12-24-2024
Understanding Form 720 IRS numbers 26, 27, 28
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Federal Excise Taxes are reported and paid using Form 720, which encompasses various categories of taxes. Among these, the "Communication and Air Transportation Taxes" section includes the following categories:
IRS Number 22: Local Telephone and Teletypewriter Exchange Services.
IRS Number 26: Transportation of Persons by Air.
IRS Number 27: Use of International Air Travel Facilities.
IRS Number 28: Transportation of Property by Air.
In this blog, we will focus on understanding the differences between IRS Numbers 26, 27, and 28 to gain a better understanding of the taxes they represent.
IRS Number 26 – Transportation of Persons by Air
This tax is applied when a person travels by air within U.S. territories, which includes domestic flights. A 7.5% tax is levied on the amount paid for the taxable transportation of persons by air. This includes additional charges for layover or waiting time and even the movement of aircraft in deadhead service (flights conducted without passengers).
IRS Number 27 – Use of International Air Travel Facilities
This tax is imposed on individuals using international air travel facilities in the U.S., such as customs and immigration services. It applies to international flights that either begin or end in the United States. The tax is charged per person, irrespective of whether the flight remains within U.S. territories or travels outside of them.
IRS Number 28 – Transportation of Property by Air
This tax pertains to the transportation of cargo or property by air within the United States. A 6.25% tax is imposed on the amount paid for transporting property domestically. This includes transportation that begins and ends within U.S. territories, factoring in layover time and the movement of aircraft in deadhead service.
Summary Table
For better clarity, the distinctions between these tax categories can be summarized as follows:
Features | Transportation of Persons by Air (26) | Use of International Air Travel Facilities (27) | Transportation of Property by Air (28) |
Description | Tax on payments for the transportation of passengers by air (domestic and U.S. territories) | Fee for using international air travel facilities in the U.S. (e.g. customs, immigration) | Tax on payments for transporting cargo or property by air (domestic only) |
What it covers | Airfare for domestic flights or domestic legs of international trips. | Passengers departing from or arriving in the U.S. on international flights | Freight charges for domestic shipments of cargo or property by air |
Tax/Fee Amount | 7.5% of ticket price plus $4.50 per segment (take-off and landing) | $19.10 per passenger for international flights, $9.60 for U.S. territories | 6.25 % of the freight transportation fee |
Who pays it | Passengers (Collected by airlines or ticketing agents) | Passengers (Collected by airlines or ticketing agents) | Shippers (Collected by freight carriers such as FedEx or UPS) |
Exemptions | Sightseeing flights, foreign diplomats and certain government officials | If the surtax on fuel used in a fractional ownership program aircraft is imposed | Shipment by the U.S. postal services |
Purpose of funds | Supports the Airport and Airway Trust Fund (AATF) for infrastructure and air traffic control improvements | Funds customs, immigration and security services at U.S. international airports | Maintains and enhances infrastructure for air cargo operations |
Example | A ticket from Chicago to New York (domestic leg): 7.5% tax on ticket price + $4.50 segment fee | A flight from Los Angeles to Tokyo (direct): $19.10 international facility fee. | Shipping goods from Dallas to Atlanta via FedEx: 6.25% tax on shipping fee. |
Also read our blog on Communication and air transportation taxes for detailed understanding.
WRAP:
The IRS Numbers 26, 27, and 28 represent key excise taxes related to air transportation in the United States. Each category plays a critical role in supporting essential aviation services and infrastructure. Understanding these taxes ensures compliance and helps stakeholders stay informed about their financial responsibilities.
File your Communications and Air Transportation Taxes online using Simple720!
