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State of California 

Aviation Fuel Tax Questions and Responses

The following questions were submitted by the State of California Senator Mike McGuire 

specifically related to state and local sales tax on aviation fuel. The answers were prepared by

Randy Fiertz, Director – FAA Airport Compliance and Management Analysis.

Question #1

Prior to 1990, all fuels sold to common carriers, including air carriers, were exempt from paying 

sales taxes on fuel sold after the first out-of-state destination. After 1990, the above exemption 

was removed and was not restored. With removal of the partial sales tax exemption, would all 

fuel sales be subject to the FAA’s revenue use requirements or only the portion of fuel used after 

the first out-of-state destination due to grandfathering of all taxes in place prior to 1987?

FAA Response to Question #1

State or local taxes on aviation fuel (except taxes in effect on December 30, 1987) are considered 

to be airport revenue subject to the revenue-use requirement. With removal of the partial sales 

tax exemption in 1991, all taxes on aviation fuel sales collected and levied within the taxing 

jurisdiction would be subject to the revenue-use requirements. The FAA will need further 

information to substantiate the terms of the aviation fuel tax in effect as of December 30, 1987 to 

determine eligibility for grandfathered status.

Please see response to Question #4 which directs you to guidance on eligibility for 

grandfathering of aviation fuel taxes.

Question #2

Since December 30, 1987, California has increased its general sales tax rate by one and a half 

percent. According the docket, this policy applies to a new assessment or imposition of a tax on 

aviation fuel, even if the tax could have been imposed earlier under a statute enacted before 

December 30, 1987. Would only the 1.5 percent increase be subject to the FAA’s revenue use 

requirements or would the entire 7.5 percent statewide sales tax be obligated to airports?

FAA Response to Question #2

California will need to provide documents substantiating that the original 6 percent tax qualifies 

for grandfathered status, including proof that the tax law was in effect on December 30, 1987. If 

substantiated, the 6 percent tax rate could be used for the purposes established by the 

grandfathering documentation. The 1.5 percent implemented after December 30, 1987 would be 

subject to the Revenue Use Policy Amendment.
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Question #3

The 1.5 percent increase since 1987 is used as follows: a half percent for local public safety

services; a half percent for mental health realignment purposes, a quarter percent for education, 

and a quarter percent for the state’s General Fund. As these are voter approved taxes are they

still subject to the FAA mandate?

FAA Response to Question #3

Yes, federal statutory requirements, as clarified in the Revenue Use Policy Amendment, would 

subject these state taxes on aviation fuel to the revenue use requirements required under 49 

U.S.C. 47133. State taxes (except those taxes in effect on December 30, 1987) on aviation fuel 

(imposed by either an airport sponsor or a non-sponsor) are subject to use either for a state 

aviation program or for airport-related purposes.

Question #4

Will guidelines for the action plan be released in the near future? (Action plan requirements, 

submission location, penalties for failure to submit an action plan, etc.)

FAA Response to Question #4

Yes, guidance has been issued. The guidance, “Final Aviation Fuel Tax Grandfathering Action 

Plans Final 2015 07 10,” is located on the regulations.gov website at

http://www.regulations.gov/#!documentDetail;D=FAA-2013-0988-0041.

The guidance outlines several scenarios to assist airport sponsors and non-sponsors to determine 

an appropriate course of action and/or development of an action plan for aviation fuel taxes that 

may or may not qualify for grandfathered status. 

The Revenue Use Amendment states, “The FAA believes that State and local officials should 

prepare an action plan to initiate the process to amend any non-compliant State laws and local 

ordinances as necessary to conform to federal law on use of aviation fuel tax revenues. The 

action plan should detail the process necessary to develop reporting requirements and tracking 

systems for discrete information on aviation fuel tax revenues. The plan may include a 

reasonable transition period, not to exceed three years, during which the FAA would agree, in an 

exercise of its prosecutorial discretion, not to enforce the revenue use requirement against a nonsponsor State or local government. State and local governments should submit an action plan to 

the FAA within a year of the effective date of this notice.” (79 Fed. Reg. 66286, November 7, 

2014)

State and local taxing legislation, collection and allocation methodologies, reporting, and 

accounting systems are complex and may vary widely. The FAA left the action plan 

requirements flexible for each state or local government to account for variances among 

jurisdictions. Moreover, the FAA believes that standard guidelines could be constraining and/or 

restrictive to state and local governments as they work to become compliant with the 

Amendment.