SECTION 2. BACKGROUND

.01 Section 4261(a) generally imposes a tax equal to a percentage of the amount paid for taxable transportation of any person (percentage tax).

.02 Section 4261(b) imposes an additional tax on the amount paid for each domestic segment of taxable transportation by air (domestic segment tax).

.03 Section 4261(b)(2) generally defines a domestic segment as any segment consisting of one takeoff and one landing in the course of taxable transportation that begins and ends in the United States (or in Canada or Mexico at a point within 225 miles of the U.S. border).

.04 Section 4261(e)(1)(A) excepts from the domestic segment tax (but not the percentage tax) any domestic segment beginning or ending at an airport which is a rural airport for the calendar year in which such segment begins or ends (as the case may be).

.05 Section 4261(e)(1)(B) provides that an airport is a rural airport for a calendar year if (i) fewer than 100,000 commercial passengers departed by air during the second preceding calendar year from the airport, and (ii) the airport (I) is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year or (II) is receiving essential air service subsidies as of August 5, 1997. .06 Rev. Proc. 98–18, 1998–1 C.B. 435, provides a list of airports that qualify as rural airports. Since Rev. Proc. 98–18 was published, the airports that qualify as rural airports have changed.