Transportation of person by Air (IRS No. 26)

The tax on the transportation of person by air is the percentage tax and the domestic segment tax. Add the percentage tax and the domestic segment tax to get the total tax on transportation of persons by air.

Do note, the percentage and domestic segment tax does not apply on flight if the surtax on fuel used in a fractional ownership program aircraft is imposed. For more information, see Surtax on any liquid used in a fractional ownership program aircraft as fuel (IRS No. 13).

If you are wondering, who should file. Keep reading to know more:

The person who is receiving the payment for the air transportation services must do all of the following:

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

What is Percentage and Domestic Segment Tax?

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

For the calendar year 2015, the tax on the amount paid for each of the domestic segment of taxable transportation is $4.00.

Example: In January 2015, Steve Martin pays $256.00 to a commercial airline for a flight in January from Washington to Seattle with a stopover in Portland. The flight has two segments. The price includes the $230 fare and $26.00 excise tax [($230×7.5%)+(2×$4.00)] for which Frank is liable. The airline collects the tax from Frank and submits it to the government.

Charter flights: If an aircraft is chartered, and 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 tax by the number of passengers transported on the aircraft.

Example:

In March 2015, Tommy pays $1,121.00 to an air charter service to carry seven employees from Washington to Detroit with a stopover in Pittsburgh. The flight has two segments. The price includes the $1,000 charter payment and $121.00 excise tax [($1,000×7.5%) + (2×$4.00×7 passengers)] for which Tim is liable. The charter service collects the tax from Tim and submits it to the government.

Rural Airports:

If a segment is to or from a rural airport, the domestic segment tax does not apply. Transportation of Property by Air (IRS No. 28) includes tax percentage of 6.25% of amounts paid for transportation of property by air. The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft is imposed.

Use of International Air Travel Facilities (IRS No. 27):

For calendar year 2014, the tax on the amount paid for international flights is $17.50 per person for flights that begin or end in the United States. The tax is $8.70 per person for domestic segments that begin or end in Alaska or Hawaii (applies only to departures).