H.R. 896House115th Congress (2017-2019)In Committee

To amend the Internal Revenue Code of 1986 to exempt amounts paid for aircraft management services from the excise taxes imposed on transportation by air.

AI-Generated Summary

Updated April 15, 2026 at 12:24 PM UTC

The bill changes the tax code so that money an aircraft owner pays for aircraft management services is not subject to the federal excise taxes that normally apply to air transportation. It defines what counts as aircraft management services and clarifies who is considered the aircraft owner for tax purposes. The change would affect aircraft owners, lessees, and companies that provide management services.

Key Provisions

Adds a new paragraph to IRC §4261(e) stating that amounts paid for aircraft management services are exempt from the excise taxes on air transportation.
Defines "aircraft management services" to include tasks such as scheduling, flight planning, weather forecasting, insurance, maintenance, storage, fueling, hiring and training pilots and crew, and safety compliance.
Treats a lessee as an aircraft owner for this exemption unless the lease is a "disqualified lease"—a lease of 31 days or less from a provider of aircraft management services.
Requires a pro‑rata allocation of the tax if a payment includes both exempt management services and taxable services.
Specifies that payments made on behalf of a wholly‑owned subsidiary are treated as if made directly by the aircraft owner.
The exemption applies to payments made after the law is enacted.

Legislative Activity

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1 earlier action

HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

February 6, 2017

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HouseIntro Referral

Introduced in House

February 6, 2017

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

February 6, 2017

Floor Debate

1 member

What members said about H.R. 896 on the floor

1 Republican

Rep. James B. RenacciR-OH-16 · Dec 22, 2017

Mr. Speaker, as a member of the Ways and Means Committee, I rise today to speak on the Congressional intent behind the exemption for aircraft management services (AMS) companies from the federal…

Mr. Speaker, as a member of the Ways and Means Committee, I rise today to speak on the Congressional intent behind the exemption for aircraft management services (AMS) companies from the federal excise tax (FET) on air transportation included in Section 13822 of H.R. 1. This provision is based on H.R. 896, sponsored by Congressman Tiberi and co-sponsored by myself.

AMS companies are paid to manage and maintain fleets of private aircraft, a service that is non-commercial. The FET on air transportation, on the other hand, is considered an airline ticket tax which commercial airline customers pay when they purchase a commercial airline ticket. Congress is exempting AMS companies from the FET on air transportation because fees paid for the maintenance and management of private aircraft are not analogous to the purchase of a commercial airline ticket. Likewise, Federal Aviation Regulation (FAR) Part 91 recognizes that AMS companies provide non-commercial aircraft operations and thus are generally only subject to federal fuel taxes, and not the FET on air transportation.

We included Sec. 13822 in H.R. 1 because the IRS has pursued a number of AMS companies for collection of the FET on air transportation. The result has been inconsistent outcomes, creating winners and losers among similarly situated AMS companies. To clarify the law, which has become quite muddled in this area, H.R. 1 seeks to set the record straight regarding the applicability of the FET on air transportation to AMS companies.

In conjunction with prior legislation, H.R. 1 makes clear that the FET on air transportation is not applicable to payments for the management of aircraft that are wholly-owned, fractionally owned, or that belong to a fractional program. As such, with the enactment of H.R. 1, the IRS should cease its efforts to collect the FET on air transportation from AMS companies.

The IRS should not infer that Congress believes the FET on air transportation did apply to management fees paid to AMS companies prior to enactment of H.R. 1. On the contrary, Congress is finally clarifying an area of law that has become muddled, resulted in inconsistent enforcement, and created winners and losers among similarly situated AMS companies.

Bill Text

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Introduced in HouseIssued February 6, 2017

115th CONGRESS

1st Session

H. R. 896

IN THE HOUSE OF REPRESENTATIVES

February 6, 2017

Mr. Tiberi (for himself, Mrs. Beatty, Mr. Kelly of Pennsylvania, Mr. Renacci, Mr. Stivers, and Mr. Wenstrup) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to exempt amounts paid for aircraft management services from the excise taxes imposed on transportation by air.

Amounts paid for aircraft management services

(a)

In general

Subsection (e) of section 4261 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(5)

Amounts paid for aircraft management services

(A)

In general

No tax shall be imposed by this section or section 4271 on any amounts paid by an aircraft owner for aircraft management services related to—

(i)

maintenance and support of the aircraft owner’s aircraft; or

(ii)

flights on the aircraft owner’s aircraft.

(B)

Aircraft management services

For purposes of subparagraph (A), the term aircraft management services includes assisting an aircraft owner with administrative and support services, such as scheduling, flight planning, and weather forecasting; obtaining insurance; maintenance, storage and fueling of aircraft; hiring, training, and provision of pilots and crew; establishing and complying with safety standards; or such other services necessary to support flights operated by an aircraft owner.

(C)

Lessee treated as aircraft owner

(i)

In general

For purposes of this paragraph, the term aircraft owner includes a person who leases the aircraft other than under a disqualified lease.

(ii)

Disqualified lease

For purposes of clause (i), the term disqualified lease means a lease from a person providing aircraft management services with respect to such aircraft (or a related person (within the meaning of section 465(b)(3)(C)) to the person providing such services), if such lease is for a term of 31 days or less.

(D)

Pro rata allocation

If any amount paid to a person represents in part an amount paid for services not described in subparagraph (A), the tax imposed by subsection (a), if applicable to such amount, shall be applied to such payment on a pro rata basis.

(E)

Certain payments treated as made by aircraft owner

In the case of an aircraft owner which is wholly-owned by another person, amounts paid by such other person on behalf of such aircraft owner shall be treated for purposes of this paragraph as having been paid directly by such aircraft owner.

(b)

Effective date

The amendment made by this section shall apply to amounts paid beginning after the date of the enactment of this Act.