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Local Governments with Tax Revenue from Aircraft Fuel May Need to Submit Spending Plan to FAA by Dec. 8

November 20, 2015
A recently adopted amendment to a federal regulation by the Federal Aviation Administration (FAA) clarifies the rule that the proceeds of state and local taxes on aviation fuel at an airport must be used for airport-related purposes, including capital and operations, state aviation programs and airport noise mitigation.
 
The FAA is allowing a three-year period through Dec. 8, 2017, during which FAA will withhold enforcement actions and state and local agencies must develop compliance plans. 

In California, motor vehicle fuel — other than jet fuel — is exempt from sales and use tax. However, proceeds of some taxes on aircraft jet fuel are affected by the FAA rule. The rule does not apply to taxes in effect on Dec. 31, 1987 including the local Bradley Burns 1.25 percent rate or the 4.75 percent state general fund rate in effect at the time. However, several other state rates may be affected, as well as most local transactions and use tax rates.
 
Local governments with tax revenue from aircraft (jet) fuel may need to provide a spending plan to the FAA by Dec. 8.
 
Additional information is available from CaliforniaCityFinance.com.


 
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