The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) suspended federal excise taxes (FET) for commercial aviation operations until Dec. 31, 2020.
A National Business Aviation Association (NBAA) article, "What Are the Top Federal Excise Tax Exemption Filing Concerns?," discusses several issues arising under the CARES Act's FET holiday. The May 11, 2020, article was written by Holland & Knight Partner John Hoover, chair of the NBAA tax committee.
In general, air transportation of persons or property for compensation or hire is considered to be commercial transportation for tax purposes, and it is subject to an excise tax of 7.5 percent of the amount paid for the flight, plus a segment fee (collectively, FET).
Under the CARES Act, there is a tax holiday from March 28, 2020, through Dec. 31, 2020, for 1) FET on "amounts paid" during the tax holiday, and 2) fuel tax on jet fuel "used" in commercial aviation during the tax holiday.
While the suspension offers significant benefits to commercial operators, it has also generated many questions. NBAA has been working directly with the Internal Revenue Service (IRS) to understand how the suspension applies to business aviation.
In addition to the article to help answer some questions, Hoover will participate in a NBAA webinar on Friday, May 15 at 11 a.m. Eastern. The hour-long webinar – COVID-19 & Federal Excise Tax Suspension: Does It Apply to Your Business? – will cover such topics as how to apply the FET suspension to charter invoices, payments for trips before the passage of the CARES Act, and details on fuel tax credits and refunds, among other concerns.
Originally published Holland & Knight, May 2020
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