The IRS recently issued IRS Notice 2012-27 which provides guidance on the tax imposed by IRC §4043 on fuel used in a fractional program aircraft. IRC §4043 imposes a $0.141 per-gallon tax for fuel used in a fractional program aircraft after March 31, 2012: (1) for the transportation of a qualified fractional owner with respect to the fractional ownership aircraft program of which such aircraft is a part; or, (2) with respect to the use of such aircraft on account of such qualified fractional owner, including use in a deadhead service.
Generally, a fractional ownership aircraft program is a system of aircraft ownership and exchange that involves a single program manager that manages a fleet of aircrafts on behalf of fractional owners. The program entitles the fractional owner to fly on any of the aircrafts in the fleet regardless of whether the owner has an ownership interest in the aircraft in which the owner flies.
The IRS Notice provides some of the specific definitions and citations essential to fractional aircraft ownership programs. The IRS Notice provides that fractional ownership program managers must report the tax imposed by IRC §4043 on Form 720, and taxpayers liable for the tax must make deposits semimonthly.