Commercial Aviation Taxes Going Up

The rates for certain federal excise taxes (FET) and fees are on the way up for commercial transport operations booked after December 31, 2003. That includes transportation provided by Part 135 on-demand cargo and passenger operators. The new tax amounts to 7.5% of revenue for domestic overflights.

Operators who are required to collect and remit the federal excise taxes imposed on certain commercial air transportation operations must implement the new rates for all applicable transportation occurring after December 31, 2003. These fees, along with all other components of the FET on transportation, do NOT apply to those few Part 135 aircraft operators who continue to meet the small aircraft exemption criteria.

This exemption is only available to commercial operators using small aircraft (less than 6,000 lbs. maximum gross takeoff weight) that are not operated on an established line. However, these operations are subject to the fuel tax. Exemptions for air ambulance operations also remain unchanged.

For international transportation occurring after December 31, 2003, the International Facilities Fee is $13.70 per passenger.

This fee is applicable to all international flights that originate or end in the United States. The tax is imposed when aircraft leave or enter the United States. This fee is not charged on flights to or from Canada and Mexico that remain within 225 miles of the United States. Such flights are treated as domestic and are subject to the taxes described above.

Flights To And From Both Alaska And Hawaii

Because flights originating in the United States traveling to Alaska or Hawaii must cross over substantial areas of international territory or waters, a special provision exists for them. The IRS requires collection of one-half of the international facilities fee per departure, plus the "domestic transportation of persons" tax (7.5%, plus any segment fees) for the portion of the flight occurring over the United States.

Therefore, this fee is $6.90 per departure.

The following formula demonstrates in three steps how to calculate the excise tax amount for flights involving Alaska and Hawaii.

FMI: www.nata-online.org