NATA Appeals to Lawmakers To Keep Key Tax Measures

The National Air Transportation Association is urging tax negotiators on Capitol Hill to retain certain measures regarding expensing and aircraft management fee taxation as they hash out differences in the House and Senate versions of the tax bill. NATA called the measures—a House provision related to full and immediate expensing and the Senate measure clarifying that aircraft management fees are not subject to the air transportation tax—important to the goals of investment in the U.S. and overall tax simplification.

In letters to Senate Finance Committee chairman Orrin Hatch (R-Utah) and House Ways and Means Committee chairman Kevin Brady (R-Texas), the association called the full and immediate expensing measure in the House bill “a cornerstone of tax reform” and said, “It is important to the future manufacture and sale of aircraft in this nation.” The House measure would enable immediate expensing on both new and used equipment, which the association said is important because the number of used-aircraft transactions far outpaces new-aircraft transactions. 

The Senate version, NATA added, “would make the purchase of a used, albeit newer and potentially safer aircraft, a much more expensive proposition.” Noting a struggling preowned aircraft market, the association stressed the bill should not discourage operators from upgrading their aircraft.

NATA also encouraged adoption of Senate language regarding aircraft management fees. That provision would clarify uncertainty that made aviation management companies vulnerable to back taxes and penalties. While the IRS has for the time being closed pending audits surrounding the taxation, “for aircraft management businesses, the risk of additional IRS assessments on this issue still remains.”

The Senate provision became politicized when some lawmakers and pundits held up the measure as a corporate jet tax break. NATA disputed the characterization of the measure as “a giveaway to wealthy aircraft owners,” saying “far from it...Rather, the provision provides these small businesses with long-sought tax certainty. It is these small businesses—not aircraft owners—that have been vulnerable to IRS back taxes and penalties.”