Come Fly With Me: Airport and Airway Trust Fund Excise Taxes

As record numbers of travelers move through airports this summer and airlines release details of record numbers of flight additions for July and August, it is important to brush up on the tax implications of excise taxes on air transportation of people and property. These excises taxes are deposited into the Airport and Airway Trust Fund to fund the Federal Aviation Administration (FAA). Explore how the percentage tax, segment tax, international facilities tax, and property transportation tax may impact  clients. Also determine who must collect the tax, how the tax is reported, and the penalty for failure to collect and remit the tax.

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Related Content

• Federal Fuel Excise Taxes
  Explore the various excise taxes imposed by the federal government on fuel, including the retail excise taxes imposed on diesel fuel and kerosene under I.R.C. § 4041, the retail excise tax on fuel used in commercial transportation on inland waterways under I.R.C. § 4042, and the manufacturer’s excise tax under I.R.C. § 4081. Additionally, an overview of the exemption under I.R.C. § 4082 for diesel fuel and kerosene from the manufacturer’s excise tax is explained.

• Alcohol Excise Taxes
  Learn more about excise taxes and the details of their administration. In addition to excise taxes on fuel, another common activity subject to excise taxes is the purchase of alcohol. Both federal and state and local excise taxes are commonly imposed on alcohol sales and production.

Practical Guidance Updates
Featuring the latest updates from your Practical Guidance account.  

• Tax Key Legal Developments Tracker (Federal)
  Stay informed on new developments:
  • Practice and Procedure: IRS announces “Dirty Dozen” tax scams for 2021. The IRS urges all taxpayers to be on guard, especially during the pandemic, not only for themselves, but also for other people in their lives. A continuing threat to individuals is from identity thieves who try to steal Economic Impact Payments (EIPs), also known as stimulus payments. IR-2021-135, June 28, 2021.
  • Business Entities: IRS provides transition penalty relief for taxable years that begin in 2021 with respect to new Schedules K-2 and K-3 required for Forms 1065, U.S. Return of Partnership Income, 1120-S, U.S. Income Tax Return for an S Corporation, and 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. R.S. Notice 2021-39.
  • Excise Tax/Credit: IRS rules on credit for carbon oxide sequestration. IRS explains that an acid gas removal unit at an industrial facility is a component of carbon capture equipment within the meaning of Section 1.45Q-2(c). Rul. 2021-13.

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