Van's Air Force
Don't miss anything! Register now for full access to the definitive RV support community.
Missouri Use Tax on Airplanes
- Thread starter tmac
- Start date
Connecticut has a "use" tax. it's really a sales tax. Last year I paid the "use"tax on my total airplane kit when we did our income tax. On the 2 airplanes I've owned I had to write big checks and visit the Dept. of Revenue to fill out forms and kiss their A** while I wrote the big checks. When I sold my 1st plane, I got a call about 2 years later and had to prove I wrote them a big check already. All I can say is
www.fairtax.org
www.fairtax.org
Use tax is sales tax for out of state purchased items. Missouri requires you to pay use tax on all items when you have bought more then $2000 per calander year. You are supposed to know this and volunterily send it in or you will have to pay interest and penalty.
Last summer the state of Missouri went after all aircraft owners that are listed in the FAA database and live in Missouri that regestered their plane in the last 6 years. They treatened fines and interest. In the end most settled with the sate by just paying the tax. They did this if you sent them a letter indicting that you where unaware of the tax and was not informed by the state even after you where paying yearly personal property tax to the state. Still a very sore subject at the local airports.
sstellarv10
Well Known Member
The good governor of Massachusetts has been trying to get a sales tax on aircraft to pass the last couple of years, thank god it didn't pass.
Masterplumber
Active Member
MO use tax
Many of us paid the use tax on our planes over the last year or so. There was, we thought, an exemption for kit aircraft, but MO Revenue said no and cracked down throughout the state. You are actually a little late getting your bill, most of this was last year or before. Because of the lack of clarity on the issue, I think most people paid interest but no penalty. The MO Pilots Association is an excellent resource for knowledge, they went to bat for us, but lost. I'm sure they would help you out and if not a member, offer you membership. They are not expensive and a good organization for MO pilots.
John Kooonce
N 78 MU
RV 10
Many of us paid the use tax on our planes over the last year or so. There was, we thought, an exemption for kit aircraft, but MO Revenue said no and cracked down throughout the state. You are actually a little late getting your bill, most of this was last year or before. Because of the lack of clarity on the issue, I think most people paid interest but no penalty. The MO Pilots Association is an excellent resource for knowledge, they went to bat for us, but lost. I'm sure they would help you out and if not a member, offer you membership. They are not expensive and a good organization for MO pilots.
John Kooonce
N 78 MU
RV 10
I was stuck in this mess.
For starters, be sure you are only paying "Use Tax" on the correct value. I was over charged, and in the process of completing an "Offer in Compromise" the state filed a lien against my home. In the end, I won. But I still had to pay interest and penalty.
For starters, be sure you are only paying "Use Tax" on the correct value. I was over charged, and in the process of completing an "Offer in Compromise" the state filed a lien against my home. In the end, I won. But I still had to pay interest and penalty.
Only in a few States?
Now you guys (and gals) peaked my interest ... Is this use tax only in the States like MO or CT?
I live in AL, and if I'm not mistaken (while filling out tax forms back in '05 or '06) then one also had to declare if one bought items over the internet, out of State. However, I do not remember seeing that in the questionaire for the last couple of years.
So do I have to prep myself already for the big day, once I'm completely broke (having finished the aircraft, with other words)?
Thomas
Now you guys (and gals) peaked my interest ... Is this use tax only in the States like MO or CT?
I live in AL, and if I'm not mistaken (while filling out tax forms back in '05 or '06) then one also had to declare if one bought items over the internet, out of State. However, I do not remember seeing that in the questionaire for the last couple of years.
So do I have to prep myself already for the big day, once I'm completely broke (having finished the aircraft, with other words)?
Thomas
n981ms
Well Known Member
I'm not a tax expert but Georgia has "use tax" aka sales tax. In Georgia, however, it does not apply if the airplane is sold from one individual to another. It is then considered a "casual sale". Like selling a car to another individual. Any "incorporated" airplane gets the tax. Corp to corp, corp to individual or individual to corp. If the airplane is the sole reason for the "corporation" the tax can be avoided if the corporation is completely dissolved and the airplane sold in 30 days following the dissolution or something like that. If anyone is interested I may still have a copy of this from the tax man. I bought the RV-10 last January from an individual but was looking closely at one registered to a corporation. I was having trouble getting my head around the idea of paying a "use tax" on a nice RV-10 once I did the math. Unfortunately this rant applies only for Georgia. Some states have no "use tax" and people base their aircraft there wink wink. Could get caught at that though.
Death and taxes. Sure things.
Death and taxes. Sure things.
johngoodman
Well Known Member
Georgia collects sales tax on aircraft but it's just like cars.
The big issue is the annual ad valorem tax on airplanes. It depends on your county, but it's around 1 or 2% of the Assessed value of the airplane - every year.
John
The big issue is the annual ad valorem tax on airplanes. It depends on your county, but it's around 1 or 2% of the Assessed value of the airplane - every year.
John
Neal@F14
Well Known Member
Texas also has a state sales tax for aircraft bought in state and a "Use Tax" for aircraft bought out of state, and it's pretty hefty at 6.25% for the state and up to an additional 2% for local (city/county/district/etc) tax on top of that for a possible 8.25%.
However, there is an "occasional sale exemption" that may apply if you buy an aircraft from an individual who does not "habitually engage in the sale of taxable items" and has not sold more than two "taxable items" during a 12-month period. Neither buyer not seller can hold a sales tax permit at all, from Texas or any other state, even for completely unrelated business. For example: if Billybob makes and sells homemade fiddle bows out of his workshop, has a tax permit for that, and sells his RV-4 to his cousin Earl who also lives in Texas, now Earl must pay tax on the sale, but if Billybob didn't hold a sales tax permit for his small business, Clint would've been exempt from the tax. Also if the buyer, Clint, was the one with a tax permit for his small home business, and the seller Billybob didn't hold such a permit, then Clint would also still be required to pay tax.
So, in Texas, if you want to buy an aircraft, don't hold a sales tax permit for Texas or similar permit for any other state, and buy the aircraft from someone who also does not hold a tax permit for Texas or any other state, and you may qualify for the occasional sale exemption.
However, there is an "occasional sale exemption" that may apply if you buy an aircraft from an individual who does not "habitually engage in the sale of taxable items" and has not sold more than two "taxable items" during a 12-month period. Neither buyer not seller can hold a sales tax permit at all, from Texas or any other state, even for completely unrelated business. For example: if Billybob makes and sells homemade fiddle bows out of his workshop, has a tax permit for that, and sells his RV-4 to his cousin Earl who also lives in Texas, now Earl must pay tax on the sale, but if Billybob didn't hold a sales tax permit for his small business, Clint would've been exempt from the tax. Also if the buyer, Clint, was the one with a tax permit for his small home business, and the seller Billybob didn't hold such a permit, then Clint would also still be required to pay tax.
So, in Texas, if you want to buy an aircraft, don't hold a sales tax permit for Texas or similar permit for any other state, and buy the aircraft from someone who also does not hold a tax permit for Texas or any other state, and you may qualify for the occasional sale exemption.
Bill Wightman
Well Known Member
In Oklahoma, I registered my N-number a couple years early. The tax authority came and wanted me to pay "use" tax on my "airplane"
I wrote back that all I had was a KIT for an "airplane" and at the time it was essentially a non-viable, non-flyable, non-usable pile of aluminum. I told them I'd get back with them when it became an "airplane" and was in a state where I could "use" it.
You can figure the rest out.
I wrote back that all I had was a KIT for an "airplane" and at the time it was essentially a non-viable, non-flyable, non-usable pile of aluminum. I told them I'd get back with them when it became an "airplane" and was in a state where I could "use" it.
You can figure the rest out.
An update from an extended discussion with Mo Dept Revenue on Use Tax.
1. The "Underpayment of Use Tax Letter" I received over the weekend started this thread. My letter/bill for additional "use tax" gave the appearance of being a reoccurring tax based on the numbers being billed. After multiple calls today with Mo Dept of Revenue they recognized that they made an error and had added an additional 0 to the cost of the engine ($180K rather than $18k) during data entry causing an under payment bill to be generated for an additional $10K use tax to be sent to me. Unfortunately the bogus tax bill doesn't show the original amount being taxed, only the "owed" amount.
2. Coincidently, the cumulative bill was nearly perfect match for a calculated expense of a use tax as if it was a reoccurring yearly expense (I agree that doesn't make sense but lots of taxes don't). Happily, it was NOT a reoccurring bill, but a data input error that cause a new use tax bill to be created.
Moral to the story
1. There is a use tax that I was required to pay (I did pay previously) on my engine.
2. There is a use tax required to be paid (I did pay previously) on the kit.
3. In Missouri, any purchases over $2K in a year where sales tax is not collected requires a use tax payment - reminder.
4. It seems most airplane owners in Mo are now fully aware (surprise of 2009) of a use tax but it has not been well advertised and assumes you will be aware of it. Not sure what builders/owners in other states deal with.
5. Confirm everything, and be prepared to pay more taxes!
Beware!
1. The "Underpayment of Use Tax Letter" I received over the weekend started this thread. My letter/bill for additional "use tax" gave the appearance of being a reoccurring tax based on the numbers being billed. After multiple calls today with Mo Dept of Revenue they recognized that they made an error and had added an additional 0 to the cost of the engine ($180K rather than $18k) during data entry causing an under payment bill to be generated for an additional $10K use tax to be sent to me. Unfortunately the bogus tax bill doesn't show the original amount being taxed, only the "owed" amount.
2. Coincidently, the cumulative bill was nearly perfect match for a calculated expense of a use tax as if it was a reoccurring yearly expense (I agree that doesn't make sense but lots of taxes don't). Happily, it was NOT a reoccurring bill, but a data input error that cause a new use tax bill to be created.
Moral to the story
1. There is a use tax that I was required to pay (I did pay previously) on my engine.
2. There is a use tax required to be paid (I did pay previously) on the kit.
3. In Missouri, any purchases over $2K in a year where sales tax is not collected requires a use tax payment - reminder.
4. It seems most airplane owners in Mo are now fully aware (surprise of 2009) of a use tax but it has not been well advertised and assumes you will be aware of it. Not sure what builders/owners in other states deal with.
5. Confirm everything, and be prepared to pay more taxes!
Beware!
JohnRV9A
Member
Need clarification
This Missouri statute seems to indicate a tax exemption for ?Light aircraft??
http://www.moga.missouri.gov/statutes/C100-199/1440000043.HTM
I guess I need to talk to my state rep. for clarification.
This Missouri statute seems to indicate a tax exemption for ?Light aircraft??
http://www.moga.missouri.gov/statutes/C100-199/1440000043.HTM
I guess I need to talk to my state rep. for clarification.
JohnRV9A
Member
Tax exemption
This Missouri statute seems to indicate a tax exemption for ?Light aircraft??
http://www.moga.missouri.gov/statutes/C100-199/1440000043.HTM
I guess I need to talk to my state rep. for clarification.
This Missouri statute seems to indicate a tax exemption for ?Light aircraft??
http://www.moga.missouri.gov/statutes/C100-199/1440000043.HTM
I guess I need to talk to my state rep. for clarification.
dedgemon
Well Known Member
Very common miss-conception that I fell into as well. You need to read paragraph 4 which decribes a qualified purchaser
"Qualified purchaser", a purchaser of a light aircraft, light aircraft kit, parts or components who is nonresident of this state, who will transport the light aircraft, light aircraft kit, parts or components outside this state within ten days after the date of purchase, and who will register any light aircraft so purchased in another state or country
and then section 2
......all sales of new light aircraft, light aircraft kits, parts or components manufactured or substantially completed within this state, when such new light aircraft, light aircraft kits, parts or components are sold by the manufacturer to a qualified purchaser
Exemption does not apply and you owe the use tax if you live in and will keep the plane in the state of Missouri.
