Excise tax exemption for certain payments to aircraft management companies

Excise tax exemption to aircraft management companies

The House Ways and Means Committee today approved, by voice vote, an amendment in the nature of a substitute to H.R. 3608—legislation to exempt certain amounts paid by aircraft owners to aircraft management services companies from the excise taxes imposed on transportation of persons and property by air.

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Specifically, the exempt payments would be those amounts paid by an aircraft owner for management services related to maintenance and support of the aircraft or flights on the owner’s aircraft. Applicable services include:

  • Support activities related to the aircraft itself—such as its storage, maintenance, and refueling—and those related to its operation—such as the hiring and training of pilots and crew
  • Administrative services—such as scheduling, flight planning, weather forecasting, and establishing and complying with safety standards

Payments for flight services would be exempt only to the extent that they are attributable to flights on an aircraft owner’s own aircraft.  

As approved by the Ways and Means Committee, the legislation includes a special rule for aircraft held in an entity wholly owned by an individual (such as an aircraft in an LLC wholly owned by an individual) so that a payment made by the individual to the management company is treated as a payment paid directly by the entity. 


Read text of H.R. 3608.


Read the Joint Committee on Taxation’s description of H.R. 3608 and the JCT description of the amendment in the nature of a substitute.   

What’s next?

The bill will now be referred to the full House of Representatives for possible consideration. A date has not been set for the House to consider the bill.   The Senate has not scheduled action on similar legislation.

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