Executive Jet Conglomerate Sues IRS for $643 Million
A conglomerate of executive jet operators is now suing the Internal Revenue Service over what it claims to be $643 million of wrongly applied tax revenue stemming from a ticket tax on commercial airlines. Suit, filed in U.S. District Court in Columbus, Ohio by subsidiary companies of NetJets Inc alleges that the so-called ticket tax does not actually apply to providers of jet management services since the customers own their own planes rather than purchasing tickets to ride on planes owned and operated by the four companies named in the suit.
The logic offered by representatives of the four organizations is that the ticket tax applies to commercial airlines that own their planes and charge ticket prices for access, whereas the executive jet services provided by the four companies only operate and manage planes owned by the individual clients, and as such do not charge ticket fees. Claiming that the companies do not transport the jet owners, but rather act akin to an agent by assisting the client in transporting themselves on their own jet.
The suit is demanding back payment of taxes dating as far back as 2003, including interest on the payments. They allege that the IRS never properly explained the fees that it was adding to the tax bills, resulting in continuing to pay the taxes for several years before acting on the issue. This lawsuit comes at a time when corporate and private jets are a growing topic of debate in the political arena, with tax breaks for corporate jets coming under fire from Democratic lawmakers even as their economic benefits are touted by Republicans.