AGO 1989-057.

Case DateMay 08, 1989
CourtKansas
Kansas Attorney General Opinions 1989. AGO 1989-057. May 8, 1989ATTORNEY GENERAL OPINION NO. 89-57The Honorable Keith Roe State Representative One Hundred Ninth District 225 W. Webster P.O. Box 364 Mankato, Kansas 66956 Re: Cities and Municipalities--General Provisions--Countywide and City Retailers' Sales Taxes; Other City and County Excise Taxes Prohibited; Prohibition Construed; Flowage FeesTaxation--Motor Vehicle Fuel Taxes--Exempt From Other Taxes; Flowage Fees Synopsis: Flowage fees imposed by municipal airport authorities that are determined by the gross sales of fuel and are part of the rent charged for the use of airport facilities and property do not constitute a tax. As such, flowage fees are not an excise tax imposed in violation of K.S.A. 12-194 (that prohibits the levy of an excise tax on the transfer of personal and real property) and K.S.A. 79-3424 (that exempts the business of selling motor fuel from any excise, license, privilege or occupation tax). Cited herein: K.S.A. 3-116; 12-194; 79-3424. * * * Dear Representative Roe: As Chairman of the House Committee on Taxation you inquire whether "flowage fees," imposed by some municipal airport authorities on the per gallon sale of motor fuels, are local excise taxes in violation of K.S.A. 12-194 and K.S.A. 79-3424. From information provided by the Kansas Department of Transportation (KDOT), the Salina Airport Authority and the Wichita Airport Authority, we understand that a flowage fee is a user fee imposed by airport operators to meet the cost of operations for use of airport facilities. A contract in the form of a lease agreement establishes the flowage fee as a percentage of gross fuel flow based on cents per gallon or as a fixed charge in lieu of a landing fee. The lease agreements compute rent by way of a formula that includes ground rental, a percentage of gross income and a fuel flowage fee. The facts of Richland-Lexington Airport Dist. v. VIP Aviation, 183 S.E.2d 448, 449 (S.C.1979) similarly describe a flowage fee imposed in lieu of a landing fee. See also Blue v. U.S., 2 Cl.Ct. 38, 83-1 U.S.T.C.¶ 16,389 (Cl.Ct.1982). Under such leases, generally the lessee operates what is known as a fixed base operation (FBO) that includes the right to sell gasoline. Lessor (the airport authority) charges a fuel flowage fee based on the amount of fuel delivered to...

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