Bizav Groups Turn to FAA Bill for Management Tax Help

With optimism dimming for a near-term solution to the controversy surrounding aircraft management fee taxes, business aviation advocates are hoping the upcoming reauthorization bill might be a possible venue to address the issue. Speaking during the recent Conklin and de Decker/NATA Commercial Operators Tax Seminar, Conklin and de Decker co-owner and tax expert Nel Stubbs noted that industry leaders were hopeful about the IRS issuing a potential long-term decision by the end of 2014. But turnover at the agency had delayed that effort.  Now, with the current administration approaching the last part of its term, a long-term solution could be pushed off for the time being.

Stubbs noted several lawmakers are interested in backing a measure to resolve the issue of whether management fees should be subject to the air transportation tax, as the IRS has contended. Bill Deere, senior vice president and government affairs at NATA, said lawmakers might wait for the upcoming reauthorization bill before pushing the issue. Scott O’Brien, senior manager, finance and tax policy for NBAA, added this is one of the issues that the association is watching closely.

Stubbs, however, noted that while the industry continues to work the issue, IRS audits also have continued. The IRS has agreed to withhold enforcement of assessments until a decision is finalized, but some management companies have faced tax levies up to $2 million over the handling of the management fees, she said. “We need a suspension of the audits,” she said.