Flight Options, LLC v. United States

── Flight Options, LLC v. United States ── Court: Court of Appeals for the Sixth Circuit Date: May 27, 2026 Category: General RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 26a0156p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT ┐ FLIGHT OPTIONS, LLC, │ Plaintiff-Appellant, │ > No. 25-3582 │ v. │ │ UNITED STATES OF AMERICA, │ Defendant-Appellee. │ ┘ Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 1:16-cv-00917—Jennifer Dowdell Armstrong, Magistrate Judge. Argued: April 30, 2026 Decided and Filed: May 27, 2026 Before: SUTTON, Chief Judge; CLAY and MURPHY, Circuit Judges. _________________ COUNSEL ARGUED: James R. Saywell, JONES DAY, Cleveland, Ohio, for Appellant. Douglas C. Rennie, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: James R. Saywell, Elizabeth A. Dengler, Andrew S. Rumschlag, JONES DAY, Cleveland, Ohio, Laura Kingsley Hong, Brendan Kelley, TUCKER ELLIS LLP, Cleveland, Ohio, for Appellant. Douglas C. Rennie, Michael J. Haungs, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. SUTTON, C.J., delivered the opinion of the court in which CLAY and MURPHY, JJ., concurred. MURPHY, J. (pp. 20–30), delivered a separate concurring opinion, in which SUTTON, C.J., joined.  No. 25-3582 Flight Options, LLC v. United States Page 2 _________________ OPINION _________________ SUTTON, Chief Judge. The Internal Revenue Service, it’s often said, requires taxpayers to “turn square corners.” Rock Island, Ark. & La. R.R. Co. v. United States, 254 U.S. 141, 143 (1920). Complex statutes, book-length regulations, and too-many-part tests are an unfortunate reality of those turns. Yet the Internal Revenue Code, for all of the challenges of identifying taxable and non-taxable events before people act, still strives to make our nation’s tax system “accessible to everyone with the time and patience to pore over its provisions.” Summa Holdings, Inc. v. Comm’r, 848 F.3d 779, 781 (6th Cir. 2017). Congress and the citizens it represents prefer seen corners to unseen ones. In today’s case, the government seeks to impose a $39 million judgment, including interest and penalties, on Flight Options, a fractional-share jet company, for failing to collect a tax on fixed fees it charged to pay for the overhead and management of its clients’ private jets. The Internal Revenue Code imposes a 7.5% excise tax on the “amount paid for” domestic “transportation by air,” 26 U.S.C. §§ 4261(a), 4262(a)(1), what the statute called a “ticket tax” at all relevant times of this dispute, id. § 4261(e)(1)(C), (e)(5) (2012). The Code imposes the tax on the ticket buyer. But the Code makes the ticket seller liable for any tax it fails to collect on behalf of the government. Flight Options determined that the tax applies only to usage charges for each flight a client takes, not to fixed fees it charges its clients for overhead and management of its fractional jet business. The district court disagreed. It held that Flight Opti