Jet Linx customers who make deposits before year’s end will be able to fly without paying the Federal Excise tax next year and until funds are used
At the end of 2019, Jet Linx Aviation introduced a jet card deposit option in addition to its pay-as-you-go membership. More recently, it launched a new jet card program targeting corporations, also with deposit options. Now the Part 135 operator that features its own private terminals in 19 markets is saying deposits made this year will be free of the Federal Excise tax throughout 2021 or until funds expire.
The move puts them in company with a widening group of jet card sellers that started with NetJets in March. The feature is a result of the CARES Act. By waiving the FET, the government was hoping to provide a boost to private aviation, a sector that supports over one million jobs.
The tax holiday ends Dec. 31 of this year unless it’s extended. However, whether or not the tax is due is based on when you buy your flight as opposed to when you fly.
Questions however arose how the IRS would view jet card flights. It’s still not clear. There is a non-binding internal memo dating from 2015.
Why the surge of jet card providers now saying they will extend the offer? Several say their decision to move forward is based on consultations with tax experts and consultants. Another reason is likely not wanting to give competitors an edge. There’s also a general thought that the taxman has bigger fish to fry.
More so, many argue that the tax treatment is doing exactly what the CARES Act was meant to do. Boost the battered aviation and travel industry where private jet flying has now recovered to 85% of pre-COVID levels.
One executive who asked not to be identified put it this way. “If the U.S. government was able to get Apple to pay 1% additional tax, that would probably be more than the entire jet card business.” Apple generated $273 billion in revenues for the 12 months that ended in June.