Dec. 6, 2021
With the potential for the FAA Registry in Oklahoma City, OK to close on Dec. 31 for the federal holiday, and possibly close early on Dec. 30, NBAA and the General Aviation Manufacturers Association (GAMA) are working with agency leadership on possible mitigations for year-end transactions.
The unprecedented volume of transactions in 2021 means many buyers and sellers will finalize deals at the end of December, and the associations have communicated the significant financial value of the transactions to the FAA.
The FAA’s aircraft registration branch in Oklahoma City, which is known as the registry, issues aircraft registration certificates and processes documents, such as liens, which affect title to or interest in aircraft, engines, propellers and spare parts. The registry also reserves and assigns all N-Number identification marks for U.S. civil aircraft.
Typically, the registry is busy processing aircraft transactions on Dec. 31 and, like many government offices, is closed on Jan. 1 for the first federal holiday of the year. However, 2022 starts on a Saturday, so the Jan. 1 federal holiday is being celebrated on Dec. 31, 2021.
“For many parties, it will be important to close their aircraft transactions in 2021. Manufacturers are finalizing their sales for the year, and taxpayers considering immediate or full expensing on their aircraft transactions are required to fulfill specific duties before the end of the year to be eligible for this deduction,” explained Jeffrey Towers, general counsel for aircraft at TVPX and past chair of the NBAA Tax Committee.
“This year, companies are realizing a return of business activity that may warrant some to purchase a business aircraft late in the year, so closing the registry outside of normal business days could be problematic,” Towers added.
The complexity of many business aircraft transactions also presents challenges noted NBAA’s Scott O’Brien, senior director for public policy and advocacy.
“Each aircraft transaction is unique and there are many aspects, from insurance to sales tax planning to inspections, that can cause a delay,” he said. “This can be further complicated if a lender is involved, and now with the prospect of the registry closing early on Dec. 30 – it would be prudent for all parties to plan ahead and file all documentation before year-end.”
O’Brien explained that if closing on Dec. 31 is the only option, digital signatures can be a helpful tool, but advance planning is required.
“Buyers and sellers can agree in advance to submit digitally signed documents to the FAA Registry via email, but coordination between all parties to the transaction is critical, and with the registry closed you cannot perform searches immediately before the closing,” he said.
The potential impact of the Dec. 31 federal holiday has prompted NBAA to reach out to the FAA to discuss possible remedies.
“We recognized the broad and costly implications of the registry’s closure on Dec. 31 and possible early closure on Dec. 30, and asked the FAA to consider several resolutions,” said association President and CEO Ed Bolen. “While the FAA reviews our request, NBAA strongly advises anyone finalizing an aircraft transaction this month to incorporate the registry’s holiday closings into their plans and file documentation at least several days before that date.”