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State taxes

sabswbc

Well Known Member
Several tv builders have received bills for a use tax from the state of Texas.
This is something new and based on the registration information. The state did not get sales tax on the kit so they are getting the money from a 6.24% use tax.

Are other states taxing builders and does anyone know about Mississippi? I have a home there a could register the rv-12 in Mississippi.
 
Kansas see the registration and comes after you for state sales tax. If you are like me and it took several years to get to registration from first kit purchase there are penalties.
 
BTW, some states (like Ohio) don't care where the plane is registered. If they determine that the plane spends the majority of it's time in state, then it assesses state taxes. This effectively takes away any advantage of registering local planes out of state.
 
Use Tax

Missouri got the USE tax from us.
Currently no tax is being assessed as a result of a law suit filed over an out of state boat purchase.
The MO State legislature passed a law reinstating it.
However the Missouri Governor vetoed it wanting it to be placed on the ballot for the voters to decide.
Not sure when they will start collecting again, believe it is just a matter of time.
 
California is of course all over this. As soon as they see a registration the bill goes out for 8.5% use tax. I bought an RV-6 and the former owner/builder got what he described as a "packet of forms" in the mail about the same time I got my tax bill. Who did you sell it to, how much did they pay etc.

They are going to get their pound of flesh, so if you are paying tax on parts as you go during your build you had better stay on top of the receipts or you may get to pay twice...
 
In Texas, on the other hand, if you buy an already registered airplane from an individual seller you may qualify for sales/use tax exemption under the "occasional sale" rule.
 
In Texas, on the other hand, if you buy an already registered airplane from an individual seller you may qualify for sales/use tax exemption under the "occasional sale" rule.

Same in Arizona... but must be from an individual as seller...
 
Indiana collect 7% sales tax at the time of registration unless you can prove you paid the tax on your kits on your income tax statement the year you purchased them. Doing the later avoids any penalty and makes it a little less painful.
 
In my experience, as has been posted here somewhat, all states handle things a little bit differently. Some (Virginia & others) tax based on the cost of the kit and maybe the engine, but not everything completed. Others (Florida & others) tax based on every red cent that went into the cost of the build, including shipping, labor, etc. Others (Delaware & others) have no tax on aircraft.

Florida won't charge a use tax if you have owned the plane for at least six months and it hasn't entered the state during that time. I am sure other states are like this. Florida used to send tax bills to planes that flew to Sun-N-Fun, but they stopped doing that. They will, however, investigate planes that changed from Florida registration to Delaware registration, for example, because they know that people sell planes in state and the new owner registers the plane out of state.

A lot of states, including Florida, will bill their sales/use tax rate on a plane, but will reduce the taxable amount by the tax paid to another state on the same transaction. For example, if I buy a plane from a dealer in Florida and they charge me 6%, but take the plane to my home in Indiana, they would likely only charge me 1%.

What a lot of people have started doing, is creating an LLC, usually with the N-number as the name of the LLC, and paying the necessary tax at the time of original registration. Then, when they go to sell the plane, they just transfer ownership of the LLC, so the plane does not change ownership, so there is no taxable event if moving to another state. This is done regularly with boats and things like that as well. There are added complications to having an LLC, but in many cases, especially if it's a Delaware LLC, or one of those states that makes it easy, you can pay a small fee yearly to a company that manages everything.
 
Just paid my Florida Tax

On the -6A I bought recently --- 6% of the purchase price plus $50.00 to the county. Getting a little nervous now. I went to the State Dept of Revenue office in Clearwater, gave them a copy of the Bill of Sale, filled out the form and wrote them a check. The lady copied the check and form and provided me with a copy. That was a month ago and the check has still not been deposited. Not sure what the holdup is, but, then, the FAA got the registration material six weeks ago and still has not transferred the registration.
 
In CA, not only do you owe sales/use tax on all purchases, but you will also get a property tax (1% of value) bill every year. Oh yes, I also get a property tax bill for a hangar that I do not even own (leased from the city)!
Property tax is due on property owned on January 1, so CA builders who look to finish in late December may wish to hold off on registration and AW inspection until Jan 2 or later, to save one year's tax. Also, the bill does not come until July, so if you sell your plane after Jan 1 you still must pay the July bill for that year.
 
On the -6A I bought recently --- 6% of the purchase price plus $50.00 to the county. Getting a little nervous now. I went to the State Dept of Revenue office in Clearwater, gave them a copy of the Bill of Sale, filled out the form and wrote them a check. The lady copied the check and form and provided me with a copy. That was a month ago and the check has still not been deposited. Not sure what the holdup is, but, then, the FAA got the registration material six weeks ago and still has not transferred the registration.

If it falls through the cracks somehow, don't worry. They will be sure to send you a letter informing you that they know you have just purchased an airplane and they are waiting for you to pay use tax on it. It often takes months to get that letter.
 
Minnesota won't give you a state registration until you pay the sales tax, but they only want to know the cost of the engine, prop, and kit, and you're pretty much free to lie as you see fit.

There was a property tax (use tax) that was -- I believe - 2% of FMV declining to 1% of FMV , which for a typical RV was something like 300 or 400. But in a recent legislative session, that amount was lowered to something like $100, which was a pretty good deal, actually, because MN has a really good department of aeronautics that seems to do a lot of good for pilots.
 
Florida

I thought I would be pro-active with the taxes. I called the DOR in Florida this March and asked how I should pay my taxes. I knew that since I was buying a lot from out of state that they would want the sales tax. They transfered me to a person that emailed me a DR-42A form for the purchase of an aircraft. I didn't really think that was what I wanted since I built from a kit so I just sat on it until now. I just sent in my registration to the FAA so I revisited the taxes knowing that Florida checks the FAA. Again I was told the form was correct and I could send copies of receipts.
I did that today by email and now owe the 6% sales tax on all items purchased for the build. Easy peasy and I am glad to get it over with.
 
Same in Arizona... but must be from an individual as seller...

In NJ they call this a "casual" sale and I was not required to pay any tax after buying my -7A from a private seller.

I did have to fill out some forms, SEVERAL times, before they finally figured out I was exempt, and they have since sent me a letter stating such and have left me alone.

I have no idea what will happen after I register the -8 I'm currently building.
 
Illinois tax collectors ...

(And heaven knows, the state of IL needs all the revenue it can find!)
IL is about the same as Bob indicated for MN ... you cannot get a state registration sticker until you prove to the Dept of Aviation you either 1) paid IL sales tax at the time of purchase on all the parts and kits, or 2) you paid 6.5% of the cost of the parts/kits to the IL Dept of Revenue.
Outside of the major Vans kits, engine, and avionics; that 6.5% was the the biggest single payment I made on the Nine-A. :(
 
(And heaven knows, the state of IL needs all the revenue it can find!)
IL is about the same as Bob indicated for MN ... you cannot get a state registration sticker until you prove to the Dept of Aviation you either 1) paid IL sales tax at the time of purchase on all the parts and kits, or 2) you paid 6.5% of the cost of the parts/kits to the IL Dept of Revenue.
Outside of the major Vans kits, engine, and avionics; that 6.5% was the the biggest single payment I made on the Nine-A. :(

My wifes family is trying to convince us to move from NV back to IL. Between the state income tax (NV is zero), property taxes which are 4-5 times NV, and the tax on trying to get my RV into the state and then keep it... I opted to just send the govenor a nice letter outlining why I'll never move myself or any of my money there and included a picture of a nice fat wad of cash. :D
 
In CA, not only do you owe sales/use tax on all purchases, but you will also get a property tax (1% of value) bill every year. Oh yes, I also get a property tax bill for a hangar that I do not even own (leased from the city)!
Property tax is due on property owned on January 1, so CA builders who look to finish in late December may wish to hold off on registration and AW inspection until Jan 2 or later, to save one year's tax. Also, the bill does not come until July, so if you sell your plane after Jan 1 you still must pay the July bill for that year.

I sold my Cherokee on Jan 27th. I just received the tax bill for the July 13 - Jun 14 tax year. I owned the plane after the 1st so I owe another year of taxes. If I could move out of CA tomorrow I would be gone.
 
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