Commercial air operations

From the 2024 DOR Tax Exemption Study

Det. No. 99-215, 19 WTD 817 (2000) 824 By contrast, operators of aircraft that are not commercial carriers, i.e., that do not sell air transportation services to others, do not pay the Section 4261 tax. These operators are subject instead to the Section 4091 tax. It is clear, therefore, that the Section 4091 tax is, in substance, imposed on purchasers and not on sellers of jet fuel. The statutory mechanism by which the above taxing regime is established is as follows. IRC Section 4092 exempts from the Section 4091 tax fuel that is “sold for nontaxable uses as defined by Section 6427(l)(1)(B).” Section 6427(l)(1)(B), in turn, defines a “nontaxable use” as a use that is exempt from the tax imposed by Section 4041(c)(1). Finally, Section 4041(c)(1) imposes a tax on fuel used in noncommercial aviation. Accordingly, fuel used in commercial aviation is exempt from the tax imposed by Section 4041(c)(1). Therefore the use of such fuel is a “nontaxable use” within the meaning of Section 6427(l)(1)(B) and is exempted from the Section 4091 tax by Section 4092. Thus, the Section 4091 tax is imposed or not imposed on a sale of fuel depending on the status of the buyer as a commercial or noncomm