Senate passes “clean” FAA reauthorization bill, only aviation-related tax provisions

U.S. Senate passes “clean” FAA reauthorization bill

The Senate today passed H.R. 636, the legislative vehicle for reauthorizing Federal Aviation Administration (FAA) programs.

Related content

As passed by the Senate, the bill would extend through September 30, 2017, the following taxes and tax rates that are dedicated to the airport and airway trust fund: 

  • 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

The bill does not include tax provisions unrelated to aviation.

Background

Earlier this year, the House passed a bill that would have extended the FAA trust fund taxes through March 31, 2017. Shortly thereafter, the Senate passed a bill that only extended FAA authorization and the trust fund taxes to July 15, 2016. The House ultimately approved that version of the bill. As a result, the airport and airway trust fund taxes currently are set to expire July 15, 2016. 

Recently, there have been some negotiations in the Senate regarding possibly adding to its version of the current FAA bill, tax provisions that are unrelated to aviation (such as extensions of certain expiring tax incentives relating to renewable energy). Ultimately, however, the tax title of the bill as passed today by the Senate is limited to provisions relating to the aviation trust fund taxes.  

What's next?

The House and Senate need to pass identical legislation before sending the legislation to the president. The House has not yet scheduled action on legislation extending the FAA programs and taxes.

KPMG observation

If the Senate bill becomes law in its current form, it is not clear whether or not there will be another legislative vehicle this year for other tax law changes (such as extensions of incentives that expire at the end of the year and technical corrections to previously enacted legislation). There are several IRS personnel-related bills pending consideration by the House, and whether any of these might serve as the vehicle for tax legislation is uncertain.

© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.