At long last, the one major obstacle to the production of new single engine general aviation aircraft in the United States has been removed. On August 3, 1994, the U.S. Congress passed legislation to limit to 18 years the period of time an aircraft manufacturer or aircraft parts manufacturer can be held liable for an accident involving their aircraft or aircraft part. Until this legislation was enacted, aircraft and parts manufacturers were held liable without limit for the life of the aircraft or part. This has resulted in manufacturers’ liability costs increasing from $24 million per year in 1977 to $210 million in 1985. These costs have virtually destroyed the general aviation single engine aircraft manufacturing industry in the United States. However, based on this new legislation, Cessna has stated that they will begin production of single engine aircraft immediately. Many individuals deserve a great deal of credit for the success of this effort including the General Aviation Manufacturers Association, the Aircraft Owners and Pilots Association (AOPA), and Senator Kassebaum and Representative Glickman from Kansas who lead the battle in the U.S. Congress.
Other Good News!!
The U.S. Congress has now acted to make airport development funds available for the second half of fiscal year 94 as well as fiscal years 95 and 96. Without this action the State of Texas stood to lose over $7 million in funding for general aviation airport development. Thanks to those of you who contacted your congressman about this critically important issue.
And Finally!!!
Another aviation crisis averted. For some time discussions have been taking place with representatives of the State Comptroller’s Office to attempt to resolve a tax liability situation involving a large number of flight schools throughout Texas. Since the late 1970’s, Texas law has provided a sales tax exemption for “aircraft used in a licensed course of instruction”. Since there is no “licensed course of instruction” for aviation flight schools, the Comptroller’s Office has interpreted this statute to mean schools that have an FAA approved course of instruction by meeting the requirements of the Federal Aviation Regulation (FAR) Part 141. This decision resulted in disallowance of the tax exception of many transactions involving FAR Part 61 schools while leaving others open for interpretation. Comptroller representatives and flight school operators ultimately faced a maze of conflicting guidelines. Under such circumstances a number of FAR Part 141 and Part 61 flight schools were audited and faced huge tax liabilities for failure to collect and remit sales taxes. Since there has been some confusion and possible misinformation provided regard- ing this matter in the past, Mr. John Sharp, Texas Comptroller of Public Accounts, has agreed to forgive taxes due prior to July 22, 1994. However, FAR Part 61 schools will be responsible for future taxes unless a change in the law occurs. Special thanks are in order to Mr. Norm Scroggins, Field Representative for the AOPA and Mr. Lou McCaslin, Fixed Base Operator at the Castroville Airport for taking the lead in this matter, as well as Ben Harvey, who provided free legal assistance, and Senator Frank Madla, who worked directly with Mr. Sharp to resolve the problem. Contact our office if you need further information.