Certified Aviation Manager (CAM) Practice Test

If a particular flight is subject to federal excise tax, who is responsible for the tax?

1. The flight crew

2. The entity billing the end-user customer

3. The airline operating the flight

4. The federal government

The correct answer is: The entity billing the end-user customer

The federal excise tax on air transportation is primarily the responsibility of the entity billing the end-user customer. This means that the airline or service provider must collect this tax as part of the ticket fare or charges billed for the service rendered. The reasoning behind this is that the federal excise tax is designed to be a pass-through cost; the airline collects the tax from the customer at the time of sale and then remits it to the federal government. This system ensures that the tax is effectively tied to the transaction between the airline and the consumer, creating a clear line of accountability for tax collection. While other options may seem plausible, they do not align with the actual mechanism of tax responsibility in aviation. The flight crew do not engage in the financial transactions related to tax collection; the airline operating the flight, while involved in the process, does so in the capacity of the collector on behalf of the billing entity; and the federal government simply sets the tax policy and collects the revenue after it has been arranged through the flight service provider.