Lower Fees, Better Airports Act of 2023

II 118TH CONGRESS 1ST SESSION S. 1550 To amend the Internal Revenue Code of 1986 to include fees paid by airline passengers for goods and services offered during the course of a flight as amounts paid for taxable transportation. IN THE SENATE OF THE UNITED STATES MAY 11, 2023 Mr. SCHATZ introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to include fees paid by airline passengers for goods and services offered during the course of a flight as amounts paid for taxable transportation. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Lower Fees, Better 4 Airports Act of 2023’’. 5 VerDate Sep 11 2014 19:19 May 23, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1550.IS S1550 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1550 IS SEC. 2. FEES PAID BY AIRLINE PASSENGERS FOR GOODS 1 AND SERVICES OFFERED DURING FLIGHT. 2 (a) IN GENERAL.—Section 4261(e) of the Internal 3 Revenue Code of 1986 is amended by adding at the end 4 the following new paragraph: 5 ‘‘(6) FEES PAID FOR GOODS AND SERVICES.— 6 ‘‘(A) IN GENERAL.—Any amount paid to 7 an air carrier (or any related person) for any 8 applicable product in connection with taxable 9 transportation shall be treated for purposes of 10 subsection (a) as an amount paid for taxable 11 transportation, and such amount shall be tax- 12 able under subsection (a) without regard to any 13 other provision of this subchapter. 14 ‘‘(B) APPLICABLE PRODUCT IN CONNEC- 15 TION WITH TAXABLE TRANSPORTATION.—For 16 purposes of this paragraph, the term ‘applicable 17 product in connection with taxable transpor- 18 tation’ means any good or service which is re- 19 lated to taxable transportation and which is of- 20 fered prior to or during such taxable transpor- 21 tation, including— 22 ‘‘(i) any service related to ticketing, 23 booking, or the purchase of such taxable 24 transportation (including payment proc- 25 essing and the change or cancellation or 26 VerDate Sep 11 2014 19:19 May 23, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1550.IS S1550 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1550 IS any ticket or reservation), regardless of 1 whether such service is offered or provided 2 electronically, by telephone, or in person, 3 ‘‘(ii) the direct purchase of frequent 4 flyer miles or qualifying points toward air- 5 line status from a frequent flyer or similar 6 program, including any subscriptions re- 7 lated to such purchase, 8 ‘‘(iii) the ability to redeem frequent 9 flyer miles or points for transportation of 10 persons by air or to accelerate the accumu- 11 lation of frequent flyer miles or points, 12 ‘‘(iv) any service relating to seating or 13 boarding, including seat assignments, up- 14 grades to a higher level seating product, 15 priority boarding, or early check-in, 16 ‘‘(v) the transportation (whether 17 checked or carry-on) of any baggage, ani- 18 mal, or other property of the passenger, 19 ‘‘(vi) any in-flight food or beverage, 20 ‘‘(vii) any in-flight entertainment or 21 wireless internet service, 22 ‘‘(viii) any accommodation or assist- 23 ance provided for an unaccompanied minor 24 passenger, 25 VerDate Sep 11 2014 19:19 May 23, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1550.IS S1550 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1550 IS ‘‘(ix) membership in an airline club or 1 similar program that entitles the passenger 2 to— 3 ‘‘(I) free or discounted transpor- 4 tation by air, or 5 ‘‘(II) goods or services described 6 in any other clause of this subpara- 7 graph, and 8 ‘‘(x) any other good or service identi- 9 fied by the Secretary for purposes of this 10 paragraph. 11 ‘‘(C) REGULATIONS.—Not later than 24 12 months after the date of enactment of this 13 paragraph, the Secretary shall issue such regu- 14 lations or other guidance as the Secretary de- 15 termines necessary to carry out the purposes of 16 this paragraph.’’. 17 (b) EFFECTIVE DATE.— 18 (1) IN GENERAL.—Except as provided in para- 19 graph (2), the amendment made by this section shall 20 apply to amounts paid after the date of the enact- 21 ment of this Act. 22 (2) SPECIAL RULE FOR APPLICABLE PRODUCTS 23 IDENTIFIED BY THE SECRETARY.—In the case of 24 any good or service identified by the Secretary of the 25 VerDate Sep 11 2014 19:19 May 23, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1550.IS S1550 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1550 IS Treasury (or the Secretary’s delegate) pursuant to 1 section 4161(e)(6)(B)(x) of the Internal Revenue 2 Code of 1986 (as added by subsection (a)), the 3 amendment made by this section shall apply to 4 amounts paid after the earlier of— 5 (A) the date determined by the Secretary 6 of the Treasury (or the Secretary’s delegate), or 7 (B) the date that is 12 months after the 8 date on which the Secretary of the Treasury (or 9 the Secretary’s delegate) identified such good or 10 service pursuant to such section. 11 Æ VerDate Sep 11 2014 19:19 May 23, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S1550.IS S1550 kjohnson on DSK79L0C42PROD with BILLS