NetJets Sues IRS Over $642.7M Tax Bill - Thanks OBAMA...

[Heavy Set]

Have you seen this? Is this old news? How might this impact pilot jobs at Netjets (and other fractionals) if they are forced to pay this tax bill? Can Netjets afford to pay this and keep pilot staffing as is?

How many of you guys will vote for Obama and his IRS-loving cronies again????? Let's all tax the rich because they can clearly afford it!!!! Who cares about the collateral damage (i.e., the pilots, mechanics, flight attendants, dispatchers, etc.). The fractional business and I assume the charter business (and private aviation in general) are under assault by this Administration. That's a fact... Read the blurb from AIN below:


NetJets Sues IRS Over $642.7M Tax Bill
Four of NetJets’ subsidiaries–NetJets Aviation, NetJets International, NetJets Large Aircraft and Executive Jet Management (EJM)–are suing the U.S. government over a $642.7 million IRS tax bill for past federal excise taxes (aka “ticket tax”) and assessed penalties and interest. In the lawsuit, filed on Monday, NetJets said, “The ticket tax was not intended to apply to private aircraft owners and the fees they pay to maintain and operate their aircraft.” Further, it alleges that the IRS is also attempting to “improperly collect the tax from [the NetJets subsidiaries] based on secondary liability, despite having failed to give EJM or the NetJets entities any advance notice that the IRS intended to apply the tax with respect to many of the fees at issue in this case.” NetJets maintains that the so-called “ticket tax” is not applicable to both monthly management and hourly fees the company charges its customers, citing IRS precedent and lack of any previous “clear guidance” from the agency regarding the specific types of fees included in the tax. “Unfortunately, the IRS position...is that all fees paid by the owners to the fractional managers are subject to the tax, whether the owners fly on their own airplane or not,” Jonathan Levy, legal director of Naples, Fla.-based aviation tax consulting firm Advocate Consulting, told AIN. “This is a hot legal issue and we will be watching the NetJets case closely.” Both NetJets and the IRS declined to comment on “pending litigation matters.”

 

[johnsonrod]

Have you seen this? Is this old news? How might this impact pilot jobs at Netjets (and other fractionals) if they are forced to pay this tax bill? Can Netjets afford to pay this and keep pilot staffing as is?

How many of you guys will vote for Obama and his IRS-loving cronies again????? Let's all tax the rich because they can clearly afford it!!!! Who cares about the collateral damage (i.e., the pilots, mechanics, flight attendants, dispatchers, etc.). The fractional business and I assume the charter business (and private aviation in general) are under assault by this Administration. That's a fact... Read the blurb from AIN below:


NetJets Sues IRS Over $642.7M Tax Bill
Four of NetJets’ subsidiaries–NetJets Aviation, NetJets International, NetJets Large Aircraft and Executive Jet Management (EJM)–are suing the U.S. government over a $642.7 million IRS tax bill for past federal excise taxes (aka “ticket tax”) and assessed penalties and interest. In the lawsuit, filed on Monday, NetJets said, “The ticket tax was not intended to apply to private aircraft owners and the fees they pay to maintain and operate their aircraft.” Further, it alleges that the IRS is also attempting to “improperly collect the tax from [the NetJets subsidiaries] based on secondary liability, despite having failed to give EJM or the NetJets entities any advance notice that the IRS intended to apply the tax with respect to many of the fees at issue in this case.” NetJets maintains that the so-called “ticket tax” is not applicable to both monthly management and hourly fees the company charges its customers, citing IRS precedent and lack of any previous “clear guidance” from the agency regarding the specific types of fees included in the tax. “Unfortunately, the IRS position...is that all fees paid by the owners to the fractional managers are subject to the tax, whether the owners fly on their own airplane or not,” Jonathan Levy, legal director of Naples, Fla.-based aviation tax consulting firm Advocate Consulting, told AIN. “This is a hot legal issue and we will be watching the NetJets case closely.” Both NetJets and the IRS declined to comment on “pending litigation matters.”

Another Obama Administration over-reach. That's ridiculous. It's clear Obama does not care for aviation. Nobody in this industry is safe.

Fun fact: did people know that our friends at the IRS will be hiring 14,000 new agents to manage the adoption of Obamacare (making sure everyone signs up and that employers are following the 2000+ new regulations)? I wonder what they are paying... :laugh:

 

[CA1900]

If you Obama-hating dittoheads would stop frothing at the mouth long enough to do the slightest bit of research, you'd find out that this tax was enacted in 2003. You know, when the "decider" was at the helm.


http://www.wftv.com/news/ap/ohio/private-business-jet-operators-sue-irs-for-643m/nFfZD/

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

 

[bluepost]

This is for BACK PAYMENT plus interest...starting in 2003...I don't think Obama was in office then. Surely this group will be as hard on Bush attacking our industry as Obama. Bush was also trying to apply ADDITIONAL fees for GA usage of the ATC usage.

 

[gunfyter]

9-9-9 eliminates this tax

 

[Oakum_Boy]

9-9-9... Lmao

 

[glasspilot]

Going to a rubber chicken based economy would eliminate the tax too. Unfortunately both ideas are stupid.

 

[gunfyter]

This whole topic is proof that taxing the rich is bad for the economy and the middle class. I hope none of us lose our jobs because of this tax.

9-9-9 FairTax is the way to go to increase GDP 12% , create 6 million jobs, reverse the trade deficit, increase wages, and solve the unemployment problem we have today.

Eliminate 70,000 pages of tax code, thereby saving entire forests worth of trees and Ink.

 

[johnsonrod]

If you Obama-hating dittoheads would stop frothing at the mouth long enough to do the slightest bit of research, you'd find out that this tax was enacted in 2003. You know, when the "decider" was at the helm.


http://www.wftv.com/news/ap/ohio/private-business-jet-operators-sue-irs-for-643m/nFfZD/

Even if it was Bush who enacted it, Obama is aggressively enforcing it. Certainly won't help Netjets if they are forced to pay it now...

 

[fischman]

They all suck.

 

[glasspilot]

Even if it was Bush who enacted it, Obama is aggressively enforcing it. Certainly won't help Netjets if they are forced to pay it now...

So you don't think the President should enforce the laws of the land?

Seems to me the Foxies get awful upset with that premise when it comes to immigration. Does Fox and the GOP post a list of which laws should be enforced and which should be overlooked?

PS, could the OP please change the title of this thread to "Thanks Bush"?

 

[mtnrunner]

Rookie move

This is the act of an attorney turned CEO who has seriously miscalculated. The attorney is making Obama's and the airline's case that the rich, who own their private jet, refuse to pay "their fair share" of the aviation infrastructure.

The attorney armed Obama, ATA, and every airline CEO and lobbiest with the ammo they need. I don't know many in congress that could defend NetJets position for a "free ride." The taxes were implemented under Bush 43 and seen as very favorable to fractional, even more so than Part 135, and very favorable vs what the airlines pay. It's a very pro General Aviation tax scheme.

The airlines have been arguing for years for landing/user fees over passenger or "ticket tax." Obama has been aggressively advocating for landing/user fees. I think the attorney just cost more pilots their job short and long term.

Big miscalculation in my opinion. It's a rookie CEO with no real experience picking a fight with Obama, Congress, IRS, Labor, and OEM's. At least the negotiating tactic is consistent in all cases.

 

[kf4amu]

This whole topic is proof that taxing the rich is bad for the economy and the middle class. I hope none of us lose our jobs because of this tax.

9-9-9 FairTax is the way to go to increase GDP 12% , create 6 million jobs, reverse the trade deficit, increase wages, and solve the unemployment problem we have today.

Eliminate 70,000 pages of tax code, thereby saving entire forests worth of trees and Ink.

Dude we could also just print a ******************** ton of fiat currency, devalue the dollar, and do the same thing! GDP would skyrocket, jobs would totally increase (ya know, making our roads pretty and other "shovel ready" stuff), our products would be so cheap we would sell them if we had any productive capacity left, wages would skyrocket on a nominal basis, and everyone would have jobs!!!



Except we'd all still be broke.

 

[gunfyter]

No it's not the same thing. When you print fiat currency, people buy gold instead of investing in businesses. You get hyperinflation and economic collapse

Where taxes are places in the economy has a similar effect on the velocity of money, as where you place impedance in an electrical circuit has on electron flow.

Taxes are impedance to money flow (velocity) as resistors pare impedance to amperage ((electron flow). An economic circuit is analyzed with the same mathematics (2nd order differential equations) as the electric circuit.

Money supply M, times the Velocity of Money V, = GDP. Your solution of printing more Money increases M, but does nothing for V. Our problem is Not M... We have Quadrupled the supply of money since 2008. The problem is the money isn't moving! What can we control that will reduce the impedance to money flow and increase it's velocity?

The answer is Taxes... That is what has to change. We need the overabundant supply of money we already have to Flow. That's what 9-9-9 FaIRTAX does, reduces total impedance while collecting the same revenues. and saving pilot jobs by getting rid of this tax on our business.

No you can't do the same thing by printing money. That's what we have been doing.

 

[Hung Start]

So you don't think the President should enforce the laws of the land?

The laws didn't matter to him before. Announced he WILL NOT enforce the Marriage Law, and Immigration Law.

Hung

 

[johnsonrod]

Politics aside, the fact is that Netjets is being aggressively pursued by the IRS for a huge tax bill. This could also impact other fractionals.

How about we discuss the potential impact instead of whether people should enforce laws?

 

[Hung Start]

Fair enough.
It used to be that the ticket tax was only billed when it was a true charter, company held a 135 certificate, and held out to the public. If a person owned the aircraft, or owned a percentage of an aircraft, we did not collect any tax. Looks that might have changed. Or, if you decided you wanted to shield yourself from any kind of liability, and decide to go with a "jet card" type of program, I can see where the tax would be imposed. Am I reading this correctly?

Hung

 

[jtf]

Have the other fracs been paying the tax or is the IRS coming after them also? Or is the IRS selectively enforcing this?

 

[152SIC]

No it's not the same thing. When you print fiat currency, people buy gold instead of investing in businesses. You get hyperinflation and economic collapse

Where taxes are places in the economy has a similar effect on the velocity of money, as where you place impedance in an electrical circuit has on electron flow.

Taxes are impedance to money flow (velocity) as resistors pare impedance to amperage ((electron flow). An economic circuit is analyzed with the same mathematics (2nd order differential equations) as the electric circuit.

Money supply M, times the Velocity of Money V, = GDP. Your solution of printing more Money increases M, but does nothing for V. Our problem is Not M... We have Quadrupled the supply of money since 2008. The problem is the money isn't moving! What can we control that will reduce the impedance to money flow and increase it's velocity?

The answer is Taxes... That is what has to change. We need the overabundant supply of money we already have to Flow. That's what 9-9-9 FaIRTAX does, reduces total impedance while collecting the same revenues. and saving pilot jobs by getting rid of this tax on our business.

No you can't do the same thing by printing money. That's what we have been doing.

I think that you meant that the monetary base has increased since 2008. Not the supply of money as measured by either M1 or M2.

Monetary base: http://research.stlouisfed.org/fred2/series/BASE?cid=124

M2: http://research.stlouisfed.org/fred2/series/M2?cid=29

Increasing the money supply will be through our national lending institutions. Unfortunately we now pay those institutions for their excess reserves held at the Fed. http://en.wikipedia.org/wiki/Excess_reserves

If the interest payed on excess reserves was reversed and the institutions were required to pay interest on their excess reserves, you would see the money supply increase quickly. This would also increase the velocity of money by increasing the workforce.

The 9-9-9 plan is an idea Cain got from playing The Sims too often. Those were the original default tax rates for that game. It is a highly regressive tax plan that would benefit the wealthy.

 

[gunfyter]

Totally false that it is regressive or that it came from the sims. It came from calculations on the percentage of GDP that would be taxable on sales, personal income and business transactions. The total comes to $33 trillion. 7% of $33 trillion is what it takes to be revenue neutral compared to current revenues. 7-7-7 was bumped up to 9-9-9 to account for a "poverty grant", which eliminates income tax on families up to the poverty level. Don't listen to the know nothings at the huffing ton post.

I can take any series circuit and increase the current flow by rearranging the resistors into a parallel circuit. We can increase the velocity of money by rearranging the impedance (taxes)... And thereby increase GDP. When you increase GDP you create jobs. That is the ONLY way to increase jobs. Taxing the rich only redistributes the wealth, it doesn't increase it or GDP. Or create a single job because the required wealth has not been created.

It's all in the scoring reports and tables.
http://hermancain.com/999

 

[152SIC]

If there is a reduction in the rate of taxation on the rich from it's current level of 35% for income, or 15% for capital gains, to the proposed 9% there would be a decrease in the velocity of money for that income segment. I am not sure if there is an exemption for lower income consumers and the 9% national sales tax. If there isn't the tax is regressive.

The argument could be made that more jobs would result because of increased domestic investment. Trickle down type economics. However, companies are already sitting on record amounts of cash. Not much is trickling down. Here is an example I read recently: http://www.npr.org/2011/08/17/139703989/companies-sit-on-cash-reluctant-to-invest-hire

 

[gunfyter]

The reason the sales tax is not regressive is that it replaces Hidden Embedded Taxes we already pay.... I will show this below and also how it will bring jobs from overseas to the US...

Studies show 22% of the price of items we purchase represents embedded taxes. If we abolished all taxes, this embedded cost could be removed such that a $100 item today would only cost $78.

The same item coming from china does not have the embedded US taxes ... It sells for say $90. But we have now undercut the Chinese so those jobs come back to America..

But how then do we fund the government? We impose a 30% sales tax. This returns the us product to it's original $100 price. The chinese product is now $117. We collect the same revenue as before, while abolishing the need for the IRS and the tax code. This is effectively a tariff on foreign products.

This tax plan is called The FairTax. That is phase 2 of the 9-9-9 plan. It has a prebate also that untaxes everyone up to the poverty level. It is progressive not regressive.

The UAW should support this plan. Imagine the price advantage us cars would have over foreign cars.

 

[152SIC]

I have heard this line of reasoning before and on the surface it sounds like a great idea. However the "embedded" taxes could refer to "costs" like EPA regulations and the difference between labor laws between the US and China.

If you have the actual study which shows how they came up with the 22% number I would be interested in looking through it.

 

[gunfyter]

Jorgenson, Dale W. (1998-05-18). "The Economic Impact of the National Retail Sales Tax" (PDF). U.S. House of Representatives. Retrieved 2008-02-20.

----------

Please Consider that even for someone who pays no income tax, it takes $107.65 to bring home $92.35. Normalizing this it means it takes $117 in compensation to buy something that has a price of $100.

Turbo tax tells me my effective tax rate is 17%. That means it takes me $134 of compensation to buy an item priced at $100. Even worse, my marginal rate is 25%, meaning I have to earn $142 to be able to afford a $100 increase in my bills. that’s a 42% tax rate on this middle class guy. God help the rich!

The FairTax is looking very, very good to me , sir…. Once we include the prebate….
http://www.fairtax.org/site/PageServer?pagename=about_faq_answers#5

It looks even better!

 

[waka]

How many of you guys will vote for Obama and his IRS-loving cronies again????? Let's all tax the rich because they can clearly afford it!!!! Who cares about the collateral damage (i.e., the pilots, mechanics, flight attendants, dispatchers, etc.). The fractional business and I assume the charter business (and private aviation in general) are under assault by this Administration. That's a fact... Read the blurb from AIN below:

Correct me if I am wrong, but the current excise tax on tickets has been around well before Obama. Right or wrong, the IRS is using their interpretation of existing law. It will be settled in court and the outcome will have nothing to do with the President. So, exactly what does this tax bill have to do with an "assault" by the current administration?

 

[rigger]

Correct me if I am wrong, but the current excise tax on tickets has been around well before Obama. Right or wrong, the IRS is using their interpretation of existing law. It will be settled in court and the outcome will have nothing to do with the President. So, exactly what does this tax bill have to do with an "assault" by the current administration?

Aaaaaa everything.......look bush sucked we get it and agree....but bumbles sucks x3....... All this crap on rich paying the fair share is a moot point until the 47% not paying ANYTHING pays thier fair share.....it's so friggin simple tax people more for success and you get less of it....they take the ball and go home....proven facts cannot be argued...progressives like you guys here don't like it so you argue on your emotions.....EVERY SINGLE TIME IN PAST AND RECENT HISTORY TAXES ARE LOWERED INCOME GOES WAYYYYYY UP..... Stop with your stupidity and class warefare already...we get it you hate anyone who is doing better than you and you want to TAKE the unfair earnings away and give it to some moochers. You know best how to spend my money, I know, I know.....now for the bumbles lovers name 1 thing he has gotten right thus far....and I will show you 5 that have devastated the economy even more than Bush did...... WAKEEEEE WAKKKKKEEEEEE nomes......

 

[152SIC]

Jorgenson, Dale W. (1998-05-18). "The Economic Impact of the National Retail Sales Tax" (PDF). U.S. House of Representatives. Retrieved 2008-02-20.

----------

Please Consider that even for someone who pays no income tax, it takes $107.65 to bring home $92.35. Normalizing this it means it takes $117 in compensation to buy something that has a price of $100.

Turbo tax tells me my effective tax rate is 17%. That means it takes me $134 of compensation to buy an item priced at $100. Even worse, my marginal rate is 25%, meaning I have to earn $142 to be able to afford a $100 increase in my bills. that’s a 42% tax rate on this middle class guy. God help the rich!

The FairTax is looking very, very good to me , sir…. Once we include the prebate….
http://www.fairtax.org/site/PageServer?pagename=about_faq_answers#5

It looks even better!

I looked through the PDF file briefly and it sounds interesting. I don't have a lot of time on my hands today, my 7 month old takes priority

Correct me if I am wrong; is this plan basically like a negative income tax with a supplemental income tax? The negative income tax made sense from what I remember from reading Friedman years ago. Here is the negative income tax: http://en.wikipedia.org/wiki/Negative_income_tax

 

[gunfyter]

I see your point on the NIT. I am not sure about that. It is a rebate to ensure low income people are not negatively affected by the plan.

 

[waka]

Aaaaaa everything.......look bush sucked we get it and agree....but bumbles sucks x3....... All this crap on rich paying the fair share is a moot point until the 47% not paying ANYTHING pays thier fair share.....it's so friggin simple tax people more for success and you get less of it....they take the ball and go home....proven facts cannot be argued...progressives like you guys here don't like it so you argue on your emotions.....EVERY SINGLE TIME IN PAST AND RECENT HISTORY TAXES ARE LOWERED INCOME GOES WAYYYYYY UP..... Stop with your stupidity and class warefare already...we get it you hate anyone who is doing better than you and you want to TAKE the unfair earnings away and give it to some moochers. You know best how to spend my money, I know, I know.....now for the bumbles lovers name 1 thing he has gotten right thus far....and I will show you 5 that have devastated the economy even more than Bush did...... WAKEEEEE WAKKKKKEEEEEE nomes......

Wow! Everything you say is pure emotion and a 180 from reality. This is what happens when you get drunk and post.

 

[johnsonrod]

Regardless of how we all feel about Obama, most of us in aviation should conclude that his policies are NOT FAVORABLE toward avaition. His views towards the "rich" and their requirements for income redistribution will certainly not benefit the fractional business - especially on the lower end of the income spectrum where big tax bills can make a difference. I think we can all agree about that - right?

Ask anyone who lives in California or New York whether $250K makes you a "rich" person after taxes and living expenses.