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. IRS is expected to release additional guidance for aircraft management companies in June.