Reuters logo
Berkshire's NetJets sues U.S. over $643 mln taxes
November 17, 2011 / 10:26 PM / 6 years ago

Berkshire's NetJets sues U.S. over $643 mln taxes

* IRS accused of mistakenly assessing “ticket tax”

* NetJets says services do not trigger tax

* IRS spokeswoman declines to comment

Nov 17 (Reuters) - NetJets Inc, a private jet-sharing company owned by Warren Buffett’s Berkshire Hathaway Inc , sued the United States to recoup $642.7 million in taxes and penalties it said were assessed illegally.

The lawsuit filed Monday by four NetJets units contended that the Internal Revenue Service mistakenly assessed a “ticket tax” meant to apply only to passengers who buy seats on commercial or charter aircrafts.

As a manager of private aircraft, NetJets said its services do not qualify as “taxable transportation,” under Congress’ definition of the tax, imposed in 1954. Rather, NetJets said it acts as an “agent” to owners of the planes.

NetJets also said rivals have not faced similar taxes, putting it at a competitive disadvantage, and that it did not have clear guidance on how to collect the tax from passengers.

Because of the IRS’ mistaken interpretation of the law, the NetJets units have been “stuck with a $642 million-plus bill for past taxes the IRS never indicated they were required to collect and for which they are not even the actual taxpayers,” the complaint said.

The lawsuit seeks a refund of the $642.7 million, plus penalties and interest. It was filed in a federal court in Columbus, Ohio, where NetJets is based. Berkshire is based in Omaha, Nebraska.

An IRS spokeswoman declined to comment. NetJets and a lawyer for the company were not immediately available for comment. The parent company, NetJets Inc, was not among the named plaintiffs.

In recent years, NetJets enjoyed a turnaround after prior management had racked up $1.9 billion of debt and overseen frequent quarterly losses. It is now profitable.

The case is NetJets Large Aircraft Inc. v. U.S., U.S. District Court, Southern District of Ohio, No. 11-1023.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below