IRS ISSUES NEW TAX REGULATIONS RELATED TO AIRCRAFT MANAGEMENT COMPANY EXCISE TAX
February 21, 2022
The U.S. Internal Revenue Service (“IRS”) recently issued final regulations under Internal Revenue Code § 4261(e)(5) which provide guidance to aircraft management companies and aircraft owners in relation to their federal excise tax obligations. Specifically, the final regulations implement a provision included in the 2017 Tax Cuts and Jobs Act that provides an exception to the 7.5% federal excise tax for commercial air transportation operators when an aircraft owner pays for management services to support flights on their aircraft. Under the new regulations, the 7.5% tax is not due when an aircraft owner pays for management services for their flights because such flights are already subject to the non-commercial fuel tax and exempt from the percentage tax.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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