Proposed Regulations, Property by Air; Aircraft Management Michael H

46032 Federal Register / Vol. 85, No. 148 / Friday, July 31, 2020 / Proposed Rules Managers other than the Manager filing nearest dollar)’’ in the Form 13F ADDRESSES: Commenters are strongly this report, enter in the List of Other Information Table Value Total row. encouraged to submit public comments Included Managers all such Managers ■ u. In the List of Other Included electronically. Submit electronic together with any CRD Number or SEC Managers section of the Form 13F submissions via the Federal filing number assigned to each Manager Summary Page, adding ‘‘CRD Number eRulemaking Portal at and, if known, the Managers’ respective (if applicable)’’ and ‘‘SEC Filing Number www.regulations.gov (indicate IRS and Form 13F file numbers (The Form 13F (if applicable)’’ columns; and REG–112042–19) by following the file numbers are assigned to Managers ■ v. In the Form 13F Information Table, online instructions for submitting when they file their first Form 13F.).’’; replacing ‘‘(x$1000)’’ with ‘‘(to the comments. Once submitted to the ■ l. In Special Instruction 9, revising nearest dollar)’’ in the Value Federal eRulemaking Portal, comments ‘‘rounded to the nearest one thousand subcolumn. cannot be edited or withdrawn. The IRS dollars (with ‘‘000’’ omitted)’’ to read By the Commission. expects to have limited personnel ‘‘rounded to the nearest dollar’’; Dated: July 10, 2020. available to process public comments ■ m. Deleting Special Instruction 10 and Vanessa A. Countryman, that are submitted on paper through renumbering Special Instructions 11, 12, Secretary. mail. Until further notice, any and 13 to 10, 11, and 12, respectively; [FR Doc. 2020–15322 Filed 7–30–20; 8:45 am] comments submitted on paper will be ■ n. In renumbered Special Instruction considered to the extent practicable. BILLING CODE 8011–01–P 10, revising ‘‘$100,000,000’’ to read The Department of the Treasury ‘‘$3.5 billion’’; (Treasury Department) and the IRS will ■ o. In renumbered Special Instruction publish for public availability any DEPARTMENT OF THE TREASURY 11.b.i, revising the phrase ‘‘rule 13f–1(c) comment submitted electronically, and (the ‘‘13F List’’)’’ to read ‘‘the 13F List’’; Internal Revenue Service to the extent practicable on paper, to its and public docket. ■ p. Deleting renumbered Special 26 CFR Parts 40 and 49 Send paper submissions to: Instruction 12 in its entirety and CC:PA:LPD:PR (REG–112042–19), Room replacing it with the following: [REG–112042–19] 5203, Internal Revenue Service, P.O. ‘‘Filing of Reports RIN 1545–BP37 Box 7604, Ben Franklin Station, Washington, DC 20044. ■ 13. Reports must be filed Excise Taxes; Transportation of FOR FURTHER INFORMATION CONTACT: electronically using EDGAR in Persons by Air; Transportation of accordance with Regulation S–T. Concerning the proposed regulations, Property by Air; Aircraft Management Michael H. Beker or Rachel S. Smith at Consult the EDGAR Filer Manual and Services Appendices for EDGAR filing (202) 317–6855; concerning submissions instructions.’’ AGENCY: Internal Revenue Service (IRS), of comments and/or requests for a ■ q. Deleting the Paperwork Reduction Treasury. public hearing, Regina Johnson, (202) Act Information section in its entirety ACTION: Notice of proposed rulemaking 317–5177 (not toll-free numbers). and replacing it with the following: and partial withdrawal of notice of SUPPLEMENTARY INFORMATION: proposed rulemaking. ‘‘PAPERWORK REDUCTION ACT Background INFORMATION SUMMARY: This document contains This document contains proposed Persons who are to respond to the proposed regulations relating to the amendments to the Facilities and collection of information contained in excise taxes imposed on certain Services Excise Tax Regulations (26 CFR this form are not required to respond to amounts paid for transportation of part 49) under sections 4261, 4262, the collection of information unless the persons and property by air. 4263, 4264, 4271, 4281, and 4282 of the form displays a currently valid Office of Specifically, the proposed regulations Internal Revenue Code (Code). This Management and Budget (‘‘OMB’’) relate to the exemption for amounts document also contains proposed control number. Please direct comments paid for certain aircraft management amendments to the Excise Tax concerning the accuracy of the services. The proposed regulations also Procedural Regulations (26 CFR part information collection burden estimate amend, revise, redesignate, and remove 40). and any suggestions for reducing the provisions of existing regulations that Section 4261 imposes an excise tax on burden to the Secretary, Securities and are out-of-date or obsolete and generally certain amounts paid for transportation Exchange Commission, Washington, DC update the existing regulations to of persons by air. Section 4271 imposes 20549. OMB has reviewed this incorporate statutory changes, case law, an excise tax on certain amounts paid collection of information under the and other published guidance. In for transportation of property by air. The clearance requirements of 44 U.S.C. addition, the proposed regulations excise taxes imposed by sections 4261 3507.’’; withdraw a provision that was included and 4271 (collectively, air ■ r. In the Institutional Investment in a prior notice of proposed rulemaking transportation excise tax), as well as Manager Filing this Report section on that was never finalized and re-propose certain Federal fuel taxes, are deposited the Cover Page, adding ‘‘CRD Number (if it. The proposed regulations affect into the Airport and Airway Trust Fund, applicable):ll’’ and ‘‘SEC Filing persons that provide air transportation which funds the Federal Aviation Number (if applicable):ll ’’; of persons and property, and persons Administration’s (FAA) operations, air ■ s. In the List of Other Managers that pay for those services. transportation infrastructure, and other Reporting for this Manager section on DATES: Written or electronic comments aviation-related programs. See section the Cover Page, adding ‘‘CRD Number (if and requests for a public hearing must 9502 of the Code. applicable)’’ and ‘‘SEC Filing Number (if be received by September 29, 2020. Section 13822 of Public Law 115–97, applicable)’’ columns; Requests for a public hearing must be 131 Stat. 2054, 2182 (2017), commonly ■ t. In the Report Summary on the Form submitted as prescribed in the referred to as the Tax Cuts and Jobs Act 13F Summary Page, replacing ‘‘Comments and Requests for a Public (TCJA), amended the Code by adding ‘‘(thousands)’’ with ‘‘(round to the Hearing’’ section. paragraph (e)(5) to section 4261. The VerDate Sep<11>2014 16:47 Jul 30, 2020 Jkt 250001 PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 E:\FR\FM\31JYP1.SGM 31JYP1 Federal Register / Vol. 85, No. 148 / Friday, July 31, 2020 / Proposed Rules 46033 new provision provides that no tax shall The Conference Report further states transportation excise tax for amounts be imposed by section 4261 or 4271 on that participation in a fractional paid by an aircraft owner for aircraft any amount paid by an aircraft owner ownership aircraft program does not management services pursuant to for aircraft management services related constitute ‘‘aircraft ownership’’ for section 4261(e)(5). to: (1) Maintenance and support of the purposes of section 4261(e)(5). Id. During the development of these aircraft owner’s aircraft, or (2) flights on Amounts paid to a fractional ownership proposed regulations, the Treasury the aircraft owner’s aircraft. aircraft program for transportation Department and the IRS received Section 4261(e)(5)(B) defines the term under such a program are already various requests for guidance from ‘‘aircraft management services’’ to exempt from air transportation excise stakeholders (referred to herein as include assisting an aircraft owner with: tax pursuant to section 4261(j) if certain ‘‘commenters’’) related to the first five (1) Administrative and support services, requirements provided in section 4043 issues discussed in part 1 of this such as scheduling, flight planning, and of the Code are satisfied, including that Explanation of Provisions. weather forecasting; (2) obtaining the aircraft is operated under subpart K a. Applicability of Possession, insurance; (3) maintenance, storage, and of part 91 of Title 14 of the Code of Command, and Control Test fueling of aircraft; (4) hiring, training, Federal Regulations (subpart K). Id. and provision of pilots and crew; (5) Flights under a fractional ownership Commenters requested clarification on the applicability of the possession, establishing and complying with safety aircraft program are subject to both the command, and control test in existing standards; and (6) such other services as fuel tax levied on noncommercial guidance to amounts paid for aircraft are necessary to support flights operated aviation and an additional fuel surtax management services in light of section by an aircraft owner. imposed by section 4043 (fuel surtax). 4261(e)(5). The possession, command, Section 4261(e)(5)(C)(i) provides that Id. As a result, the Conference Report and control test is a facts-and- the term ‘‘aircraft owner’’ includes a explains that ‘‘a business arrangement circumstances analytical framework that person who leases an aircraft other than seeking to circumvent the fuel surtax by is used to determine whether a person under a ‘‘disqualified lease.’’ Section operating outside of subpart K, allowing is providing taxable transportation to 4261(e)(5)(C)(ii) defines the term an aircraft owner the right to use any of another person in cases where each of ‘‘disqualified lease’’ for purposes of a fleet of aircraft, be it through an the parties contribute some, but not all, section 4261(e)(5)(C)(i) as a lease from a aircraft interchange agreement, through of the elements necessary for complete person providing aircraft management holding nominal shares in a fleet of air transportation services. See e.g., Rev. services with respect to the aircraft (or aircraft, or any other arrangement that Rul. 60–311 (1960–2 C.B. 341), Rev. Rul. a related person (within the meaning of does not reflect true tax ownership of 70–325 (1970–1 C.B. 231), and Rev.

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