U.S. House Panel To Consider Management Fee Tax Bill

The U.S. House Ways and Means Committee will consider a bill this week that would exempt aircraft management service fees from the air transportation tax. Introduced by Rep. Pat Tiberi (R-Ohio), the bill (H.R.3608) is designed to clear up ambiguity about the tax treatment of aircraft management fees.

To be considered along with a number of other tax measures tomorrow afternoon, the bill comes as the industry has long awaited guidance from the IRS on the management fees. The IRS in May 2012 had issued a memorandum that essentially deemed management services as commercial activities that are subject to the 7.5-percent airline ticket tax. That led to audits and tax bills amounting to hundreds of thousands of dollars for some operators.

After an industry uproar and pointed questions from Congress, the IRS agreed to put the memorandum on hold and refrain from further assessments until more permanent guidance could be drafted. The IRS since has held numerous meetings with industry leaders on the issue, but the release of guidance has been slowed by turnover at the agency.

Introduced in late 2015, H.R.3608 has about 10 co-sponsors and strong support from both NATA and NBAA.