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These are federal impositions on air travel costs and certain ancillary services. These taxes apply to passengers traveling by air, and owners such as rental companies pay the money to the Internal Revenue Service. The common taxes would be domestic segment fees, international departure tax, and cargo transportation excise tax. All airline air-charter companies, as well as freight carriers, must be accurate in tax collections and reporting to comply with IRS rules.

Those engaging in these taxable air transportation services must file IRS Form 720 (Quarterly Federal Excise Tax Return). Scheduled airlines, charter flight providing companies, and firms that hire property for an air transport service fall under that category. Form 720 is used to make air passenger taxes, air freight taxes, and other federal excise taxes report and remit. If not submitted on time, though, the IRS imposes penalties and interest, thus making timely filing an important aspect of compliance regarding aviation tax obligations.

Form 720 must be filed quarterly, that is, by the last day of the month following the calendar quarter end: April 30, July 31, October 31, and January 31. Operators should keep detailed records of each transaction, including ticket sales, freight invoices, and charter agreements, to answer IRS inquiries about correct tax reporting. Submitting 720 through the IRS e-file can greatly simplify the process because of less error-prone filing and confirmation of filing in a shorter time frame.

 

Double-check all passenger and cargo sales against the relevant tax rate prior to filing to avoid compliance issues. A tax calculation software package or a freight tax specialist should provide security for that accuracy. Find out from the IRS what exemptions exist for any flights, say for certain government or non-profit ones, to ensure that overpayment does not occur. Keep current on the latest FAA and IRS tax regulations, as they will serve to keep your business compliant and guard against expensive audits.