Private business jet operators sue IRS for $643 million, claiming ticket tax wrongly applied

A story by the Associated Press published yesterday says that a  group of private business jet operators is suing the Internal Revenue Service for $643 million, saying the government wrongly applied a ticket tax meant for commercial passengers only.

The lawsuit in U.S. District Court in Columbus by four Ohio-based subsidiaries of Columbus-based NetJets Inc. says the ticket tax was not intended to apply to private aircraft owners and the fees they pay to maintain and operate their planes.

The companies provide aircraft management services to people and companies that own planes.

The companies “do not transport these owners, but instead simply act as the owners’ agent and assist them in transporting themselves on their own planes,” the companies argued in the lawsuit filed Monday.

“As such, the ticket tax has no application to the fees that aircraft owners pay … to manage and maintain their aircraft for them,” the lawsuit said.

The companies are seeking back payment of the taxes, which were first applied beginning in 2003, with interest.

An IRS spokeswoman was reviewing the lawsuit but said the agency typically doesn’t comment on pending litigation. Messages were left with NetJets and the attorney handling the lawsuit.

The companies filing the lawsuit are NetJets Large Aircraft Inc., NetJets International Inc., NetJets Aviation Inc. and Executive Jet Management Inc.

The companies said the IRS never explained what type of fees it was placing the taxes on, the lawsuit said.

As a result, the companies “are stuck with a $642 million-plus bill for past taxes the IRS never indicated they were required to collect and for which they are not even the actual taxpayers,” the lawsuit said.

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