A US court has ruled in favour of Flight Options (Ohio) (OPT, Cleveland Cuyahoga Country), overturning a lower court decision in a tax dispute over the applicability of the 7.5% Federal Excise Tax (FET) to fractional ownership services. On May 27, the United States Court of Appeals for the Sixth Circuit rejected an Internal Revenue Service (IRS) assessment of approximately USD39 million.

The case addressed whether the FET applied solely to flight usage charges or also to fixed management and overhead fees paid by customers participating in fractional ownership programmes.

The IRS sought to collect approximately USD24 million in what it considered unpaid taxes covering the period between January 1, 2009, and March 31, 2012. Interest and penalties later increased the total assessment to approximately USD39 million. Congress amended the Tax Code on April 1, 2012, introducing an exemption for fractional ownership programmes under FET rules.

On May 28, 2025, the United States District Court for the Northern District of Ohio Eastern Division ruled in favour of the IRS, concluding that Flight Options was required to collect and remit tax on fixed-fee charges.

The Court of Appeals now reversed that decision, holding that the FET applies only to actual air transportation services rather than broader ownership-related fees. Judges stated that fleet management expenses, including hangar leases, insurance, and pilot salaries, fall outside the scope of taxable transportation services under IRS regulations.

The panel further criticised the IRS for lacking clear industry guidance before attempting a retroactive enforcement of the tax.

Flight Options forms part of Directional Aviation, whose portfolio includes Flexjet. The company holds a Part 135 certificate comprising two Beechjet 400XTs and two Hawker 400XTs. Flight Options no longer markets services under a standalone brand, with all operations conducted under the Flexjet name.