IRS countersues net jets

[jonjuan]

http://www.ainonline.com/aviation-n...countersues-netjets-seeking-367m-excise-taxes

The IRS has countersued NetJets for more than $360 million in alleged uncollected excise taxes. In November, NetJets sued the federal government for what it said were wrongfully imposed taxes, interest and penalties totaling more than $642.7 million. NetJets claimed that as a manager of private aircraft, it was not required to pay a “ticket tax” because its services were not taxable transportation.

Less than six months later, the IRS filed the countersuit, refuting NetJets’ claim and asserting that four NetJets business units “failed, neglected or refused” to pay excise taxes and related penalties between 2003 and 2009 in the amount of approximately $367 million. The countersuit claims NetJets Aviation owes $302.1 million, NetJets International owes $53 million, Executive Jet Management owes $10 million and NetJets Large Aircraft owes $1.91 million. In 2011, NetJets posted a pre-tax profit of $227 million.

 

[CALRepublic]

new article on ainonline.com " IRS memo triggers federal exicse tax fears".. if the IRS manages to extract money out of NJA, they're gonna go after the other management companies. So it looks like this is NOT just a Netjets problem.


Management Company Fears

What [the IRS has] attempted to do is take a simplistic issue and create a ruling without understanding all the potential variations that actually take place in the industry, said Andrew Richmond, CEO of charter/management firm TWC Aviation. I think theyre saying, We are already receiving FET on Part 135 charters, how is a Part 91 flight different? Theyre trying to interpret the service that a management company is providing and fit it into the existing tax code that entitles them to collect taxes.

What mostly concerns Richmond is not the prospect of the IRS applying the FET to management fees but deciding that FET should be paid for an average hourly flight-time charge. Management fees typically might be up to $10,000 per month for a large jet. FET on that would be $750 a month. But FET for a Gulfstream flying 40 hours a month at an hourly rate of $4,000 would generate $12,000 per month in tax revenue. Thats where theres still a lot of discussion that needs to be had, he said, because since we dont charge an hour of flight time, how would they determine what tax is due? Are they going to look at the charter rates and say it should be comparable? What if no invoice is being generated? Will they argue that its an imputed tax and that the invoicing and collection of the fee is not a requirement for the tax?

Richmond also worries about how far back the IRS will reach during audits of management companies. If the IRS wins [the NetJets claim] and prevails on collecting back taxes going all the way back to, say, 10 years, does that open the door to go to all management companies and demand 10 years of back taxes as well?

It goes without saying that this could be devastating for the aircraft management business, a top executive at a large charter/management firm told AIN. It also could have potential industry safety impacts as aircraft owners are forced to go in-house (and ostensibly to less controlled environments).

 

[cldsfr79]

The IRS needs to find a different tree to bark up. I'm sure the Obama administration, which saddled this country with historic and epic debt, is looking for anyone to pay the bill. First they tried to tax it out of wealthy income, now they are going after wealth items.

First the "ticket tax" is a complete joke. Really IRS? Ticket Tax? and to whom do we sell tickets? Didn't know i had a United customer on board their privately owned jet. And now they are going after another "excise tax". How about everyone register their aircraft in Monte Carlo or the Isle of Man or some where else off shore and give the feds the big middle finger.

Next the IRS will be suing anyone that owns a car. They will tell you that since people who ride the bus pay a $1 for a ride, you too, with your private car, must pay a excise transportation fare every time you drive some where.

I was really hoping for the next president to sack the IRS and simplify the tax code, but I don't see that happening.

 

[gunfyter]

The IRS better hope they have better lawyers than the Justice Department ... LOL

 

[AftCG182]

The IRS needs to find a different tree to bark up. I'm sure the Obama administration, which saddled this country with historic and epic debt, is looking for anyone to pay the bill.

Obama has the monumental task of cleaning up Bush's mess. Bush spent 8 years absolutely wrecking this country; Obama (or anyone else for that matter) isn't going to fix it overnight. Or in one term, if you prefer.

If Congress starts cooperating, we'll see huge improvments in Obama's 2nd term. We're already seeing a big improvement in many areas...

 

[gunfyter]

We need to find his birth certificate first... and his draft card. Failure to register for the draft disqualifies a person from federal office.

But after that we should be good to go and a tremendous 4 more years....

 

[CRAWDADDY]

We need to find his birth certificate first... and his draft card.

Would you accept a PDF?

 

[gunfyter]

Would you accept a PDF?

Only if the IRS accepts a PDF of the $367 Million. Then sure I would.

 

[jonjuan]

Only if the IRS accepts a PDF of the $367 Million. Then sure I would.

LOL.......Then they'll send back a PDF of handcuffs.

 

[OPECJet]

Obama has the monumental task of cleaning up Bush's mess. Bush spent 8 years absolutely wrecking this country; Obama (or anyone else for that matter) isn't going to fix it.

If Congress starts cooperating, we'll see huge improvements in Romney's 1st term. We're already seeing a big improvement in many areas unless you really pay attention.

Fixed it for you......