FREQUENTLY ASKED QUESTIONS

The Highway Bill contains a change in the collection of fuel taxes for business and general aviation operators that will have a significant financial impact on the aviation industry and could lead to a de facto tax increase. Before enactment of the Highway Bill, jet fuel intended for noncommercial use was taxed at a rate of 21.9 cents per gallon (CPG). While the tax on aviation jet fuel remains at 21.9 CPG, the Highway Bill mandates that all taxes on aviation jet fuel will be collected at the same rate as the tax for highway diesel fuel, 24.4 CPG, except under very controlled circumstances. The FBO or "ultimate registered vendor" would then have to file claims with the Internal Revenue Service (IRS) to be reimbursed for the 2.5 CPG difference in the amount of taxes paid and the amount actually owed. The change was made amid concerns that highway truck drivers were buying aviation jet fuel and then mixing the fuel with another substance to make it operable in highway trucks, thus avoiding the higher taxes. Despite the fact that there is no documented evidence of widespread fuel fraud of this nature, the change has been implemented and stands to increase Highway Trust Fund revenues by hundreds of millions of dollars at the expense of the Airport and Airway Trust Fund. The change in the fuel tax collection poses problems for aviation operators, fuel providers and the aviation industry as a whole.

In the event that an operator or fuel provider does not apply for the refund, the aviation trust fund receives no revenue from the sale of the aviation jet fuel. The revenue generated for the Highway Trust Fund is not "new" revenue: it is simply taking money from the Airport and Airway Trust Fund to justify the high costs of the Highway Bill. The change took effect on October 1, 2005, with no guidance from the IRS on how aviation fuel operators should apply the new policy. Fuel providers that do not become Ultimate Vendors may pass the increased tax along to aircraft operators, which in turn can not apply for refund either. In this situation, the Airport and Airway Trust Fund receives no revenue, and purchasers of aircraft fuel have been given a de facto tax increase. Million Air St. Louis is an Ultimate Vendor and needs to have a Tax ID on file for each company incase they were to be audited. Please fill out our CERTIFICATE OF ULTIMATE PURCHASER OF KEROSENE FOR USE IN FOREIGN TRADE OR USE (OTHER THAN BY STATE OR LOCAL GOVERNMENT) IN NONCOMMERCIAL AVIATION (To support vendor's claim for a credit or payment under § 6427(l)(5)(B) of the Internal Revenue Code.) Form.