NetJets Sues IRS over $642.7 Million Ticket Tax Bill

Fractional provider hit for unpaid taxes it thinks it doesn’t owe.

NetJets is suing the IRS over a tax bill totaling $642.7 million, money the fractional jet provider says it never should have been required to pay in the first place.

The Internal Revenue Service improperly assessed passenger ticket taxes, NetJets said in its complaint in federal court in Columbus, Ohio. Four NetJets subsidiaries involved in the lawsuit – NetJets Aviation, NetJets International, NetJets Large Aircraft and Executive Jet Management (EJM) – argue that the ticket tax should apply only to passengers who use commercial or charter aircraft owned by others. NetJets sells or leases shares of business aircraft to individual owners and companies.

“The ticket tax was not intended to apply to private aircraft owners and the fees they pay to maintain and operate their aircraft,” NetJets said in the complaint.

NetJets also claimed that the IRS didn’t provide guidance about the types of fees it would have to collect from passengers. The company, owned by Warren Buffett’s Berkshire Hathaway, is seeking a full refund.