Nov. 14, 2014
For more than two years, NBAA has been working with the Internal Revenue Service (IRS) to reverse its current stance that FAR Part 91 aircraft management services are subject to Federal Excise Tax (FET). While the Association’s efforts succeeded last year in getting the IRS to suspend FET assessments until new regulations are published, the work in Washington and at the grassroots level hasn’t stopped.
In fact, a group of NBAA Members, led by several Ohio-based aircraft management companies, worked with their representatives in Congress to introduce legislation clarifying that flights by aircraft owners with the assistance of a management company are non-commercial.
“As an industry, we’re taking two parallel approaches to this issue,” said Scott O’Brien, NBAA senior manager for finance and tax policy. “With the regulatory approach, we’re talking to the IRS and Treasury Department in Washington and educating government officials about how aircraft management arrangements work. At the same time, we are supporting Member Companies in their legislative approach.”
The two bills that have been introduced in Congress have bipartisan support. H.R. 5382 was introduced by Rep. Patrick Tiberi (R-OH-12) with Republican and Democratic co-sponsors, and S. 2775 was sponsored by Sen. Sherrod Brown (D-OH) and Sen. Rob Portman (R-OH).
Although support for the legislation started in Ohio, it has quickly spread across the country.
“We’re in the grassroots phase now,” said Mark Myers, vice president of Lane Aviation, an FBO and aircraft management company based at Ohio’s Port Columbus International Airport (CMH). “We’re working with the Ohio Regional Business Aviation Association to send information packets on FET to other regional groups across the country.”
Myers also made a presentation at the Regional and Local Group Networking Session at NBAA2014. He invited regional group leaders to get involved in the advocacy push and handed out packets that their members can use to educate congressional representatives.
“We couldn’t just wait for the IRS rulemaking,” said Myers. “Hundreds of management companies are being forced to defend unnecessary audits, while tax penalties and interest stack up. In Ohio alone there are more than 5,000 jobs at stake. The uncertainty is hurting our industry.”
To support the grassroots efforts to generate support for H.R. 5382 and S. 2775, NBAA created a letter Members can send to their representatives through the Association’s online “Contact Congress” tool.
The letter makes clear that aircraft owners who use management companies already pay the full federal fuel tax – like all non-commercial general aviation operators – and that most aircraft management companies are small businesses with only a handful of employees.
“The legislation and the whole industry’s support are critical,” said Myers. “Now we’re all able to work together going forward.”