Category Archives: Aviation News

IRS Suspends Aircraft Management Tax Assessments

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The Internal Revenue Service (IRS) is suspending tax assessments applied to aircraft management companies during federal exercise tax (FET) audits while it develops additional guidance for auditing aircraft management operations. The suspension is the result of government-industry collaboration since 2008, when the agency released an audit technique guide, and began assessing FET on a wide variety of non-commercial flight operations. These assessments included FET on a “wide variety of non-commercial flight operations,” including flights under Part 91 of the Federal Aviation Regulations, according to the National Business Aviation Association (NBAA). IRS’ suspension of the audits comes following a meeting between the agency and NBAA, along with officials from the National Air Transportation Association (NATA) last week to discuss a possible suspension. “Since 2008, NBAA has been diligently working with senior officials at the IRS to address significant industry concerns about the applicability of FET to management companies,” said NBAA President Ed Bolen. “Today’s announcement that IRS will suspend any potential assessments on these audits until the work to develop formal guidance is complete.” The agency will still be completing open audits, though the aircraft management companies will not be subject to the tax assessments while the additional guidance is being developed.Read more →

SIFL Rates Rise for the Fourth Consecutive Term

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SIFL rates are important numbers used to calculate the taxable income you receive when taking a personal flight on employer provided aircraft as a fringe benefit.  The U.S. Department of Transportation recently released new SIFL rates for the 1st half of 2013 and there was an increase of 3.33% overall.  This marks the fourth consecutive term that SIFL rates have significantly increased, with a total hike of over 17% since July of 2011.  The following table shows these new numbers:     SIFL Rates for 1st Half of 2013 Time Period of Flight 01/01/2013 – 06/30/2013 Miles: 0 – 500 –> .2655 Miles: 501 – 1500 –> .2024 Miles: > 1500 –> .1946 Terminal Charge –> $48.54 Aircraft Multiplier Weight Class Control Employee Non-Control Employee < 6,000 lbs. 62.5% 15.6% 6,001 – 10,000 lbs. 125% 23.4% 10,001 – 25,000 lbs. 300% 31.3% > 25, 000 lbs. 400% 31.3% Crunching these numbers, a control employee would have a $598.59 taxable fringe benefit for a 750-mile flight, a 3.23% increase from the prior term. If you’re unfamiliar with SIFL rates and whether they may apply to you, please read my earlier blog post.   http://goo.gl/Bfmx6 -          Ari Good Ari Good, JD LL.M. isRead more →

Florida Aircraft Repair Maintenance Exemption – Aircraft Tax Lawyer Ari Good

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Florida Aircraft Repair Maintenance Exemption:  As a friendly reminder to aircraft owners (and snowbirds) nationwide, be advised that Florida wisely modified the “repair and maintenance” exemption this past June to apply to smaller, in fact most, planes, giving greater tax benefits to small aircraft owners having work done on their planes in Florida. The aircraft repair and maintenance exemption in Florida has since 1994 provided that “repair and maintenance” labor charges are tax-exempt when performed on aircraft with a MTOW of greater than 15,000 pounds (10,000 pounds for helicopters).  Parts and equipment remained taxable “except as otherwise provided” in the exemption statute.  Fortunately for the airplane owner, the statute does indeed otherwise provide that “equipment used in aircraft repair and maintenance” (including replacement engines, parts and equipment used for such activities) is also tax exempt when used for these purposes. Taxpayer information publication TIP #12A01-04 extends this exemption to planes weighing 2,000 pounds or more. This will obviously apply to most owner-pilot, single piston aircraft using the plane partially or wholly for business. Also welcome are provisions of the Florida Administrative Code that provide that “labor, parts and materials used and actually incorporated into and becoming a component part of [theRead more →

Enter The Drones – FAA required to make room for UAVs by 2015

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Enter The Drones – fSo from the looks of it it’s not so much a question of if, but rather when, private and commercial pilots will be sharing the American skies with unmanned aerial vehicles (UAVs), more commonly known as drones.  The FAA has at least as early as 1991 been collecting information and requests from industry and Congress alike regarding implementing these systems. The FAA Modernization and Reform Act of 2012 requires that the FAA implement the necessary procedures to put drones to share our skies by 2015, although it looks like they’re running into little delays here and there (perhaps not so strange for a government agency). So, drones, are they a good thing or a bad thing?  Well, I say both.  The possible civilian uses are exciting.  I was listening to people sound off on the issue in a Google hangout (a little virtual town meeting on pretty much anything).  One person who influenced me the most was a fire chief talking about its department’s use of a drone to pinpoint hotspots in a dangerous wildfire.  He said that he would not have been able to get the fire under control nearly as effectively without it, sinceRead more →

Mergers in Aviation: The Hawker Effect

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Anyone who is familiar with the aviation industry knows that the past decade has been a tough one economically. A global recession, partnered with high fuel costs and rising operational costs, has had a devastating effect on many in the business. The circumstances surrounding this decade-long slump have caused a ripple affect that can be felt all across the industry. From the largest commercial carriers to the smaller business jet producers, companies have had to “tighten the belt”, metaphorically speaking, to keep from going under. In some cases, this has meant filing for bankruptcy, and facilitating a buyout via acquisition. For others, it means mergers with another business just to stay afloat. While the merger between Continental and United Airlines grabbed the biggest commercial headlines in 2010, there’s another story that’s grabbing everyone’s attention in the GA world. That story is the eminent acquisition of the bankrupt Wichita-based aircraft manufacturer, Hawker Beechcraft, Inc. Hawker filed for Chapter 11 bankruptcy in May, 2012, after massive layoffs and a steady profit loss had damaged the company beyond repair. The company had admitted to losing $1 billion in the previous two years, and was unable to pay their overall accrued debt of $2.3Read more →