In the current economic climate, corporate aircraft have been singled out as an excessive cost and targeted with restrictive language in the American Recovery and Reinvestment Act. However, government contractors can still be reimbursed for their corporate aircraft costs as expenses properly charged against Government contracts in certain situations.
Under the existing federal regulations, the cost of travel by aircraft owned, leased or chartered by the contractor is allowed when such travel is specifically required by contract specification, term, or condition, or a higher amount is approved by the contracting officer. Such private aircraft travel must be fully documented and justified, and the contractor must maintain and make available manifests or flight logs that indicate (i) date, time and points of departure, (ii) destination, date and time of arrival, (iii) name of each passenger and relationship to the contractor, (iv) authorization for trip, and (v) purpose of trip. Notwithstanding such reimbursements, contractors should be aware that special federal excise taxes can apply to air transportation services provided by contractors to the federal government and other parties pursuant to Government contracts. So, if the contractor is reimbursed for the cost of travel provided to federal employees or third parties, the amount collected could be subject to the federal excise tax.
On April 9, 2009, a notice of request for public comments on these information reporting collection requirements was issued in advance of the Federal Acquisition Regulation Secretariat’s submission to the Office of Management and Budget requesting the review and approval of an extension of the corporate aircraft recordkeeping procedures. Comments are due by June 16, 2009. Wiley Rein is available to assist with these submissions and questions regarding aircraft related federal excise taxes.