USC Subchapter C

in effect

26 U.S.C. § 4281 Small aircraft on nonestablished lines

(a) In generalThe taxes imposed by sections 4261 and 4271 shall not apply to transportation by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less, except when such aircraft is operated on an established line or when such aircraft is a jet aircraft. (b) Maximum certificated takeoff weightFor purposes of this section, the term “maximum certificated takeoff weight” means the maximum such weight contained in the type certificate or airworthiness certificate. (c) SightseeingFor purposes of this section, an aircraft shall not be considered as operated on an established line at any time during which such aircraft is being operated on a flight the sole purpose of which is sightseeing. (d) Jet aircraftFor purposes of this section, the term “jet aircraft” shall not include any aircraft which is a rotorcraft or propeller aircraft.

26 U.S.C. § 4282 Transportation by air for other members of affiliated group

(a) General ruleUnder regulations prescribed by the Secretary, if—(1) one member of an affiliated group is the owner or lessee of an aircraft, and (2) such aircraft is not available for hire by persons who are not members of such group, no tax shall be imposed under section 4261 or 4271 upon any payment received by one member of the affiliated group from another member of such group for services furnished to such other member in connection with the use of such aircraft. (b) Availability for hireFor purposes of subsection (a), the determination of whether an aircraft is available for hire by persons who are not members of an affiliated group shall be made on a flight-by-flight basis. (c) Affiliated groupFor purposes of subsection (a), the term “affiliated group” has the meaning assigned to such term by section 1504(a), except that all corporations shall be treated as includible corporations (without any exclusion under section 1504(b)).

26 U.S.C. § 4271 Imposition of tax

(a) In generalThere is hereby imposed upon the amount paid within or without the United States for the taxable transportation (as defined in section 4272) of property a tax equal to 6.25 percent of the amount so paid for such transportation. The tax imposed by this subsection shall apply only to amounts paid to a person engaged in the business of transporting property by air for hire. (b) By whom paid(1) In generalExcept as provided by paragraph (2), the tax imposed by subsection (a) shall be paid by the person making the payment subject to tax. (2) Payments made outside the United StatesIf a payment subject to tax under subsection (a) is made outside the United States and the person making such payment does not pay such tax, such tax—(A) shall be paid by the person to whom the property is delivered in the United States by the person furnishing the last segment of the taxable transportation in respect of which such tax is imposed, and (B) shall be collected by the person furnishing the last segment of such taxable transportation. (c) Determination of amounts paid in certain casesFor purposes of this section, in any case in which a person engaged in the business of transporting property by air for hire and one or more other persons not so engaged jointly provide services which include taxable transportation of property, and the person so engaged receives, for the furnishing of such taxable transportation, a portion of the receipts from the joint providing of such services, the amount paid for the taxable transportation shall be treated as being the sum of (1) the portion of the receipts so received, and (2) any expenses incurred by any of the persons not so engaged which are properly attributable to such taxable transportation and which are taken into account in determining the portion of the receipts so received. (d) Application of tax(1) In generalThe tax imposed by subsection (a) shall apply to—(A) transportation beginning during the period—(i) beginning on the 7th day after the date of the enactment of the Airport and Airway Trust Fund Tax Reinstatement Act of 1997, and (ii) ending on September 30, 2028, and (B) amounts paid during such period for transportation beginning after such period. (2) RefundsIf, as of the date any transportation begins, the taxes imposed by this section would not have applied to such transportation if paid for on such date, any tax paid under paragraph (1)(B) with respect to such transportation shall be treated as an overpayment.

26 U.S.C. § 4272 Definition of taxable transportation, etc.

(a) In generalFor purposes of this part, except as provided in subsection (b), the term “taxable transportation” means transportation by air which begins and ends in the United States. (b) ExceptionsFor purposes of this part, the term “taxable transportation” does not include—(1) that portion of any transportation which meets the requirements of paragraphs (1), (2), (3), and (4) of section 4262(b), or (2) under regulations prescribed by the Secretary, transportation of property in the course of exportation (including shipment to a possession of the United States) by continuous movement, and in due course so exported. (c) Excess baggage of passengersFor purposes of this part, the term “property” does not include excess baggage accompanying a passenger traveling on an aircraft operated on an established line. (d) TransportationFor purposes of this part, the term “transportation” includes layover or waiting time and movement of the aircraft in deadhead service.

26 U.S.C. § 4261 Imposition of tax

(a) In generalThere is hereby imposed on the amount paid for taxable transportation of any person a tax equal to 7.5 percent of the amount so paid. (b) Domestic segments of taxable transportation(1) In generalThere is hereby imposed on the amount paid for each domestic segment of taxable transportation by air a tax in the amount of $3.00. (2) Domestic segmentFor purposes of this section, the term “domestic segment” means any segment consisting of 1 takeoff and 1 landing and which is taxable transportation described in section 4262(a)(1). (3) Changes in segments by reason of reroutingIf—(A) transportation is purchased between 2 locations on specified flights, and (B) there is a change in the route taken between such 2 locations which changes the number of domestic segments, but there is no change in the amount charged for such transportation, the tax imposed by paragraph (1) shall be determined without regard to such change in route. (c) Use of international travel facilities(1) In generalThere is hereby imposed a tax of $12.00 on any amount paid (whether within or without the United States) for any transportation of any person by air, if such transportation begins or ends in the United States. (2) Exception for transportation entirely taxable under subsection (a)This subsection shall not apply to any transportation all of which is taxable under subsection (a) (determined without regard to sections 4281 and 4282). (3) Special rule for Alaska and HawaiiIn any case in which the tax imposed by paragraph (1) applies to a domestic segment beginning or ending in Alaska or Hawaii, such tax shall apply only to departures and shall be at the rate of $6. (d) By whom paidExcept as provided in section 4263(a), the taxes imposed by this section shall be paid by the person making the payment subject to the tax. (e) Special rules(1) Segments to and from rural airports(A) Exception from segment taxThe tax imposed by subsection (b)(1) shall not apply to any domestic segment beginning or ending at an airport which is a rural airport for the calendar year in which such segment begins or ends (as the case may be). (B) Rural airportFor purposes of this paragraph, the term “rural airport” means, with respect to any calendar year, any airport if—(i) there were fewer than 100,000 commercial passengers departing by air (in the case of any airport described in clause (ii)(III), on flight segments of at least 100 miles) during the second preceding calendar year from such airport, and (ii) such airport—(I) is not located within 75 miles of another airport which is not described in clause (i), (II) is receiving essential air service subsidies as of the date of the enactment of this paragraph, or (III) is not connected by paved roads to another airport. (2) Amounts paid outside the United StatesIn the case of amounts paid outside the United States for taxable transportation, the taxes imposed by subsections (a) and (b) shall apply only if such transportation begins and ends in the United States. (3) Amounts paid for right to award free or reduced rate air transportation(A) In generalAny amount paid (and the value of any other benefit provided) to an air carrier (or any related person) for the right to provide mileage awards for (or other reductions in the cost of) any transportation of persons by air shall be treated for purposes of subsection (a) as an amount paid for taxable transportation, and such amount shall be taxable under subsection (a) without regard to any other provision of this subchapter. (B) Controlled groupFor purposes of subparagraph (A), a corporation and all wholly owned subsidiaries of such corporation shall be treated as 1 corporation. (C) RegulationsThe Secretary shall prescribe rules which reallocate items of income, deduction, credit, exclusion, or other allowance to the extent necessary to prevent the avoidance of tax imposed by reason of this paragraph. The Secretary may prescribe rules which exclude from the tax imposed by subsection (a) amounts attributable to mileage awards which are used other than for transportation of persons by air. (4) Inflation adjustment of dollar rates of tax(A) In generalIn the case of taxable events in a calendar year after the last nonindexed year, the $3.00 amount contained in subsection (b) and each dollar amount contained in subsection (c) shall be increased by an amount equal to—(i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting the year before the last nonindexed year for “calendar year 2016” in subparagraph (A)(ii) thereof. If any increase determined under the preceding sentence is not a multiple of 10 cents, such increase shall be rounded to the nearest multiple of 10 cents. (B) Last nonindexed yearFor purposes of subparagraph (A), the last nonindexed year is—(i) 2002 in the case of the $3.00 amount contained in subsection (b), and (ii) 1998 in the case of the dollar amounts contained in subsection (c). (C) Taxable eventFor purposes of subparagraph (A), in the case of the tax imposed by subsection (b), the beginning of the domestic segment shall be treated as the taxable event. (D) Special rule for amounts paid for domestic segments beginning after 2002If an amount is paid during a calendar year for a domestic segment beginning in a later calendar year, then the rate of tax under subsection (b) on such amount shall be the rate in effect for the calendar year in which such amount is paid. (5) Amounts paid for aircraft management services(A) In generalNo 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 servicesFor purposes of subparagraph (A), the term “aircraft management services” includes—(i) assisting an aircraft owner with administrative and support services, such as scheduling, flight planning, and weather forecasting, (ii) obtaining insurance, (iii) maintenance, storage and fueling of aircraft, (iv) hiring, training, and provision of pilots and crew, (v) establishing and complying with safety standards, and (vi) such other services as are necessary to support flights operated by an aircraft owner. (C) Lessee treated as aircraft owner(i) In generalFor purposes of this paragraph, the term “aircraft owner” includes a person who leases the aircraft other than under a disqualified lease. (ii) Disqualified leaseFor 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 allocationIn the case of amounts paid to any person which (but for this subsection) are subject to the tax imposed by subsection (a), a portion of which consists of amounts described in subparagraph (A), this paragraph shall apply on a pro rata basis only to the portion which consists of amounts described in such subparagraph. (f) Exemption for certain usesNo tax shall be imposed under subsection (a) or (b) on air transportation—(1) by helicopter for the purpose of transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas, or (2) by helicopter or by fixed-wing aircraft for the purpose of the planting, cultivation, cutting, or transportation of, or caring for, trees (including logging operations), but only if the helicopter or fixed-wing aircraft does not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code, during such use. In the case of helicopter transportation described in paragraph (1), this subsection shall be applied by treating each flight segment as a distinct flight. (g) Exemption for air ambulances providing certain emergency medical transportationNo tax shall be imposed under this section or section 4271 on any air transportation for the purpose of providing emergency medical services—(1) by helicopter, or (2) by a fixed-wing aircraft equipped for and exclusively dedicated on that flight to acute care emergency medical services. (h) Exemption for skydiving usesNo tax shall be imposed by this section or section 4271 on any air transportation exclusively for the purpose of skydiving. (i) Exemption for seaplanesNo tax shall be imposed by this section or section 4271 on any air transportation by a seaplane with respect to any segment consisting of a takeoff from, and a landing on, water, but only if the places at which such takeoff and landing occur have not received and are not receiving financial assistance from the Airport and Airways Trust Fund. (j) Exemption for aircraft in fractional ownership aircraft programsNo tax shall be imposed by this section or section 4271 on any air transportation if tax is imposed under section 4043 with respect to the fuel used in such transportation. This subsection shall not apply after September 30, 2028. (k) Application of taxes(1) In generalThe taxes imposed by this section shall apply to—(A) transportation beginning during the period—(i) beginning on the 7th day after the date of the enactment of the Airport and Airway Trust Fund Tax Reinstatement Act of 1997, and (ii) ending on September 30, 2028, and (B) amounts paid during such period for transportation beginning after such period. (2) RefundsIf, as of the date any transportation begins, the taxes imposed by this section would not have applied to such transportation if paid for on such date, any tax paid under paragraph (1)(B) with respect to such transportation shall be treated as an overpayment.

26 U.S.C. § 4262 Definition of taxable transportation

(a) Taxable transportation; in generalFor purposes of this part, except as provided in subsection (b), the term “taxable transportation” means—(1) transportation by air which begins in the United States or in the 225–mile zone and ends in the United States or in the 225–mile zone; and (2) in the case of transportation by air other than transportation described in paragraph (1), that portion of such transportation which is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if such portion is not a part of uninterrupted international air transportation (within the meaning of subsection (c)(3)). (b) Exclusion of certain travelFor purposes of this part, the term “taxable transportation” does not include that portion of any transportation by air which meets all 4 of the following requirements:(1) such portion is outside the United States; (2) neither such portion nor any segment thereof is directly or indirectly—(A) between (i) a point where the route of the transportation leaves or enters the continental United States, or (ii) a port or station in the 225-mile zone, and (B) a port or station in the 225-mile zone; (3) such portion—(A) begins at either (i) the point where the route of the transportation leaves the United States, or (ii) a port or station in the 225-mile zone, and (B) ends at either (i) the point where the route of the transportation enters the United States, or (ii) a port or station in the 225-mile zone; and (4) a direct line from the point (or the port or station) specified in paragraph (3)(A), to the point (or the port or station) specified in paragraph (3)(B), passes through or over a point which is not within 225 miles of the United States. (c) DefinitionsFor purposes of this section—(1) Continental United StatesThe term “continental United States” means the District of Columbia and the States other than Alaska and Hawaii. (2) 225-mile zoneThe term “225-mile zone” means that portion of Canada and Mexico which is not more than 225 miles from the nearest point in the continental United States. (3) Uninterrupted international air transportationThe term “uninterrupted international air transportation” means any transportation by air which is not transportation described in subsection (a)(1) and in which—(A) the scheduled interval between (i) the beginning or end of the portion of such transportation which is directly or indirectly from one port or station in the United States to another port or station in the United States and (ii) the end or beginning of the other portion of such transportation is not more than 12 hours, and (B) the scheduled interval between the beginning or end and the end or beginning of any two segments of the portion of such transportation referred to in subparagraph (A)(i) is not more than 12 hours. For purposes of this paragraph, in the case of personnel of the United States Army, Air Force, Navy, Marine Corps, and Coast Guard traveling in uniform at their own expense when on official leave, furlough, or pass, the scheduled interval described in subparagraph (A) shall be deemed to be not more than 12 hours if a ticket for the subsequent portion of such transportation is purchased within 12 hours after the end of the earlier portion of such transportation and the purchaser accepts and utilizes the first accommodations actually available to him for such subsequent portion. (d) TransportationFor purposes of this part, the term “transportation” includes layover or waiting time and movement of the aircraft in deadhead service. (e) Authority to waive 225-mile zone provisions(1) In generalIf the Secretary of the Treasury determines that Canada or Mexico has entered into a qualified agreement—(A) the Secretary shall publish a notice of such determination in the Federal Register, and (B) effective with respect to transportation beginning after the date specified in such notice, to the extent provided in the agreement, the term “225-mile zone” shall not include part or all of the country with respect to which such determination is made. (2) Termination of waiverIf a determination was made under paragraph (1) with respect to any country and the Secretary of the Treasury subsequently determines that the agreement is no longer in effect or that the agreement is no longer a qualified agreement—(A) the Secretary shall publish a notice of such determination in the Federal Register, and (B) subparagraph (B) of paragraph (1) shall cease to apply with respect to transportation beginning after the date specified in such notice. (3) Qualified agreementFor purposes of this subsection, the term “qualified agreement” means an agreement between the United States and Canada or Mexico (as the case may be)—(A) setting forth that portion of such country which is not to be treated as within the 225-mile zone, and (B) providing that the tax imposed by such country on transportation described in subparagraph (A) will be at a level which the Secretary of the Treasury determines to be appropriate. (4) Requirement that agreement be submitted to CongressNo notice may be published under paragraph (1)(A) with respect to any qualified agreement before the date 90 days after the date on which a copy of such agreement was furnished to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.

26 U.S.C. § 4263 Special rules

(a) Payments made outside the United States for prepaid ordersIf the payment upon which tax is imposed by section 4261 is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation pursuant to such order shall collect the amount of the tax. (b) Tax deducted upon refundsEvery person who refunds any amount with respect to a ticket or order which was purchased without payment of the tax imposed by section 4261 shall deduct from the amount refundable, to the extent available, any tax due under such section as a result of the use of a portion of the transportation purchased in connection with such ticket or order, and shall report to the Secretary the amount of any such tax remaining uncollected. (c) Payment of taxWhere any tax imposed by section 4261 is not paid at the time payment for transportation is made, then, under regulations prescribed by the Secretary, to the extent that such tax is not collected under any other provision of this subchapter, such tax shall be paid by the carrier providing the initial segment of such transportation which begins or ends in the United States. (d) Application of taxThe tax imposed by section 4261 shall apply to any amount paid within the United States for transportation of any person by air unless the taxpayer establishes, pursuant to regulations prescribed by the Secretary, at the time of payment for the transportation, that the transportation is not transportation in respect of which tax is imposed by section 4261. (e) Round tripsIn applying this subchapter to a round trip, such round trip shall be considered to consist of transportation from the point of departure to the destination, and of separate transportation thereafter. (f) Transportation outside the northern portion of the Western HemisphereIn applying this subchapter to transportation any part of which is outside the northern portion of the Western Hemisphere, if the route of such transportation leaves and reenters the northern portion of the Western Hemisphere, such transportation shall be considered to consist of transportation to a point outside such northern portion, and of separate transportation thereafter. For purposes of this subsection, the term “northern portion of the Western Hemisphere” means the area lying west of the 30th meridian west of Greenwich, east of the international dateline, and north of the Equator, but not including any country of South America.