Aviation tax extended to July 15; future tax legislation possible?

Aviation tax extended July 15; tax legislation possible

President Obama on March 30 signed into law H.R. 4721—a bill that extends authorization of Federal Aviation Administration (FAA) programs and certain taxes and tax rates that are dedicated to the airport and airway trust fund through July 15, 2016.

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Without this extension, the authorization for the FAA programs and related taxes would have expired today, March 31, 2016.

Vehicle for more tax legislation?

Because these programs and taxes are now set to expire on July 15, 2016, Congress will need to extend these items again.  It is not clear, however, whether Congress will provide a short-term or long-term extension before the July 15 expiration date.  For example, it is possible that Congress might provide another short-term extension before July 15 and address the programs and the taxes yet again after the elections, in a “lame duck” session.

Query whether Congress might use a future aviation-related bill as a vehicle for moving other tax legislation. For example, could a future bill provide an opportunity for Congress to extend certain tax preferences (“tax extenders”) that expire at the end of 2016? Could Congress use this as an opportunity to make technical corrections to previously enacted tax legislation (such as the partnership audit changes enacted in November 2015 and provisions in the December 2015 legislation known as the PATH Act)?

Extended aviation-related taxes

The tax provisions in H.R. 4721 include:

  • The imposition of tax at an increased rate on certain removals, entries, and sales of aviation gasoline and kerosene used in noncommercial aviation
  • The tax on amounts paid for taxable transportation of persons by air
  • The tax on amounts paid for taxable transportation of property by air
  • The exemption for aircraft in fractional ownership aircraft programs

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