S. 340 (112th): Airport and Airway Trust Fund Reauthorization Act of 2011

112th Congress, 2011–2013. Text as of Feb 14, 2011 (Placed on Calendar in the Senate).

Status & Summary | PDF | Source: GPO

II

Calendar No. 10

112th CONGRESS

1st Session

S. 340

[Report No. 112–1]

IN THE SENATE OF THE UNITED STATES

February 14, 2011

, from the Committee on Finance, reported the following original bill; which was read twice and placed on the calendar

A BILL

To amend the Internal Revenue Code of 1986 to extend the funding and expenditure authority of the Airport and Airway Trust Fund, and for other purposes.

1.

Short title; amendment of 1986 code

(a)

Short title

This Act may be cited as the Airport and Airway Trust Fund Reauthorization Act of 2011.

(b)

Amendment of 1986 code

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

2.

Extension of taxes funding airport and airway trust fund

(a)

Fuel taxes

Subparagraph (B) of section 4081(d)(2) is amended by striking March 31, 2010 and inserting September 30, 2013.

(b)

Ticket taxes

(1)

Persons

Clause (ii) of section 4261(j)(1)(A) is amended by striking March 31, 2010 and inserting September 30, 2013.

(2)

Property

Clause (ii) of section 4271(d)(1)(A) is amended by striking March 31, 2010 and inserting September 30, 2013.

(c)

Effective date

The amendments made by this section shall take effect on April 1, 2010.

3.

Extension of airport and airway trust fund expenditure authority

(a)

In general

Paragraph (1) of section 9502(d) is amended—

(1)

by striking April 1, 2010 in the matter preceding subparagraph (A) and inserting October 1, 2013, and

(2)

by striking the semicolon at the end of subparagraph (A) and inserting or the FAA Air Transportation Modernization and Safety Improvement Act;.

(b)

Conforming amendment

Paragraph (2) of section 9502(e) is amended by striking April 1, 2010 and inserting October 1, 2013.

(c)

Effective date

The amendments made by this section shall take effect on April 1, 2010.

4.

Modification of excise tax on kerosene used in aviation

(a)

Rate of tax on aviation-grade kerosene

(1)

In general

Subparagraph (A) of section 4081(a)(2) is amended by striking and at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and, and by adding at the end the following new clause:

(iv)

in the case of aviation-grade kerosene, 35.9 cents per gallon.

.

(2)

Fuel removed directly into fuel tank of airplane used in noncommercial aviation

Subparagraph (C) of section 4081(a)(2) is amended to read as follows:

(C)

Taxes imposed on fuel used in commercial aviation

In the case of aviation-grade kerosene which is removed from any refinery or terminal directly into the fuel tank of an aircraft for use in commercial aviation by a person registered for such use under section 4101, the rate of tax under subparagraph (A)(iv) shall be 4.3 cents per gallon.

.

(3)

Exemption for aviation-grade kerosene removed into an aircraft

Subsection (e) of section 4082 is amended—

(A)

by striking kerosene and inserting aviation-grade kerosene,

(B)

by striking section 4081(a)(2)(A)(iii) and inserting section 4081(a)(2)(A)(iv), and

(C)

by striking Kerosene in the heading and inserting Aviation-Grade Kerosene.

(4)

Conforming amendments

(A)

Clause (iii) of section 4081(a)(2)(A) is amended by inserting other than aviation-grade kerosene after kerosene.

(B)

The following provisions are each amended by striking kerosene and inserting aviation-grade kerosene:

(i)

Section 4081(a)(3)(A)(ii).

(ii)

Section 4081(a)(3)(A)(iv).

(iii)

Section 4081(a)(3)(D).

(C)

Subparagraph (D) of section 4081(a)(3) is amended—

(i)

by striking paragraph (2)(C)(i) in clause (i) and inserting paragraph (2)(C), and

(ii)

by striking paragraph (2)(C)(ii) in clause (ii) and inserting paragraph (2)(A)(iv).

(D)

Paragraph (4) of section 4081(a) is amended—

(i)

by striking kerosene in the heading and inserting aviation-grade kerosene, and

(ii)

by striking paragraph (2)(C)(i) and inserting paragraph (2)(C).

(E)

Paragraph (2) of section 4081(d) is amended by striking (a)(2)(C)(ii) and inserting (a)(2)(A)(iv).

(b)

Retail tax on aviation fuel

(1)

Exemption for previously taxed fuel

Paragraph (2) of section 4041(c) is amended by inserting at the rate specified in subsection (a)(2)(A)(iv) thereof after section 4081.

(2)

Rate of tax

Paragraph (3) of section 4041(c) is amended to read as follows:

(3)

Rate of tax

The rate of tax imposed by this subsection shall be the rate of tax in effect under section 4081(a)(2)(A)(iv) (4.3 cents per gallon with respect to any sale or use for commercial aviation).

.

(c)

Refunds relating to aviation-grade kerosene

(1)

Aviation-grade kerosene used in commercial aviation

Clause (ii) of section 6427(l)(4)(A) is amended by striking specified in section 4041(c) or 4081(a)(2)(A)(iii), as the case may be, and inserting so imposed.

(2)

Kerosene used in aviation

Paragraph (4) of section 6427(l) is amended by striking subparagraphs (B) and (C) and inserting the following new subparagraph:

(B)

Payments to ultimate, registered vendor

With respect to any kerosene used in aviation (other than kerosene to which paragraph (6) applies), if the ultimate purchaser of such kerosene waives (at such time and in such form and manner as the Secretary shall prescribe) the right to payment under paragraph (1) and assigns such right to the ultimate vendor, then the Secretary shall pay (without interest) the amount which would be paid under paragraph (1) to such ultimate vendor, but only if such ultimate vendor—

(i)

is registered under section 4101, and

(ii)

meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).

.

(3)

Aviation-grade kerosene not used in aviation

Subsection (l) of section 6427 is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

(5)

Refunds for aviation-grade kerosene not used in aviation

If tax has been imposed under section 4081 at the rate specified in section 4081(a)(2)(A)(iv) and the fuel is used other than in an aircraft, the Secretary shall pay (without interest) to the ultimate purchaser of such fuel an amount equal to the amount of tax imposed on such fuel reduced by the amount of tax that would be imposed under section 4041 if no tax under section 4081 had been imposed.

.

(4)

Conforming amendments

(A)

Subparagraph (B) of section 4082(d)(2) is amended by striking 6427(l)(5)(B) and inserting 6427(l)(6)(B).

(B)

Paragraph (4) of section 6427(i) is amended—

(i)

by striking (4)(C) or (5) and inserting (4)(B) or (6), and

(ii)

by striking , (l)(4)(C)(ii), and (l)(5) and inserting and (l)(6).

(C)

Subsection (l) of section 6427 is amended by striking Diesel Fuel and Kerosene in the heading and inserting Diesel Fuel, Kerosene, and Aviation Fuel.

(D)

Paragraph (1) of section 6427(l) is amended by striking paragraph (4)(C)(i) and inserting paragraph (4)(B).

(E)

Paragraph (4) of section 6427(l) is amended—

(i)

by striking kerosene used in aviation in the heading and inserting aviation-grade kerosene used in commercial aviation, and

(ii)

in subparagraph (A)—

(I)

by striking kerosene and inserting aviation-grade kerosene,

(II)

by striking Kerosene used in commercial aviation in the heading and inserting In general.

(d)

Transfers to the airport and airway trust fund

(1)

In general

Subparagraph (C) of section 9502(b)(1) is amended to read as follows:

(C)

section 4081 with respect to aviation gasoline and aviation-grade kerosene, and

.

(2)

Transfers on account of certain refunds

(A)

In general

Subsection (d) of section 9502 is amended—

(i)

by striking (other than subsection (l)(4) thereof) in paragraph (2), and

(ii)

by striking (other than payments made by reason of paragraph (4) of section 6427(l)) in paragraph (3).

(B)

Conforming amendments

(i)

Paragraph (4) of section 9503(b) is amended by striking or at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting a comma, and by inserting after subparagraph (D) the following new subparagraphs:

(E)

section 4081 to the extent attributable to the rate specified in clause (ii) or (iv) of section 4081(a)(2)(A), or

(F)

section 4041(c).

.

(ii)

Subsection (c) of section 9503 is amended by striking paragraph (5).

(iii)

Subsection (a) of section 9502 is amended—

(I)

by striking appropriated, credited, or paid into and inserting appropriated or credited to, and

(II)

by striking , section 9503(c)(5),.

(e)

Effective date

The amendments made by this section shall apply to fuels removed, entered, or sold after March 31, 2011.

(f)

Floor stocks tax

(1)

Imposition of tax

In the case of aviation-grade kerosene fuel which is held on April 1, 2011, by any person, there is hereby imposed a floor stocks tax on aviation-grade kerosene equal to—

(A)

the tax which would have been imposed before such date on such kerosene had the amendments made by this section been in effect at all times before such date, reduced by

(B)

the tax imposed before such date on such kerosene under section 4081 of the Internal Revenue Code of 1986, as in effect on such date.

(2)

Liability for tax and method of payment

(A)

Liability for tax

A person holding aviation-grade kerosene on April 1, 2011, shall be liable for such tax.

(B)

Time and method of payment

The tax imposed by paragraph (1) shall be paid at such time and in such manner as the Secretary of the Treasury shall prescribe.

(3)

Transfer of floor stock tax revenues to trust funds

For purposes of determining the amount transferred to the Airport and Airway Trust Fund, the tax imposed by this subsection shall be treated as imposed by section 4081(a)(2)(A)(iv) of the Internal Revenue Code of 1986.

(4)

Definitions

For purposes of this subsection—

(A)

Aviation-grade kerosene

The term aviation-grade kerosene means aviation-grade kerosene as such term is used within the meaning of section 4081 of the Internal Revenue Code of 1986.

(B)

Held by a person

Aviation-grade kerosene shall be considered as held by a person if title thereto has passed to such person (whether or not delivery to the person has been made).

(C)

Secretary

The term Secretary means the Secretary of the Treasury or the Secretary's delegate.

(5)

Exception for exempt uses

The tax imposed by paragraph (1) shall not apply to any aviation-grade kerosene held by any person exclusively for any use to the extent a credit or refund of the tax is allowable under the Internal Revenue Code of 1986 for such use.

(6)

Exception for certain amounts of aviation-grade kerosene

(A)

In general

No tax shall be imposed by paragraph (1) on any aviation-grade kerosene held on April 1, 2011, by any person if the aggregate amount of such aviation-grade kerosene held by such person on such date does not exceed 2,000 gallons. The preceding sentence shall apply only if such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this subparagraph.

(B)

Exempt aviation-grade kerosene

For purposes of subparagraph (A), there shall not be taken into account any aviation-grade kerosene held by any person which is exempt from the tax imposed by paragraph (1) by reason of paragraph (5).

(C)

Controlled groups

For purposes of this subsection—

(i)

Corporations

(I)

In general

All persons treated as a controlled group shall be treated as 1 person.

(II)

Controlled group

The term controlled group has the meaning given to such term by subsection (a) of section 1563 of the Internal Revenue Code of 1986; except that for such purposes the phrase more than 50 percent shall be substituted for the phrase at least 80 percent each place it appears in such subsection.

(ii)

Nonincorporated persons under common control

Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of persons under common control if 1 or more of such persons is not a corporation.

(7)

Other laws applicable

All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4081 of the Internal Revenue Code of 1986 on the aviation-grade kerosene involved shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply with respect to the floor stock taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by such section.

5.

Air traffic control system modernization account

(a)

In general

Section 9502 is amended by adding at the end the following new subsection:

(f)

Establishment of air traffic control system modernization account

(1)

Creation of account

There is established in the Airport and Airway Trust Fund a separate account to be known as the Air Traffic Control System Modernization Account consisting of such amounts as may be transferred or credited to the Air Traffic Control System Modernization Account as provided in this subsection or section 9602(b).

(2)

Transfers to air traffic control system modernization account

On October 1, 2011, and annually thereafter the Secretary shall transfer $400,000,000 to the Air Traffic Control System Modernization Account from amounts appropriated to the Airport and Airway Trust Fund under subsection (b) which are attributable to taxes on aviation-grade kerosene.

(3)

Expenditures from account

Amounts in the Air Traffic Control System Modernization Account shall be available subject to appropriation for expenditures relating to the modernization of the air traffic control system (including facility and equipment account expenditures).

.

(b)

Conforming amendment

Paragraph (1) of section 9502(d) is amended by striking Amounts and inserting Except as provided in subsection (f), amounts.

(c)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act.

6.

Treatment of fractional aircraft ownership programs

(a)

Fuel surtax

(1)

In general

Subchapter B of chapter 31 is amended by adding at the end the following new section:

4043.

Surtax on fuel used in aircraft part of a fractional ownership program

(a)

In general

There is hereby imposed a tax on any liquid used during any calendar quarter by any person as a fuel in an aircraft which is—

(1)

registered in the United States, and

(2)

part of a fractional ownership aircraft program.

(b)

Amount of tax

The rate of tax imposed by subsection (a) is 14.1 cents per gallon.

(c)

Fractional ownership aircraft program

For purposes of this section—

(1)

In general

The term fractional ownership aircraft program means a program under which—

(A)

a single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners,

(B)

2 or more airworthy aircraft are part of the program,

(C)

there are 1 or more fractional owners per program aircraft, with at least 1 program aircraft having more than 1 owner,

(D)

each fractional owner possesses at least a minimum fractional ownership interest in 1 or more program aircraft,

(E)

there exists a dry-lease aircraft exchange arrangement among all of the fractional owners, and

(F)

there are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program.

(2)

Minimum fractional ownership interest

(A)

In general

The term minimum fractional ownership interest means, with respect to each type of aircraft—

(i)

a fractional ownership interest equal to or greater than 1/16 of at least 1 subsonic, fixed wing or powered lift program aircraft, or

(ii)

a fractional ownership interest equal to or greater than 1/32 of a least 1 rotorcraft program aircraft.

(B)

Fractional ownership interest

The term fractional ownership interest means—

(i)

the ownership of an interest in a program aircraft,

(ii)

the holding of a multi-year leasehold interest in a program aircraft, or

(iii)

the holding of a multi-year leasehold interest which is convertible into an ownership interest in a program aircraft.

(3)

Dry-lease aircraft exchange

The term dry-lease aircraft exchange means an agreement, documented by the written program agreements, under which the program aircraft are available, on an as needed basis without crew, to each fractional owner.

(d)

Termination

This section shall not apply to liquids used as a fuel in an aircraft after September 30, 2013.

.

(2)

Conforming amendment

Subsection (e) of section 4082 is amended by inserting (other than an aircraft described in section 4043(a)) after an aircraft.

(3)

Transfer of revenues to airport and airway trust fund

Subsection (1) of section 9502(b) is amended by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, and by inserting after subparagraph (A) the following new subparagraph:

(B)

section 4043 (relating to surtax on fuel used in aircraft part of a fractional ownership program),

.

(4)

Clerical amendment

The table of sections for subchapter B of chapter 31 is amended by adding at the end the following new item:

Sec. 4043. Surtax on fuel used in aircraft part of a fractional ownership program.

.

(b)

Fractional ownership programs treated as non-commercial aviation

Subsection (b) of section 4083 is amended by adding at the end the following new sentence: For uses of aircraft before October 1, 2013, such term shall not include the use of any aircraft which is part of a fractional ownership aircraft program (as defined by section 4043(c))..

(c)

Exemption from tax on transportation of persons

Section 4261, as amended by this Act, is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection:

(j)

Exemption for aircraft in fractional ownership aircraft programs

No tax shall be imposed by this section or section 4271 on any air transportation provided before October 1, 2013, by an aircraft which is part of a fractional ownership aircraft program (as defined by section 4043(c)).

.

(d)

Effective dates

(1)

Subsection (a)

The amendments made by subsection (a) shall apply to fuel used after March 31, 2011.

(2)

Subsection (b)

The amendment made by subsection (b) shall apply to uses of aircraft after March 31, 2011.

(3)

Subsection (c)

The amendments made by subsection (c) shall apply to taxable transportation provided after March 31, 2011.

7.

Termination of exemption for small jet aircraft on nonestablished lines

(a)

In general

the first sentence of section 4281 is amended by inserting or when such aircraft is a turbine engine powered aircraft after an established line.

(b)

Effective date

The amendment made by this section shall apply to taxable transportation provided after March 31, 2011.

8.

Transparency in passenger tax disclosures

(a)

In general

Section 7275 (relating to penalty for offenses relating to certain airline tickets and advertising) is amended—

(1)

by redesignating subsection (c) as subsection (d),

(2)

by striking subsection (a) or (b) in subsection (d), as so redesignated, and inserting subsection (a), (b), or (c), and

(3)

by inserting after subsection (b) the following new subsection:

(c)

Non-tax charges

(1)

In general

In the case of transportation by air for which disclosure on the ticket or advertising for such transportation of the amounts paid for passenger taxes is required by subsection (a)(2) or (b)(1)(B), if such amounts are separately disclosed, it shall be unlawful for the disclosure of such amounts to include any amounts not attributable to such taxes.

(2)

Inclusion in transportation cost

Nothing in this subsection shall prohibit the inclusion of amounts not attributable to the taxes imposed by subsection (a), (b), or (c) of section 4261 in the disclosure of the amount paid for transportation as required by subsection (a)(1) or (b)(1)(A), or in a separate disclosure of amounts not attributable to such taxes.

.

(b)

Effective date

The amendments made by this section shall apply to taxable transportation provided after March 31, 2011.

9.

Tax-exempt bond financing for fixed-wing emergency medical aircraft

(a)

In general

Subsection (e) of section 147 is amended by adding at the end the following new sentence: The preceding sentence shall not apply to any fixed-wing aircraft equipped for, and exclusively dedicated to providing, acute care emergency medical services (within the meaning of 4261(g)(2)).

(b)

Effective date

The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act.

10.

Protection of Airport and Airway Trust Fund solvency

(a)

In general

Paragraph (1) of section 9502(d) is amended by adding at the end the following new sentence: Unless otherwise provided by this section, for purposes of this paragraph for fiscal year 2012 or 2013, the amount available for making expenditures for such fiscal year shall not exceed 90 percent of the receipts of the Airport and Airway Trust Fund plus interest credited to such Trust Fund for such fiscal year as estimated by the Secretary of the Treasury..

(b)

Effective date

The amendment made by this section shall apply to fiscal years beginning after September 30, 2011.

February 14, 2011

Read twice and placed on the calendar