2) by helicopter or by fixed-wing aircraft for the 
        purpose of the planting, cultivation, cutting, or 
        transportation of, or caring for, trees (including 
        logging operations),
but only if the helicopter or fixed-wing aircraft does not take 
off from, or land at, a facility eligible for assistance under 
the Airport and Airway Development Act of 1970, or otherwise 
use services provided pursuant to section 44509 or 44913(b) or 
subchapter I of chapter 471 of title 49, United States Code, 
during such use. In the case of helicopter transportation 
described in paragraph (1), this subsection shall be applied by 
treating each flight segment as a distinct flight.
  (g) Exemption for air ambulances providing certain emergency 
medical transportation.--No tax shall be imposed under this 
section or section 4271 on any air transportation for the 
purpose of providing emergency medical services--
          (1) by helicopter, or
          (2) by a fixed-wing aircraft equipped for and 
        exclusively dedicated on that flight to acute care 
        emergency medical services.
  (h) Exemption for skydiving uses.--No tax shall be imposed by 
this section or section 4271 on any air transportation 
exclusively for the purpose of skydiving.
  (i) Exemption for seaplanes.--No tax shall be imposed by this 
section or section 4271 on any air transportation by a seaplane 
with respect to any segment consisting of a takeoff from, and a 
landing on, water, but only if the places at which such takeoff 
and landing occur have not received and are not receiving 
financial assistance from the Airport and Airways Trust Fund.
  (j) Exemption for aircraft in fractional ownership aircraft 
programs.--No tax shall be imposed by this section or section 
4271 on any air transportation if tax is imposed under section 
4043 with respect to the fuel used in such transportation. This 
subsection shall not apply after [September 30, 2023] September 
30, 2028.
  (k) Application of taxes.--
          (1) In general.--The taxes imposed by this section 
        shall apply to--
                  (A) transportation beginning during the 
                period--
                          (i) beginning on the 7th day after 
                        the date of the enactment of the 
                        Airport and Airway Trust Fund Tax 
                        Reinstatement Act of 1997, and
                          (ii) ending on [September 30, 2023] 
                        September 30, 2028, and
                  (B) amounts paid during such period for 
                transportation beginning after such period.
          (2) Refunds.--If, as of the date any transportation 
        begins, the taxes imposed by this section would not 
        have applied to such transportation if paid for on such 
        date, any tax paid under paragraph (1)(B) with respect 
        to such transportation shall be treated as an 
        overpayment.

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PART II--PROPERTY

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SEC. 4271. IMPOSITION OF TAX.

  (a) In general.--There is hereby imposed upon the amount paid 
within or without the United States for the taxable 
transportation (as defined in section 4272) of property a tax 
equal to 6.25 percent of the amount so paid for such 
transportation. The tax imposed by this subsection shall apply 
only to amounts paid to a person engaged in the business of 
transporting property by air for hire.
  (b) By whom paid.--
          (1) In general.--Except as provided by paragraph (2), 
        the tax imposed by subsection (a) shall be paid by the 
        person making the payment subject to tax.
          (2) Payments made outside the United States.--If a 
        payment subject to tax under subsection (a) is made 
        outside the United States and the person making such 
        payment does not pay such tax, such tax--
                  (A) shall be paid by the person to whom the 
                property is delivered in the United States by 
                the person furnishing the last segment of the 
                taxable transportation in respect of which such 
                tax is imposed, and
                  (B) shall be collected by the person 
                furnishing the last segment of such taxable 
                transportation.
  (c) Determination of amounts paid in certain cases.--For 
purposes of this section, in any case in which a person engaged 
in the business of transporting property by air for hire and 
one or more other persons not so engaged jointly provide 
services which include taxable transportation of property, and 
the person so engaged receives, for the furnishing of such 
taxable transportation, a portion of the receipts from the 
joint providing of such services, the amount paid for the 
taxable transportation shall be treated as being the sum of (1) 
the portion of the receipts so received, and (2) any expenses 
incurred by any of the persons not so engaged which are 
properly attributable to such taxable transportation and which 
are taken into account in determining the portion of the 
receipts so received.
  (d) Application of tax.--
          (1) In general.--The tax imposed by subsection (a) 
        shall apply to--
                  (A) transportation beginning during the 
                period--
                          (i) beginning on the 7th day after 
                        the date of the enactment of the 
                        Airport and Airway Trust Fund Tax 
                        Reinstatement Act of 1997, and
                          (ii) ending on [September 30, 2023] 
                        September 30, 2028, and
                  (B) amounts paid during such period for 
                transportation beginning after such period.
          (2) Refunds.--If, as of the date any transportation 
        begins, the taxes imposed by this section would not 
        have applied to such transportation if paid for on such 
        date, any tax paid under paragraph (1)(B) with respect 
        to such transportation shall be treated as an 
        overpayment.

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                         VII. DISSENTING VIEWS

                          House of Representatives,
                               Committee on Ways and Means,
                                      Washington, DC, June 7, 2023.

DISSENTING VIEWS ON ``TO PROVIDE FOR THE EXTENSION OF TAXES FUNDING THE 
AIRPORT AND AIRWAY TRUST FUND AND TO REQUIRE THE DESIGNATION OF CERTAIN 
                AIRPORTS AS PORTS OF ENTRY,'' H.R. 3796

    Democrats agree that the Airport and Airways Trust Fund 
should continue to be funded and generally support legislation 
that extends these taxes. However, we are concerned that no 
hearing was held regarding these taxes and whether there are 
any appropriate updates to be made as a part of this 
reauthorization process. The imposition of these taxes is 
affecting the manner in which air carriers conduct their 
business, and accordingly we feel it is important to thoroughly 
examine the tax base to ensure that our airports and airways 
continue to receive necessary funding from the commercial 
enterprises that use these facilities.
    For instance, had the Committee held hearings on the 
current state of the AATF taxes, it might have learned that 
certain low-cost air carriers are pushing the boundaries of the 
line between ``an amount paid for taxable transportation'', and 
other charges.\1\ The Committee could have explored whether the 
current fuel surcharge for fractional aircraft ownership, which 
is not indexed for inflation, is providing a competitive 
advantage for the likes of large fractional ownership 
operations over smaller charter operations, who pay the 7.5 
percent ticket tax (a tax that generally rises with rising 
costs). The Committee could have examined any number of issues, 
but it nonetheless neglected to do so.
---------------------------------------------------------------------------
    \1\See, e.g., https://onemileatatime.com/insights/buy-spirit-
tickets-airport/. This blog post details how Spirit Airlines 
artificially lowers its base ticket prices, and then charging a 
``passenger usage charge'', upon which the tax is not levied, arguing 
that this charge is not a mandatory fee because it is not charged when 
a purchaser drives to the airport to purchase a ticket at the ticket 
counter.
---------------------------------------------------------------------------
    More broadly, with the increasing proliferation of fees, 
documented in a recent Wall Street Journal article,\2\ the 
Committee should have examined whether the AATF taxes 
accurately captured the cost of travel. By simply rubber-
stamping the status quo, the Committee is blessing the airlines 
shifting more of their charges into un-taxed fees, and 
contributing to the feeling of air passengers being nickled-
and-dimed whenever they travel.
---------------------------------------------------------------------------
    \2\The Airline, Hotel and Rental Car Fees That Catch Travelers Off-
Guard--WSJ.
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    Furthermore, the bill designates airports that meet new, 
unvetted criteria with port of entry status without any 
justification regarding the need for this legislation. 
Committee Democrats unanimously opposed H.R. 3796 at the markup 
because the legislation affects only certain airports in select 
congressional districts. The bill expands on previous 
legislation introduced by Rep. Stefanik, the Border Airport 
Enhancement Act of 2023 (H.R. 2979), which would designate the 
Plattsburgh International Airport in Plattsburgh, New York and 
the Valley International Airport in Harlingen, Texas as ports 
of entry. H.R. 3796 would also benefit Rep. Stefanik, a member 
of the House Republican leadership and Chair of the House 
Republican Conference, and perhaps several other Members of 
Congress, not the American people.
    The legislation would terminate user fees at affected 
airports and take away resources and staff from U.S. Customs 
and Border Protection (CBP), thereby jeopardizing the important 
work the agency does to keep America's borders and ports of 
entry safe. The airports affected by the bill do not meet CBP's 
existing customs workload criteria for port of entry status. 
Most of the airports affected by the legislation rely on user 
fees authorized by Congress to receive CBP services. The 
legislation, by terminating the application of user fees at 
these airports would likely leave them without any customs 
services given CBP's limited, overstretched appropriated 
resources. The Committee has not had the opportunity to study 
this legislation fully to assess its potential merits as 
Chairman Jason Smith introduced H.R. 3796 on June 5, two days 
prior to the markup.
    During the markup, Rep. Pascrell offered an amendment to 
strike section 2 of H.R. 3796 which includes the provisions 
related to the designation of certain airports as ports of 
entry. Committee Democrats unanimously supported the amendment. 
Unfortunately, the Members of the Majority present at the 
markup all voted against the amendment.
    We hope the Majority will reconsider this legislation and 
instead consider bipartisan approaches to improving customs 
services at our nation's airports and ports of entry.

                                           Richard E. Neal,
                                                    Ranking Member.

        Ranking Member Richard E. Neal, Opening Statement, 
            Committee on Ways and Means Markup of H.R. 
            3796,
                                           Wednesday, June 7, 2023.
    This hastily thrown-together legislation flies in the face 
of the long-established practice of bipartisan reauthorization 
of the AATF taxes. Republicans released the text less than 24 
hours ago, giving us no opportunity to provide our perspective. 
This proposal rubber-stamps three excise taxes without so much 
as a hearing or any examination of the current practices of 
these airlines. According to press reports, this legislation 
would designate two airports as ports of entry with absolutely 
no rationale or explanation. The Committee hasn't studied these 
issues nor held a hearing on this legislation, which is 
strongly opposed by U.S. Customs and Border Protection.
    This is hardly the sort of meaningful policy discussion one 
would expect from the Committee charged with funding the 
operation of our airways. There are any number of issues the 
Committee could have examined: the increasing proliferation of 
fees, the current state of AATF taxes, and the rising costs air 
carriers are levying onto consumers. Unfortunately, Republicans 
neglected to--rubberstamping airlines' current practices and 
telling American consumers who they stand with: corporations.
    Thank you, and I yield back.

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