Aircraft Management Services – The conference report retains Senate language clarifying that aircraft management services are not subject to the 7.5 percent commercial ticket tax. The provision, supported by NATA, was necessitated by a 2012 IRS Chief Counsel opinion that left aircraft management service companies – most of them small businesses – vulnerable to back taxes and penalties. After a significant number of these companies successfully appealed audit findings assessing the FET to aircraft management services, the IRS opinion was put on hold in May of 2013 pending further clarification.

Expensing – NATA has long-supported full and immediate expensing as a cornerstone of tax reform. The conference report makes immediate expensing available to both new and used equipment, particularly important given the fact the legislation also repeals Like-Kind Exchanges (IRS Sec. 1031). While the House language supported the immediate expensing of new and used equipment, the related Senate provision was limited to new equipment, potentially undermining the stability of the used aircraft market. 

“NATA thanks Senators Brown and Portman and Representative Tiberi for their tireless efforts on our behalf. We also want to thank NATA members who responded to our recent legislative call to action and let their Senators and Representatives know of the importance of these provisions to their businesses,” concluded Hiller.

The conference report is expected to be considered by the House and Senate early next week.