The table below shows total liabilities and the composition of those liabilities for the taxes that fund the Airport and Airway Trust Fund for FY 1993 through FY 1996. The IRS has identified various administrative problems with the current tax. Some of these problems are attributable to the fact that the taxes on air transportation are imposed on the person purchasing the transportation rather than the transportation provider. Although the transportation provider is required to collect the tax and remit the amounts collected to the Treasury, the IRS may have no effective remedy when the transportation provider does not collect and remit the tax. In those cases, the IRS must either establish that the transportation provider's failure was willful or attempt to collect a small amount of tax from each of the persons to whom transportation was provided.
Additional difficulties arise when the tax expires or is reinstated.
For example, the expiration of the tax at the end of 1995 resulted in numerous small refund claims from individual passengers who purchased tickets in 1995 for travel during 1996. The differing tax treatment of commercial and noncommercial aviation is also a source of difficulty. Dual-use aircraft, however, are likely to use fuel that has already been taxed at the full rate, necessitating a claim for refund. In other words, a substantial fuel tax can be avoided by paying a relatively small tax on a single passenger's fare. The administrative problems discussed above do not result in significant revenue losses.