NetJets Subsidiaries Sue IRS

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Four subsidiaries of NetJets are suing the IRS for a total of $643 million, saying that the agency wrongly applied ticket tax to the private flight operations they manage. According to the subsidiary companies, they do not act to transport the people that own the aircraft they manage but act as agents to assist owners in transporting themselves. The ticket tax, say the companies, should not apply to private owners or fees paid to operate and maintain privately owned aircraft. And by that argument, the IRS owes them.

The suit says that the IRS "stuck" the companies with "a $642 million-plus bull for past taxes the IRS never indicated they were required to collect and for which they are not even the actual taxpayers. The IRS is reviewing the suit and, per its policy, is not offering comments on the pending litigation. The taxes were first applied in 2003. Through the suit, the companies are now seeking back payment of the taxes, with interest. Companies represented by the lawsuit are Executive Jet Management Inc., NetJets International Inc., NetJets Large Aircraft Inc. and NetJets Aviation Inc.