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2017-11-17 15:55:03
Senate Tax Plan Includes Exemption for Private Jet Management

It may look like a giveaway to rich people who own their own private jets. But the aviation industry and legislators, including a liberal Democratic senator who helped inspire the provision, said it only reinforces the status quo.

And the provision, part of the Senate Republicans’ tax plan under consideration this week, is expected by one tally to cost federal coffers $500,000 over 10 years, an infinitesimally small amount in congressional bookkeeping.

The measure exempts private plane management fees from taxation, and relates to a 7.5 percent excise tax paid by commercial airlines on each seat they sell.

Until several years ago, owners of private aircraft using planes for personal or business travel were free from this so-called ticket tax. They did, however, pay management companies to store and fuel their jets, hire crew, train pilots, schedule flights and comply with safety standards.

When the Internal Revenue Service decided that aircraft management businesses should also be subject to the ticket tax, the decision prompted an immediate backlash from the aviation industry, who said management companies would pass along the cost of the tax to private aircraft owners in the form of steeper fees.

In response, the I.R.S. froze its efforts to collect the ticket tax and promised to review the policy.

“We’re doing our best to navigate a very unclear path — frankly, the industry doesn’t know the proper guidance to be following, and the I.R.S. doesn’t either,” said Jamie Walker, chief executive of Jet Linx Aviation, a management company offers services for more than 100 jets at 14 locations across the country.

“Everyone’s been stuck in limbo,” Mr. Walker said.

Earlier this year, the I.R.S. lost a case in federal court that had challenged ticket tax on aircraft management firms. Afterward, the agency said it would abandon existing audits involving ticket taxes on such firms.

That lawsuit was filed by NetJets, a company based in Ohio. The provision in the Senate tax plan closely mirrors a bill co-sponsored this year by Senator Sherrod Brown, a Democrat from the same state.

Although protected from the ticket tax, aircraft management companies would still be subject to corporate taxes.

Martin H. Hiller, president of the National Air Transportation Association trade group, said in a statement that the provision was a “common sense” addition that affords small aviation businesses “the tax certainty they have long sought.”