The US Federal Aviation Administration has put its weight behind business aviation in a dispute over burdensome new tax rules intended to prevent fuel fraud. A letter from the FAA to the Internal Revenue Service requests that implementation of the new rules be suspended “until a workable solution is reached”.

The new rules, part of the latest highway bill, are intended to discourage vehicle operators from using jet fuel to avoid the higher taxes on diesel. They require business aviation operators to pay taxes on jet fuel at the higher rate applied to highway diesel, then apply for a refund of the difference. Additionally, all jet fuel taxes collected at the higher rate are deposited into the Highway Trust Fund and transferred to the Airport and Airway Trust Fund only after the refund credit has been applied for.

Describing them as confusing, as well as impractical and bureaucratic, business-aviation industry associations have asked for the rules to be shelved until a more feasible approach for addressing fuel fraud can be produced. “We all want to minimise the financial and administrative burden on aviation users and ensure that each trust fund receives credit for appropriate tax revenue,” the FAA says.

Source: Flight International