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Minnesota - sales tax

LettersFromFlyoverCountry

LettersFromFlyoverCountry

Well Known Member
Looking for some information from Minnesota builders. What happens when you register your just-completed project? Do you get a bill from the state for sales tax? For property tax? When? etc. Thanks.
 
Bob,

You need to set up a Use Tax account with MN (sales tax). They will probably be nice to you, even though you were supposed to be paying on engine, kits and prop as you purchased them (assuming you bought them out of state and didn't already pay sales tax). Not sure if they require it on anything else besides those items (of course everyone is obligated to pay use tax on every single out of state purchase shipped to their home state, obviously most do not). Although it's been a long time since I did it, I suspect it hasn't changed. Call the MN Revenue and ask to talk to someone in the use tax area.

Need to do this prior to attempting to register...
 
Tax Liability

Be careful in Missouri they can/will take on penalties and interest.
Ask me how I know
 
Thanks, Mike. I'll be anxious to hear about the process. I tried following things on the Mn. Department of Revenue website but it's very confusing. From what it says, you have to register the aircraft with the MnDOT Aeronautics before paying sales/use tax, which I can't do because it's not an aircraft.

So maybe I'm just supposed to total up everything I've put into the plane (on which tax wasn't paid) and write a check, which is money I really don't have.

But the plane is almost done and maybe now it'll attract a buyer, which it hasn't done since it was first listed, and I can pay the tax bill from the sale proceeds.
 
Bob, I registered mine with MnDOT in an unairworthy condition with the explanation that I'm still building, and that I'm registering for MN use tax payment purposes only. I also called MnDOT and talked to a very nice lady, who was very helpful. That said, it was painfull to write the check, but I wanted to be proactive. One good thing... the registration fee is waived until the A/C is airworthy.

The aircraft must be registered when airworthy, but if you register the aircraft without submitting use tax payment, you MAY be subject to MnDOT determining how much you owe:eek:.
 
LettersFromFlyoverCountry said:
Looking for some information from Minnesota builders. What happens when you register your just-completed project? Do you get a bill from the state for sales tax? For property tax? When? etc. Thanks.
Click to expand...

Having just gone through this last year, I can say that MN use tax is due once the aircraft is airworthy. If you register it before this point, no use tax is collected.
This is the way I did it: Registered my N-number a year before I flew, then once I got the inspection done I filled out the MN registration form as airworthy and paid the tax.

Tax at that time was the use (sales) tax calculated on kit, engine, and propeller.
 
Hi Bob:

I just finished this process with my RV-7. First I sent in the FAA application for registration and received that back in less than 2 weeks so now N722DW was officially registered with the Feds. Then I went to the MN DOT's website and downloaded the Aircraft Registration Form. You fill that out and you will note on the form that MN wants 6.875% of the cost of the kit, engine, and prop. Fill out the form, write the big check (ouch!) to the Commissioner of Transportation, send it in. A week later I get the bill for the actual aircraft registration ($405). And I see that just as soon as I sent in my sales tax, the state of MN announced a budget surplus!!! As a Wisconsin resident, I was SOOOO glad to help my neighboring state on the road to fiscal health!!!!!
 
dougweil said:
Hi Bob:

I just finished this process with my RV-7. First I sent in the FAA application for registration and received that back in less than 2 weeks so now N722DW was officially registered with the Feds. Then I went to the MN DOT's website and downloaded the Aircraft Registration Form. You fill that out and you will note on the form that MN wants 6.875% of the cost of the kit, engine, and prop. Fill out the form, write the big check (ouch!) to the Commissioner of Transportation, send it in. A week later I get the bill for the actual aircraft registration ($405). And I see that just as soon as I sent in my sales tax, the state of MN announced a budget surplus!!! As a Wisconsin resident, I was SOOOO glad to help my neighboring state on the road to fiscal health!!!!!
Click to expand...

Dumb question, but don't you owe sales..errr use... tax to the state you reside in?

I can see registration fees going to the state the plane is based in, but I would think that the sales tax is dependent on the owners residence location...
 
LettersFromFlyoverCountry said:
I think Minnesota and Wisconsin have a tax reciprocity agreement, or at least they did.

Oh, and for those who stumble across this thread later, here's the form Doug (and also a hat tip to David Maib) was talking about.

I don't suppose I can get away with saying this is a glider...
Click to expand...

So am I correct in assuming that MN use tax is less than WI so invoking the reciprocal agreement is worth it?

But even then most states just give credit for taxes paid to another state and want the difference if their taxes are higher...:)
 
Bob - could you get yourself an aircraft brokers license? May be cheap and easy with the cooperation of the airport you are based at. According to the MN rules - as I read them - you could then forego the taxes and the buyer pays them (MN or elsewhere) on the purchase price. Am I nuts?

Also, Gil, Minnesota requires registration in MN and sales tax on any aircraft based here, regardless of where the owner resides.

Forrest
 
I guess I COULD. I'm not really sure. I don't really want to end up with -- as David Maib put it -- a cot in Stillwater (prison).

I also tend to distinguish my depression at the size of the tax bill from my obligation to pay lawful taxes. I'll just add 'em into the sales price. :rolleyes:
 
Looks like you have all the info you need, Bob. You can put off paying until it's time to fly it.
 
Another reason to move South

You folks might want to consider a move to warmer climes. In SC the sales tax on vehicles including ANY airplane is capped at $300.00, and the property tax in some counties is very low. Plus we have great weather. (Its 55 right now, going up to 75 this PM) Just sayin.
 
Minnesota is a fabulous place to live and raise a family. I've got a great job, it's in the middle of everywhere and it's home. Surveys continually show people in the state to be healthier and better educated, the quality of life is great and there are a lot of amenities. And the airports are in great shape. And in the winter, there are 10,000 really great spots to land if there's a problem.

I'm generally OK with supporting all of that.

Then, again, I'm not one of these babies that can't stand a little -10 weather. (g) Heck, I've built most of my plane in that sort of weather in an unheated hangar.
 
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Taxing Question??

Wondering if anyone can tell me how it works in NY State. Talked with my accountant and he seems to think I should pay the 8% on the 26g's I have out for the 12 now.

Just wondering if others have paid on the kits as you buy or upon registration?
 
D&M Dan said:
Wondering if anyone can tell me how it works in NY State. Talked with my accountant and he seems to think I should pay the 8% on the 26g's I have out for the 12 now.

Just wondering if others have paid on the kits as you buy or upon registration?
Click to expand...


There isn't a good standard answer. Some find it easier to pay as you go. That's what I did here in Ohio. I paid on my annual state return as I purchased the kits. I've seen others pay at registration. I guess you can go through all the net present value calculations to see what makes better financial sense. It's probably a function of your ability to pay and make your you have plenty of spare savings at the end of the build to pay the taxes, insurance, and fuel.

bob
 
NY will find you

If you do nothing, NY will find you within a few months after registration. When the letter comes, they begin with an inquiry of how much you have in the airplane and whether any tax has been paid. They will have looked for previous filings for sales tax and will have checked your personal tax returns to determine if you paid sales tax there.

You would file for ST-141 ( http://www.tax.ny.gov/pdf/current_forms/st/st141.pdf - instructions at http://www.tax.ny.gov/pdf/current_forms/st/st141i.pdf )

You can pay as you go - keep copies of the filed forms and cancelled checks, etc. as well as the invoices that comprise the total for the aircraft.

I've seen people advise that you can avoid the tax by registering the aircraft as a XYZ-1 (rather than a RV-7) and claim that you paid the tax as you went along. However, they will typically respond by asking for copies of the receipts and want you to show that the receipts, collectively, comprise an airplane (aircraft, engine, prop, etc).

Dan
 
Pay as I Go

Thanks Guys,
I will pay either through my state tax filling or with form Dan has linked. Better to get the expense out of the way and not worry about ruffling NYS Department of Taxation feathers.
 
So long as the state is OK with you paying just before registration, and assigns no penalties for doing so, I don't see the value of paying as you go. First, why let the state earn interest on money you could be earning interest on? Second, what happens if you sell the project before registration?
 
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