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IN CASE YOU MISSED IT: COLUMBUS DISPATCH ARTICLE: Tax issue to be solved for NetJets?
BY JESSICA WEHRMAN
For years, a Columbus company that allows people to own the equivalent of a time share of an aircraft has faced a conundrum: Are companies of its sort commercial or general aviation?
The Internal Revenue Service has considered them commercial airlines for tax purposes. The Federal Aviation Administration has considered them general aviation.
The lack of clarity has led to uncertainty and bureaucratic confusion for NetJets, a “fractional aviation” company that employs 1,300 in Columbus and 1,900 across Ohio. Among the key issues: How should such companies be taxed?
But a provision introduced by Rep. Pat Tiberi, R-Genoa Township, in the Federal Aviation Administration reauthorization bill seeks to end the confusion.
“We want to give them some certainty that they will have the same classification in the FAA’s world as they do in the IRS world,” Tiberi said.
Under a provision backed by Sen. Rob Portman, R-Ohio, in the Senate, fractional airlines would receive their own IRS designation, clarifying what taxes are owed by such companies.
Tiberi said the confusion over how the company is classified was a disincentive to fractional companies wanting to locate in the United States. NetJets, based in Columbus, is one of two fractional airplane companies in Ohio; the other, Flight Options, is in Cleveland.
Other countries, Tiberi said, could make it easier for such companies to locate there because of simpler bureaucratic guidelines.
“They have companies all over the world,” he said. “They do business in 170 countries. They could be headquartered in Dubai, they could be headquartered in Switzerland, they could be headquartered in Hong Kong. Fortunately, these good-paying jobs are in Ohio.”
Robert Tanner, vice president of government affairs for NetJets, said the confusion has made it difficult to explain the regulatory framework of the company to prospective clients. He said the company is “elated” by the prospect of clarity.
“The mantra we have had is ‘tax us like we fly,’ ” he said. “We fly as general aviation, and that’s how the tax structure ought to apply to us.”
The final version of the bill is to be voted on by the House this week.