Tax Reform Bill Signed into Law Commended for Aviation-related Provisions
The new tax overhaul package referred to as the “Tax Cuts and Jobs Act” was signed into law by President Trump on December 22, 2017. Two key provisions that aviation leaders are praising are the immediate expensing of both factory-new and pre-owned (used) aircraft, as long as it is the taxpayer’s first use of the aircraft. Businesses had been depreciating aircraft over a five-year period, and it did not include used aircraft.
Under the legislation, starting in 2023, there will be a phasedown of bonus depreciation in increments of 20 percent each year for qualified aircraft purchased and placed into service before January 1, 2027.
The other aviation-applauded provision for the general aviation industry is the managed aircraft measure, which has been a disputed item over airline ticket taxes being improperly imposed on aircraft management fees. Under the new legislation, business aircraft owners that hire a management company to provide support services will pay the non-commercial aviation fuel tax, and not the 7.5 percent Federal Transportation Excise Tax.
The tax legislation does repeal the “like-kind” exchanges for business property, in which businesses could defer taxes on sales of equipment if they were purchasing new equipment. According to the NBAA, it “plans to work through a broad coalition to seek an extension of immediate expensing and the reinstatement of like-kind exchanges of business equipment.”
House Passes Bill to Strengthen GA Security
In mid-December, the House of Representatives passed the “Securing General Aviation and Commercial Charter Air Carrier Service Act of 2017” (H.R. 3669) sponsored by Rep. Ron Estes (R-4-KS) that would improve security procedures for general aviation and commercial charter air carriers with the following:
- Require the Transportation Security Administration (TSA) to conduct a cost and feasibility study of establishing web-based access to the Secure Flight system for commercial charter operators.
- Authorize the TSA to provide screening services to commercial charter operators in areas other than primary passenger terminals, if the carrier makes that request through the airport’s federal security director.
- Require the TSA to provide Congress with an implementation plan for general aviation recommendations approved by the Aviation Security Advisory Council.
- Authorize the TSA to designate at least one employee to be responsible for issues and stakeholder engage-ment related to general aviation.
- Require the TSA to issue a report to Congress on the feasibility of requiring security threat assessments for all candidates seeking flight school training to operate any aircraft with a maximum certificated takeoff weight of more than 12,500 pounds in order to increase vetting of such candidates.
A report on the bill by the House Committee on Homeland Security said that because general aviation and commercial charter air carriers represent a small fraction of TSA’s stakeholder community, the industry’s issues and concerns often “fall to the bottom of the agency’s priorities. This bill seeks to elevate some of these important, but often overlooked, security issues.”
The bill is currently with the Senate and has been referred to the Committee on Commerce, Science, and Transportation.