House Approves Aviation Bill Exempting Certain Expense Payments from Federal Excise Tax

CCH Tax Day Report

The House Ways and Means Committee on July 13 approved, by voice vote, a bipartisan, bicameral bill that would exempt amounts paid for aircraft management services from federal excise taxes imposed on transportation by air. HR 3608 “would resolve potential ambiguities in the ticket tax by codifying the current IRS practice regarding the treatment of aircraft management services,” Chairman Kevin Brady, R-Tex., said during opening statements. The bill now heads to the House floor.

HR 3608, sponsored by Rep. Pat Tiberi, R-Ohio, has 10 Democrat and Republican cosponsors. “The bill simply clarifies that the tax on commercial air transportation called a ticket tax does not apply to aircraft management services for general aviation flights that do not use tickets,” Tiberi said. “It clarifies that the IRS does not have congressional authority to impose a tax,” he added.

Ranking member Sander Levin, D-Mich., raised the inquiry of whether “jet owners are the Americans most in need of tax relief.” He added, “At a time when so many other major tax issues are looming, such as closing egregious loopholes for companies that ship jobs overseas and acting on expiring energy provisions, it is curious that this tax provision is coming before the committee.” Levin said.

JCT

HR 3608 “exempts certain payments related to the management and maintenance of aircraft from the Federal excise tax imposed on transportation of persons and property,” according to the Joint Committee on Taxation’s (JCT) report released on July 12 (JCX-65-16). The legislation “is not exempting anyone from paying taxes in some form, be it fuels tax or ticket tax; there will still be taxes collected on air transportation,” JCT Chief Thomas A. Barthold testified.

HR 3608 is estimated to reduce federal fiscal year budget receipts by less than $500,000 from 2017 through 2026, the JCT report noted. This impact is “a small net revenue loss,” Barthold said.

By Jessica Jeane, Wolters Kluwer News Staff

Ways and Means Press Release: Chairman Brady Opening Statement at Full Committee Markup of Health, Tax, and Social Security Legislation

Ways and Means Press Release: Ranking Member Levin Opening Statement at Markup of Health, Tax, and Social Security Legislation

Amendment in the Nature of a Substitute to HR 3608

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