Welcome back filers, last week we discussed about Environmental and Communication Tax, today our topic of discussion is Air Transportation Tax that is included in Part-I in excise tax. The tax included in the list is percentage tax and domestic segment tax. To get the total tax on transportation of people by air, you need to add the percentage and domestic segment tax.

Do note the percentage and domestic segment taxes do not apply on the flight if the surtax on the fuel used in a fractional ownership program aircraft is imposed.

Who Are Required To File?

The person receiving the payment for air transportation services is held responsible for the following:

Collect the tax, file form 720 and report the amount of tax collected or considered collected for the quarter.

What is Percentage Tax?

The percentage tax is 7.5% of the amount paid for the taxable transportation of person by air.

Domestic Segment Tax:

The rate changes as per the year and for this calendar year 2014, the tax on the amount paid for each domestic segment of taxable transportation is $4.00.

Charter Flight:

If the aircraft is chartered, the flight is not one where the tax on fuel used in a fractional ownership program aircraft is imposed. The domestic segment tax for each segment of taxable transportation is figured by multiplying the taxes by the number of passengers transported on the aircraft.

Rural Airports:

When the segment is to or from a rural airport, the domestic segment tax does not apply. The transportation by Air tax is 6.5 % of the amount paid for the transportation of property by air. However, the tax is not applicable if the surtax on the fuel used in a fractional ownership program aircraft is imposed.

Usage of International Air Travel Facilities:

In the calendar year 2014, the tax on the amount paid for international flight is $17.50 per person for the flight that begins or ends in United States of America and the tax per person for domestic segment is $8.70 for the flights that begin or end in Alaska or Hawaii (applies only to the departure).

There is lot more to come, we are dividing each of the topics into various blog posts in order to keep it simple and allowing you to understand each of it perfectly. What’s more, you can reach us for any queries related to Excise Tax @ 1-866-245-3918 or simply write to us @support@taxexcise.com.