The Republican tax bill has a provision that would end a headache for private jet owners

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November 17, 2017 2:56 PM

The newest Senate version of the Republican tax plan would give a break to owners and operators of private jets.

The Senate GOP tax bill contains a tax change for owners of private jets.
People and companies that own jets would have payments relating to them exempted from an excise tax.

The Republican tax plan contains several small carve-outs for specific industries — from craft-beer tax breaks to changes on how people can sell stocks.

One of those exemptions in the Senate version of the bill, the Tax Cuts and Jobs Act, would give a break to owners and operators of private jets.

Currently, the federal government imposes an excise tax on every flight an aircraft makes. Under the Republican tax legislation, costs for maintenance and other support activities for privately-operated planes would be exempt from the excise tax. Here's what that exempts, per the Joint Committee on Taxation's description of the provision:

"Applicable services include support activities related to the aircraft itself, such as its storage, maintenance, and fueling, and those related to its operation, such as the hiring and training of pilots and crew, as well as administrative services such as scheduling, flight planning, weather forecasting, obtaining insurance, and establishing and complying with safety standards."

According to a 2016 letter from the JCT, the exemption would lose less than $500,000 in revenue over 10 years.

The change appears to be similar to a bill offered by Democratic Sen. Sherrod Brown of Ohio and cosponsored by GOP Sen. Rob Portman of Ohio. A separate bipartisan bill amending the same part of the tax code was also offered in the House.

According to the lawmakers, the excise tax was designed to be imposed on commercial flights rather than "general aviation" flights, like chartered and private planes, but the IRS has been imposing the tax on private-aircraft management firms. This has been a sore spot for chartered-flight management companies for some time.

The bills, and thus the provision, are designed to clarify the types of flights the excise tax will apply to.

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