October 22, 2008
What's at Issue
The rates for certain federal excise taxes (FET) and fees are increasing for commercial air transportation occurring after December 31, 2008, including transportation provided by Part 135 on-demand operators.
Why It's Important
Operators who are required to collect and remit the federal excise taxes imposed on certain commercial air transportation operations must implement the new rates for all applicable transportation occurring after December 31, 2008.
Important Note: These fees, along with all other components of the FET on commercial air transportation, do NOT apply to those few Part 135 aircraft operators who continue to meet the small aircraft exemption criteria. This exemption is only available to commercial operators using small aircraft (less than 6,000 lbs. maximum gross takeoff weight) that are not operated on an established line. However, these operations are subject to the fuel tax. Special exemptions for certain helicopter and air ambulance operations also remain unchanged.
Major Provisions
The IRS has released Revenue Procedure 2008-66, which provides the 2009 rates for many inflation adjusted items, including transportation taxes and fees.
It is important to note that as of publication, the current FAA funding mechanism has not been reauthorized by Congress but it has been extended through March 31, 2009. Therefore, the IRS has established these new rates only until the current extension expires.
Note: Rates that have changed are in bold throughout this report.
Domestic Transportation of Persons and Cargo
The following rates apply to all domestic transportation for amounts paid from January 1, 2009 through March 31, 2009:
Domestic Transportation of Persons: 7.5% + applicable segment fees
Domestic Segment Fee: $3.60 per passenger
Domestic Transportation of Cargo: 6.25% of cargo waybill
Please note that segment fees do not apply to transportation to and from rural airports. A link to the current rural airport list is available in the Status section of this report.
International Facilities Fee
For international transportation occurring from January 1, 2009 through March 31, 2009, the International Facilities Fee is $16.10 per passenger.
This fee is applicable to all international flights that originate or end in the United States. The tax is imposed when aircraft leave or enter the United States. This fee is not charged on flights to or from Canada and Mexico that remain within 225 miles of the United States. Such flights are treated as domestic and are subject to the taxes described above.
Flights to/from Alaska & Hawaii
The fee for departures involving Alaska or Hawaii is $8.00 for 2009.
Because flights between the United States and to Alaska or Hawaii must cross over substantial areas of international territory or waters, a special provision exists for them. The IRS requires collection of the appropriate fee per departure, plus the "domestic transportation of persons" tax (7.5%, plus any segment fees) for the portion of the flight occurring over the United States.
NATA Position
The association encourages all affected members to familiarize themselves with the changes and make necessary adjustments.
Status
The revised rates are in effect from January 1, 2009 to March 31, 2009.
To download the 2008 rural airport list, please use the links below:
Microsoft Excel format
Adobe PDF format
Staff Contact:
Jacqueline E. Rosser
Director, Regulatory Affairs
NATA
jrosser@nata.aero