A tax dispute has forced an Alaskan aviation company to file for Chapter 11 bankruptcy protection. Alaska Air Taxi LLC allegedly owes the IRS $1 million in unpaid taxes. The unpaid taxes stem from a law that charges flight operators $3-per-passenger for trips that are flown on a somewhat regular schedule. If the plane touches down at any point during the trip, flight operators must pay an additional $3-per-passenger tax.
Alaska Air Taxi offers sight-seeing trips as one of their services. The company stated that during a sight-seeing trip, their planes touch down frequently, which would make them vulnerable to numerous fees. In addition to offering sight-seeing trips, the company also flies passengers and cargo for oil and mining companies. The aviation business employs 10 percent of Alaska’s population and contributes $3.5 billion to the state’s economy.
Alaska Sen. Mark Begich proposed a bill that would solve this dispute by properly defining the tax law. Currently, the tax law doesn’t specify what “somewhat of a regular schedule” means, which has spurred a lot of confusion. The new bill proposes that no tax is applied to non-scheduled flights to areas that aren’t reachable by paved roads and it would eliminate the IRS’s ability to charge multiple taxes on sight-seeing trips. Originally the company owed $240,000 in back taxes, but reached $1 million due to late fees and penalties. If the bill passes, the company’s debt will basically go away, but until then, Alaska Air Taxi remains in Chapter 11 bankruptcy protection.
Chapter 11 bankruptcy allows companies like Alaska Air Taxi to put their debt on hold while they resolve a dispute. It also allows a company that’s in debt time to decide if they can dig themselves out of the hole they’re in. If you’re thinking about filing for Chapter 11 bankruptcy, contact a skilled JacksonWhite bankruptcy attorney. You can schedule a free consultation with Phoenix bankruptcy lawyer Kelly Black by calling (480) 422-3440.