FedEx Comments on Aviation Fuel Tax Guidance

VIA FEDEX LETTER

Federal Express Corporation ("FedEx") submits the following comments in response to the request for comments in § 10, Notice 2005-4, 2005-2 I.R.B. 289 (1/10/2005). Notice 2005-4 provides guidance on amendments to the aviation fuel excise tax provisions made by the American Jobs Creation Act of 2004, including the repeal of section 4091 and the amendments to section 4081. In particular, this letter:

• Discusses the urgent need for an expedited process by which an unlisted terminal may become listed, even if on a temporary basis;

• Responds to the request for comments concerning the standards that should be applied to determine whether a fuel terminal is located "within a secured area of an airport";

• Provides comments concerning what types of situations should be treated as "exigent circumstances" for purposes of section 4081(a)(3)(A)(iv); and

• Proposes that Treas. Reg. § 48.4081-3(b)(2)(v) be amended to include aviation-grade kerosene.

It is clear that Congress intended its list to be only an "initial" list. All major airports should be provided an opportunity to qualify for the list so that only minimal disruption will result and market-place imbalances will not occur. Temporary recognition should be granted upon a representation and preliminary findings that:

FedEx's fuel terminal, MEM-T-62-TN-2220, is not included in the list of terminals that are treated as located "within a secured area of an airport" under § 4(d)(2)(ii) of Notice 2005-4. However, MEM Terminal T-62-TN-2212 is included in the list, even though the two terminals are similar in all pertinent respects. We believe that the omission of MEM Terminal T-62-TN-2220 was the result of an oversight, which should be rectified. MEM T-62-TN-2220, a facility similar to MEM T-62-TN-2212, is (1) secured by a physical barrier (fencing), (2) entered only through a manned security gate checkpoint, and (3) operated by security-approved personnel. In addition, when not delivered by hydrant, aviation fuel is transported from MEM-T-62-TN-2220 to the wing of an aircraft only by refueler trucks that are not licensed for highway use. Furthermore, no fuel is loaded into highway-licensed vehicles at MEM-T-62-TN-2220. All fuel is loaded into and consumed in FedEx aircraft. Finally, Fedex provides a monthly accounting to the IRS for all purchases and disbursements coming into and leaving its Memphis terminal. By providing the foregoing safeguards and using only non-highway licensed vehicles to transport aviation fuel from the terminal to Fedex aircraft, MEM T-62-TN-2220 should qualify as a terminal located "within a secured area of an airport."

In defining the term "exigent circumstances," the guidance should recognize the physical conditions that may exist at some older airports. We note that the Conference Report at 690 provides as an example of an "exigent circumstance" a fuel terminal that requires repair or modification so that fuel must be unloaded from the bulk storage tanks into highway vehicles to permit the repairs or modifications to be made. "Exigent circumstances" should also include other temporary but routine and non-routine disruptions, as well as an advance ruling program to determine when a situation will be recognized as an "exigent circumstance."