Tax News

CCH (cch.taxgroup.com) reports:

The IRS has announced 2008 inflation-adjusted tax rates for the airline ticket excise taxes. The Code Sec. 4261(b) excise tax on the amount paid for each domestic flight segment of taxable transportation increases to $3.50. The Code Sec. 4261(c) excise tax on amounts paid for international air travel beginning or ending in the United States is $15.40. For a domestic flight segment beginning or ending in Alaska or Hawaii, the Code Sec. 4261(c) tax on the use of international facilities applies to departures at the rate of $7.70.
These inflation adjustments were not included in Rev. Proc. 2007-66, I.R.B. 2007-45, 970, the ruling that generally provides the inflation-adjusted tax rates for 2008. This is because, under Code Sec. 4261(j)(1)(A)(ii), the airline ticket taxes --taxes that fund the Airport and Airway Trust Fund --were scheduled to expire after September 30, 2007. Several continuing resolutions extended the 2007 rates through December 21, 2007 (P.L. 110-92, P.L. 110-116 and P.L. 110-137). But 2008 inflation-adjusted figures were not necessary until the Consolidated Appropriations Act, 2008 (HR 2764) was signed by the president on December 26, 2007 (TAXDAY, 2007/12/27, W.2). The Department of Transportation Appropriations Act within the larger consolidated Act extends the airline ticket taxes to air transportation that begins or is paid for no later than February 29, 2008.
The airline ticket taxes are expected to be extended for a four-year period when Congress completes work on the FAA Reauthorization Bill of 2007 (HR 2881), which passed the House on September 20, 2007 (TAXDAY, 2007/09/21, C.1), and has been placed on the Senate's calendar.
The IRS says that Rev. Proc. 2007-66 will soon be modified to include the 2008 inflation adjustments pertaining to airline ticket taxes.
IR-2007-208, ETR ¶66,842
Other References:
Code Sec. 4261
CCH Reference - ETR ¶19,305.014
CCH Reference - ETR ¶19,305.02
CCH Reference - ETR ¶19,305.495
Tax Research Consultant
CCH Reference - TRC EXCISE: 9,102.05
CCH Reference - TRC EXCISE: 9,104.05