Sentient is the latest jet card provider to tell customers cards purchased through year’s end will save the 7.5% Federal Excise Tax for flights until funds are used
If you fly with Sentient Jet or are considering buying a jet card before the end of the year, the unit of Directional Aviation’s OneSky Flight unit is the latest provider to offer tax savings beyond the current expiration of the CARES Act, scheduled for Dec. 31, 2020.
NetJets, Nicholas Air, Jets.com, Airstream Jets, and Magellan Jets have previously said they would extend the tax benefit, a savings of 7.5% for domestic flights, and those that start or end within 220 miles of the U.S. northern and southern borders, for the life of the cards they sell.
What it means is if you buy a jet card now, even flights that are taken in 2021 and beyond will be free of the Federal Excise Tax. Since Sentient Jet cards don’t have an expiration, Andrew Collins, the CEO, tells Private Jet Card Comparisons any funds you deposit for cards purchased before midnight on New Year’s Eve will generate tax-free flights.
The tax waiver was one of a slew of policies designed to bolster aviation against the devastation COVID-19 has wrought across the travel industry. The waiver has been widely credited as one element that has helped boost private jet travel to 85% of pre-pandemic levels, The industry supports over one million jobs, many that are still in jeopardy.
Sentient Jet keeps same terms
Collins said there are no changes to Sentient’s rules and policies, so you will still be able to switch between cabin categories with each trip at published rates. You can also request your funds are escrowed. Its entry-level is 25 hours on a light jet for $137,000.
Sentient doesn’t necessarily raise rates from year to year, and Collins says, your hourly rate would only increase post standard 12-month rate lock if the rates it publishes on its website go up.
Collins says the company decided to go the buy now, fly tax-free route after studying what others in the industry were doing, and after extensive consultations with outside advisors. The IRS hasn’t issued specific guidance and only refers to a 2015 internal memo which is non-binding.
“After looking at the guidance and spending a lot of time on this, we are comfortable that, based on how our program works, if you buy now, the flights will be without the 7.5% FET until your funds expire,” he says.
Members who purchased their cards after the CARES Act went into effect on March 27 of this year will have the same benefit. However, to add funds or for members who had balances prior to that date, Collins said you will need to buy a new card, which starts at 25 hours.
The IRS view on the 7.5% FET
If the taxman does cometh, looking for the excise tax at some point in the future, it’s likely it would be tied up for years. It also seems the IRS would go to the operator if they can’t get their money from your broker.
An IRS spokesperson pointed to Section 4263 (c) of the tax code, which reads, “Where any tax imposed by section 4261 (FET) is not paid at the time payment for transportation is made, then, under regulations prescribed by the Secretary, to the extent that such tax is not collected under any other provision of this subchapter, such tax shall be paid by the carrier providing the initial segment of such transportation which begins or ends in the United States.”