Chris Younger of GKG Law Comments on Fractional Aircraft Excise Tax Change | Tax Notes Today

April 3, 2012

By: Christopher B. Younger

Tax Notes Today quoted GKG Law attorney Christopher Younger on the taxation of flights on aircraft used in fractional aircraft ownership programs.  This issue has gained widespread media attention following a legal controversy between NetJets Aviation Inc. and the Internal Revenue Service (IRS). 

Tax Notes Today reported on a new 14.1-cent-per-gallon fuel surtax that went into effect April 1 that is applied to owner flights on fractional program aircraft in lieu of the ticket tax.  Mr. Younger said that up to now the IRS has been taking the position that the ticket tax applies to all fees paid to fractional aircraft program management companies.   

Mr. Younger pointed out that the while the new fuel surtax clarifies the taxation of flights on aircraft used in fractional aircraft programs in one respect – it applies to fuel usage, which is easy to quantify – “it’s still not clear which tax applies to a particular flight operation.  If a flight operation is conducted under FAR Part 135, does that mean that this new section 4043 tax applies, or is it still an issue that can be interpreted to let the IRS apply the ticket tax?”  

For more information, please contact Chris Younger at (202) 342-5295 or