Despite Concerns Raised by FAA, Congress, Industry, Tax Rules
Remain in Effect
Business aviation groups Thursday applauded the FAA for sending
a letter to the Internal Revenue Service (IRS) seeking suspension
of tax rules that are confusing for the business aviation industry
to implement and have the potential to decrease funding for
important aviation infrastructure projects.
The FAA's recent letter to IRS Commissioner Mark Everson
requests that the IRS "...suspend implementation of [the] new rules
until a workable solution is reached with the affected industries."
The letter adds: "We all want to minimize the financial and
administrative burden on aviation users and ensure that each trust
fund receives credit for the appropriate tax revenue."
NBAA President and CEO Ed Bolen thanked the FAA for its letter
on behalf of the industry. "The business aviation community is
pleased that the FAA has recognized that the IRS rules pose a
tremendous burden for our industry and may adversely affect
much-needed funding for aviation infrastructure maintenance and
improvements."
The provisions, which were recently implemented as part of H.R.
3 (commonly known as the "Highway Bill"), are intended to
discourage highway diesel fuel operators from using jet fuel to
avoid the higher taxes on highway fuel, a practice IRS officials
maintain is prevalent.
Unfortunately, the rules require that parties in business
aviation first pay taxes on jet fuel at the rate applied to the
costlier highway diesel fuel, then apply for a refund for the
difference between the highway rate and the jet fuel rate -- a
time-consuming and confusing process.
Additionally, under the rules, all jet fuel taxes collected at
the higher rate are deposited into the Highway Trust Fund and
transferred to the Airport and Airway Trust Fund only after a
refund of credit has been applied for.
The FAA's letter to the IRS about
the matter comes amidst related actions taken by Congress and
business aviation industry groups.
Senate Commerce Committee Chairman Ted Stevens (R-AK), Aviation
Subcommittee Chairman Conrad Burns (R-MT) and House Aviation
Subcommittee Member Robin Hayes (R-8-NC) have contacted US Treasury
Secretary John W. Snow urging suspension of the new rules until a
workable solution is reached with business aviation.
NBAA, the General Aviation Manufacturers Association (GAMA) and
the National Air Transportation Association (NATA) also recently
sent a letter to Snow asking that the rules be shelved until a more
feasible approach for addressing the fuel fraud issue could be
produced.
"This IRS provision would create an impractical, bureaucratic
process that adds administrative burdens to both the government and
the aviation community," said GAMA President and CEO Peter J.
Bunce. "We appreciate the FAA requesting that this rule be
suspended until a workable solution can be implemented."
"We thank the FAA for their letter of support and continued
efforts in addressing this issue," said NATA President James K.
Coyne. "It would be an unfortunate and avoidable tragedy if the
predominantly small businesses that operate FBOs were forced to
take on the financial burden of protecting the trust fund."