IRS audits Latin American airlines
The U.S. Internal Revenue Service (IRS) is probing Latin American airlines to determine if they owe taxes on wages paid to crewmembers for cabin time while flying over U.S. territory, as well as preflight services done in the United States.
IRS audits under way have legal validity in changes to tax law in the mid-1990s that allow the IRS to calculate U.S. 'source income' for employees who are non-resident aliens.
'This makes no sense, would add a huge burden and make flying into the U.S. more uneconomical,' Alex de Gunten, executive director of the Latin American Airline Association (AITAL), told the Financial Times, which also quoted a senior U.S. airline executive as saying the IRS's move 'will inevitably lead to retaliation. They are firing a bullet at our own industry. It is really unbelievable.'