Federal Excise Taxes (FET)

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NBAA Federal Excise Taxes Guide

The NBAA Federal Excise Taxes Guide provides the latest information on how federal excise taxes (FET) apply to business aircraft activity. The guide includes details on how FET applies to commercial air transportation of passengers, including the percentage tax on domestic travel and related exceptions and exclusions, domestic segment fees, and the head tax on international transportation.

Key concepts including possession, command and control; available FET exemptions; and charter broker obligations for air transportation excise taxes are explained in the context of business aircraft operations. Rules on FET are constantly evolving and the guide includes updates on topics such as FET on fractional aircraft ownership program operations and IRS legal interpretations regarding aircraft service and pilot service agreements.

The Federal Excise Taxes Guide is a comprehensive but concise reference that provides NBAA members with summary information about the applicability of excise taxes to common business aircraft operations and scenarios.

Download the NBAA Federal Excise Taxes Guide (685 KB, PDF)

If you have questions or feedback about the NBAA Federal Excise Taxes Guide or related topics, contact NBAA's Scott O'Brien at 202-783-9451 or sobrien@nbaa.org.


IRS Makes Adjustments to 2018 Federal Excise Tax Rates
March 26, 2018
The Tax Cuts and Jobs Act revised the way IRS calculates inflation adjusted changes to various tax rates. For the federal excise tax on air transportation of persons, the domestic segment fee has been changed to $4.10, and the head tax for flights beginning or ending in Alaska or Hawaii is now $9.10. The international head tax remains at $18.30 for calendar year 2018, and the 7.5 percent tax on amounts paid for commercial air transportation of persons also remains unchanged. For additional details, review the NBAA Federal Excise Taxes Guide.
NBAA Legal Brief Asserts Need for IRS Consistency, Clarity on Federal Excise Tax
Sept. 23, 2016
NBAA recently filed an amicus brief in the Fifth Circuit, challenging the IRS’s retroactive assessment of federal excise tax (FET) on aircraft management fees received by a fractional program. NBAA’s filing in the case involving Bombardier Aerospace, the prior owner of FlexJet, said the IRS never provided clear guidance on the application of FET to management fees. “NBAA got involved in this case because it is an example of the challenges businesses face when the IRS attempts to collect millions of dollars in retroactive taxes without clearly stating how the tax should apply,” said Scott O’Brien, NBAA senior manager of tax and finance policy. Read more about the tax case.
NBAA Welcomes Legislation Resolving Federal Excise Tax Issues for Management Companies
Sept. 25, 2015
NBAA welcomed the introduction of legislation that makes clear management services provided to assist an aircraft owner in the operation of its aircraft are not subject to the ticket tax imposed on commercial air transportation. Learn more.
Grassroots Advocacy Drives Legislation to Resolve Tax Policy on Aircraft Management Companies
November 14, 2014
A group of NBAA Members, led by several Ohio-based aircraft management companies, has been working with their representatives in Congress to introduce legislation clarifying that flights by aircraft owners with the assistance of a management company are non-commercial. "As an industry, we’re taking two parallel approaches to this issue," said Scott O'Brien, NBAA senior manager for finance and tax policy. "With the regulatory approach, we're talking to the IRS and Treasury Department in Washington and educating government officials about how aircraft management arrangements work. At the same time, we are supporting Member Companies in their legislative approach." Read more.
IRS Suspends FET Assessments for Owner Flights on Managed Aircraft
May 20, 2013
On May 16, 2013, the IRS informally announced that it will suspend the assessment of Federal Transportation Excise Tax (FET) on owner flights on aircraft managed by aircraft management companies. NBAA has numerous resources available to keep members up to date on issues surrounding the IRS chief counsel advice (CCA) memorandum regarding the taxability of aircraft management fees. Learn More about FET Issues for Management Companies

FET Resources

Federal Excise Tax FAQs

FET Information for Aircraft Management Companies

Amendment to Tax Regulations Imposes FET on Single Member LLCs (705 KB, PDF)

Uninterrupted International Air Transportation - Which Legs of My International Trip are Subject to the 7.5% FET?

When are Commercial Transportation Taxes Due for Part 91 Flights?

Amendment to Tax Regulations Creates Federal Transportation Excise Tax Risks for Single Member LLCs

New Federal Excise Tax Liabilities for Whole Aircraft Operations Under FAR Part 91 and for Fractional Ownership

Federal Excise Taxes: The Regular Method Vs. the Alternative Method

Federal Excise Taxes: Deposit Safe Harbors and the Special September Deposit Rule

Aviation Fuel Taxes for Flight Departments: Understanding Fuel Taxes, Refunds and Credits

Fuel Fraud Update: Fuel Vendors Must Register With IRS to Ensure Funding of FAA Trust Fund

Credit for Fuel Used in Foreign Trade

Explanation of Non-Aircraft Use of Jet Fuel

Selected IRS FET Publications

IRS Publication 510 (Revised July 2012)

IRS Air Transportation Excise Tax Audit Technique Guide

DOT Rural Airports List for Federal Excise Tax Purposes

IRS Technical Advice Memorandum 200122006: Federal Excise Tax Segment Fees

IRS Technical Advice Memorandum 200123002: Affiliated Group

IRS Revenue Ruling 2002-50: Foreign Trade

IRS Revenue Ruling 68-256: Demonstration Flights