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IRS Guidance on Aviation Tax Extensions

September 22nd

After offering a retroactive extension of particular aviation-related excise taxes, the IRS has provided a series of guidance notes outlining how best to deal with the new regulations provided by the Airport and Airway Extension Act of 2011, Part IV.

Specifically, the IRS guidance notes pertain to the 7.5 percent air transportation ticket tax and 6.25 percent air cargo tax. They also address procedures relating to excise taxes on aviation gasoline and kerosene. The guidance has been published in response to the Air Transportation Excise Tax Frequently Asked Questions, published on the IRS website.

The Airport and Airway Extension Act of 2011, Part IV came after federal air transport excise taxes expired on July 23, when lawmakers refused to automatically extend those taxes along with the Federal Aviation Administration’s (FAA) funding authority. Simultaneously, tax rates on aviation gasoline and kerosene dropped to 4.4 cents per gallon. After weeks of debates that left the aviation industry’s taxing authority paralysed, legislators finally agreed to approve the new extension.

Guidelines for Taxpayers

Most notably, the IRS guidance stipulates that individuals who purchased aviation-related services (namely seats on flights) will not be taxed on any services paid for after July 22, 2011 and before August 8, 2011. In addition, the IRS guidance states that any individuals who purchased aviation services before July 23, 2011, for travel dates after that time, will not be entitled to any refunds or credits on taxes paid for those services.

Taxpayers who are still unclear on proper navigation of the new extensions should consult a qualified tax lawyer. The new regulations can be quite complex, especially as they pertain to existing safe harbor rules, and assistance can therefore be quite valuable.


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