n-11-69.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Air transportation and aviation fuels excise taxes

Notice 2011-69

SECTION 1. OVERVIEW
This notice describes the relief the IRS will provide in connection with the
retroactive extension of certain aviation related excise taxes by the Airport and Airway
Extension Act of 2011, Part IV (Extension Act, Part IV) (Pub. L. 112-27).
SECTION 2. BACKGROUND
Before July 23, 2011, the Internal Revenue Code (Code) imposed excise taxes
on amounts paid for taxable air transportation of persons (§ 4261) and property
(§ 4271). In addition, the Code imposed excise taxes on certain removals, entries, and
sales of aviation gasoline and aviation fuel (§ 4081). On July 23, 2011, the taxes
imposed by §§ 4261 and 4271 expired under the terms of the Airport and Airway
Extension Act of 2011, Part III (Pub. L. 112-21) and did not apply to amounts paid on
and after that date. Air transportation providers were not authorized to collect these
taxes for air transportation services purchased on and after July 23, 2011. Also under

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the Airport and Airway Extension Act of 2011, Part III, the tax rates for aviation gasoline
and aviation fuel taxes were reduced beginning on July 23, 2011.
On August 5, 2011, the President signed the Extension Act, Part IV, into law,
reinstating the taxes imposed by §§ 4261 and 4271, and the pre-July 23, 2011, tax rates
for aviation gasoline and aviation fuel as if they had never expired.
In an August 5, 2011, statement made pursuant to its authority under § 7805(a)
(relating to prescribing rules as may be necessary by reason of any alteration of internal
revenue laws), the IRS announced that it intends to provide relief for passengers and
airlines with respect to ticket taxes that were not paid or collected on or after July 23,
2011, and before August 8, 2011. The IRS also announced that persons who
purchased airline tickets before July 23, 2011, and traveled on or after July 23, 2011,
and before the reinstatement of the taxes, are not entitled to a refund of the air
transportation taxes imposed by § 4261.
SECTION 3. AIR TRANSPORTATION TAXES
The air transportation excise taxes under §§ 4261 and 4271 of the Code are
imposed on the person making the payment for the air transportation services and
collected and paid over to the government by the person receiving that payment.
To relieve the administrative burden that would be associated with payment and
collection of air transportation excise taxes on purchases that have already occurred,
the IRS is providing the following relief with respect to these taxes:
1. Purchasers of air transportation services (including individuals who purchase
frequent flyer miles for their own use) will not be required to pay, and air

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transportation providers and other collectors of air transportation excise taxes
will not be required to collect and pay over, taxes imposed by §§ 4261 and
4271 on purchases of air transportation services (or frequent flyer miles) for
which payment was made after July 22, 2011, and before August 8, 2011.
2. Persons required to make deposits of tax in accordance with the rules
provided under §§ 40.6302(c)-1 and 40.6302(c)-3 of the Excise Tax
Procedural Regulations (Regulations) may treat the taxes imposed by
§§ 4261 and 4271 as being in effect after July 22, 2011, and before August 8,
2011, for purposes of determining whether the safe harbor rules provided in
§ 40.6302(c)-1(b)(2) apply and in determining the amount of the net tax
liability that is taken into account in applying those rules.
The relief granted in paragraph 1 of this section does not apply to any amount
paid (and the value of any other benefit provided) to an air carrier (or any related
person) for the right to provide mileage awards for (or other reductions in the cost of)
any transportation of persons by air under § 4261(e)(3) (right to provide free or reduced
rate air transportation). Purchases of the right to provide free or reduced rate air
transportation made after July 22, 2011, and before August 8, 2011, are subject to the
taxes imposed by § 4261. Accordingly, purchasers of the right to provide free or
reduced rate air transportation are required to pay the taxes imposed by § 4261 on
purchases made after July 22, 2011, and before August 8, 2011.
The relief provided in paragraph 1 applies only to amounts paid after July 22,
2011, and before August 8, 2011. Accordingly, purchasers of air transportation services

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are required to pay, and air transportation providers and other collectors of air
transportation excise taxes are required to collect taxes on air transportation services
for which payment is made on or after 12:01 am, August 8, 2011. In addition, persons
who purchased air transportation services (including purchasers of the right to provide
free or reduced rate air transportation) before July 23, 2011, for travel after that date are
not entitled to refunds of taxes paid on those purchases (other than refunds allowable
under the law in effect after the enactment of the Extensions Act, Part IV).
SECTION 4. DEPOSITS OF TAX ON AVIATION GASOLINE AND KEROSENE FOR
USE IN AVIATION
Section 4081 of the Code imposes excise taxes on certain removals, entries, and
sales of aviation gasoline and aviation kerosene. On July 23, 2011, the tax imposed by
§ 4081(a)(2)(A)(ii) on aviation gasoline was reduced from 19.4 cents per gallon to 4.4
cents per gallon, but was reinstated by the Extension Act, Part IV, at 19.4 cents per
gallon effective July 23, 2011. Also on July 23, 2011, the tax imposed by
§ 4081(a)(2)(C)(ii) on kerosene removed from any refinery or terminal directly into the
fuel tank of an aircraft for use in noncommercial aviation (aviation kerosene) was
reduced from 21.9 cents per gallon to 4.4 cents per gallon, but was reinstated by the
Extension Act, Part IV at 21.9 cents per gallon tax effective July 23, 2011. Under
§ 40.6302(c)-1(b)(1) of the Regulations, persons required to make semimonthly
deposits of tax on aviation gasoline and aviation kerosene generally must deposit at
least 95 percent of the net tax liability incurred during the semimonthly period. The IRS
will not impose § 6656 penalties with respect to semimonthly deposits made in August

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2011 if the taxpayer made a timely deposit of at least 95 percent of the net tax liability
for the semimonthly period determined without regard to the reinstated rates. The
penalty relief provided in this section does not apply to taxpayers that deposit under the
safe harbor rules of § 40.6302(c)-1(b)(2) (relating to depositing 1/6 of net tax liability
reported for a look-back quarter).
SECTION 5. DRAFTING INFORMATION
The principal author of this notice is Michael H. Beker of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding
this notice contact Michael H. Beker at (202) 622-3130 (not a toll-free call).