June 4, 2018
Through passage of the Tax Cuts and Jobs Act, NBAA secured a significant victory as a provision dealing with aircraft management services was included in the legislation. Under the provision, payments by aircraft owners for management services in connection with flights on their own aircraft are not subject to federal excise tax. In 2018, NBAA and NATA submitted a request to the Treasury Department and IRS for additional guidance to help implement the new provision and answer industry questions.
While the intent of the legislation is clear, business aviation requested guidance on a number of areas to assist IRS and industry in implementing the change. For example, understanding the definition of “aircraft owner” is critical to properly applying the provision. In the guidance request, NBAA and NATA suggest that payments for aircraft management services should be considered as made by the owner when the payments are made by parties related to the owner. This approach would recognize that cash management arrangements among related entities should not determine whether the exemption applies.
The guidance request also covers other issues including aircraft that are operated under FAR Part 135 for the owner and various payment arrangements for aircraft management services. In the coming months, NBAA will continue meeting with officials from the Treasury Department and IRS as they work through issuing guidance on this provision and the many other tax reform changes.
Review the request for guidance