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Tue, Nov 22, 2011

NetJets Sues IRS Over $643 Million In Back Taxes

Assessment Called Improper Application Of Commercial Tax

Billionaire investor Warren Buffet recently complained that his secretary pays a higher income tax rate than he does. Apparently missing the fact that the US Treasury would more than welcome his voluntary contributions, his comments provided fodder for the "one percent" debate.

The IRS responded with increased attention on Buffett's investment firm, Berkshire Hathaway, and decided it does indeed owe some back taxes. Berkshire's NetJets subsidiary has been assessed $643 million in back taxes, and NetJets has now responded with a lawsuit against the IRS, claiming the assessment is "illegal."

The Wall Street Journal reports the IRS has determined that NetJets had failed to collect a "ticket tax" from its customers—the same tax that's paid by passengers on a commercial flights. NetJets responds that the tax is meant to be paid only by commercial or charter passengers. NetJets clients are actually part-owners of the planes on which they fly.

In the suit itself, the company says, "The IRS's assessments in this case improperly extend application of the ticket tax beyond commercial airline and charter passengers, to persons who own the aircraft on which they fly." It also notes that its competitors have not been required to pay the tax.

The IRS has declined comment.

FMI: www.netjets.com ; www.berkshirehathaway.com

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