Savannah, GA, February 1, 2008 – Presenters Nel Stubbs of Conklin & de Decker and Ed Kammerer of Edwards, Angell, Palmer & Dodge, LLP gave an overview of federal and state tax issues affecting the industry and provided some practical advice on issues ranging from how to prepare for an audit to how to avoid or defer state taxes at today’s “FET & State Tax Issues” session, helping demystify the complicated and sometimes arcane subject of taxes on business aviation.

The first thing that schedulers need to remember is that the Internal Revenue Service (IRS) and the Federal Aviation Administration have different views of what aspects of business aviation operations are taxable. Then, of course, federal excise taxes vary depending on whether an aircraft operation is commercial or noncommercial. Noncommercial FET taxes are assessed when fuel is purchased, whereas commercial FETs, which involve multiple distinct charges and fees, are paid to the IRS.

Stubbs and Kammerer helped define who and what are subject to the commercial FET and what exemptions are available. In addition, a list of applicable IRS forms and publications were provided.

The session leaders also reviewed the variety of state taxes which business aviation may be subject to, including aircraft registration fees, personal property taxes, licensing and operating fees, fuel taxes and sales and use taxes. In certain cases, operators may be subject to taxation from more than one state.

They also reviewed strategies for avoiding or deferring sales taxes and discussed how sales and use taxes on aircraft maintenance apply, as well as the tax implications of shared aircraft ownership. Above all, the presenters were successful at dispelling the misconceptions that many operators have about how these taxes apply.

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