States Adopt Model Tax Rule for New Forms of Airline Revenue

The states are amending a 43-year old rule governing the tax treatment of airline revenue to accommodate new profit centers including credit-card points, on-board sales of food, and in-flight internet service.

The Multistate Tax Commission’s Uniformity Committee voted Tuesday to approve a revision to the commission’s special industry regulation on airlines. The near-unanimous vote moves the model regulation to the commission’s Executive Committee and then the full commission, an intergovernmental agency that promotes state tax code uniformity.

The regulation was initially adopted in 1983 as a formula and a set of principles to help states consistently and fairly apportion airline ...