NetJets Lawsuit Tackles IRS Excise Tax Problem | Aviation International News

Regulations and Government

NetJets Lawsuit Tackles IRS Excise Tax Problem

By Matt Thurber • Editor-in-Chief

January 4, 2012

The U.S. government claims that NetJets owes the Internal Revenue Service (IRS) nearly $643 million in federal excise taxes, assessed penalties and interest. The amount is just $125 million less than the $768 million in pre-tax earnings that NetJets parent Berkshire Hathaway reported in its last financial report for the “other” category of subsidiaries that includes NetJets, FlightSafety International and other businesses. The amount is also not much less than the $725 million that Berkshire Hathaway paid for NetJets in 1998.

NetJets filed a lawsuit on November 14, accusing the Internal Revenue Service of improperly attempting to collect the $643 million, because the taxes were assessed on “the fees that aircraft owners pay to plaintiffs to manage and maintain the owners’ aircraft.” The fees were paid by customers of NetJets subsidiaries NetJets Aviation, NetJets International, NetJets Large Aircraft and Executive Jet Management.

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