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Update: Florida Aircraft "Use" Taxes

the_other_dougreeves

Well Known Member
No real change, but the issue might be having an effect on SnF (like it needs more problems).

From AeroNews Net:

Florida Tax Ripoff Results In Growing Pilot Avoidance/Boycott of State
And Get This... Yet ANOTHER Reason To Avoid Sun 'n Fun!

Since ANN broke the bewildering details of a number of long-suffering non-resident pilots who have been caught in the FL tax trap, (otherwise known as the "Florida landing Fee"), we have learned that a full-fledged tax revolt is now underway costing the state untold monies as a result of a growing voluntary boycott that is gaining steam, even as we write this.

Over the course of our investigation last year, ANN learned of a number of issues that have arisen when owners of new aircraft, generally within the first six months of the sale, have been targeted for "use tax" by agents of the state's Department of Revenue... despite the fact that the targeted aircraft were not owned or operated by state residents.

It starts like this... you buy a new or used aircraft and sign the bill of sale... which starts "the clock." It is Florida's position that for the next six months (possibly thereafter, though the burden of proof reportedly changes at that point), the state has the right to exact the requisite "Use Tax" (Sales Tax) for the fact you partook of the state's services unless you can show an equivalent Use or Sales Tax receipt from another state...

In other words, for those of you who may have bought a $500K Cessna, Cirrus, Columbia, etc... unless you can prove that you paid the equivalent use tax in another state, you owe the state of Florida some $30K if you visited the state in the first six months of your ownership. Mind you, if your sales/use tax bill comes from a state that exacts LESS tax than Florida, the FL Department of Revenue still expects you to pony up the difference... and if you're from a state that exacts a minimum fee (like the few hundred dollars for owners in South Carolina), they will bill you for the WHOLE difference... and its up to you to fight them on it.

No kidding.

It makes NO difference to the state if you have any property in Florida, or whether you bought the airplane there, or if you have ANY business interests whatsoever in the state... If Florida catches you here and if they can find a way to stick you with a tax bill, they will.

According to the Florida Tax Code, "There shall be a presumption that any aircraft, boat, mobile home, motor vehicle, or other vehicle purchased in another state, territory of the United States, or the District of Columbia but titled, registered, or licensed in this state is taxable except as otherwise provided in subsection (26) of this rule. This presumption may be rebutted only by documentary evidence that the person owning the aircraft, boat, mobile home, or motor vehicle purchased the aircraft, boat, mobile home, or motor vehicle in another state, territory of the United States, or the District of Columbia six (6) months or more prior to the time it is brought into this state. In order for such property to be presumed exempt as purchased for use outside Florida, the person owning the aircraft, boat, mobile home, motor vehicle, or other vehicle must provide documentary proof that such property was used in other states, territories of the United States, or the District of Columbia for six months or longer under conditions which would lawfully give rise to the taxing jurisdiction of another state, territory, or District of Columbia and any lawfully imposed tax was paid to such state, territory, or District of Columbia before being imported into this state. However, the rental or lease of any aircraft, boat, mobile home, or motor vehicle which is used or stored in this state is taxable without regard to its prior use or tax paid on the purchase outside this state."

Why?

Because they can.

The very liberal Florida tax code allows them to tax aircraft if they operate at any time during the first six months of a purchase in the state... and according to some interpretations, there may be some legal justification for Florida to tax you if you so much as fly OVER the state.

This problem has been known for a while, but 2007 ramp checks by FL DOR personnel were reportedly stepped up, and snagged a number of unwary owners -- including at least one Cirrus owner and a Meridian owner who came back to Florida to undertake flight training in his new airplane. The Cirrus owner was on the hook for some $30K in additional taxes... the Meridian owner wound up paying over $100K.

Now, the situation is getting widespread attention from a group of Cirrus owners who want to attend a group flying activity that will put them in FL overnight as well as others who are now deciding to avoid the annual Sun 'n Fun Fly-In... which really doesn't need any more trouble than it's already made for itself (ANN E-I-C Note: the event is in very serious decline and its survival is not only in doubt, but the odds appear stacked against it. Worse, it has some serious safety issues that still need to be addressed).

One Cirrus owner, who called ANN, reported that he's made a number of calls to FL officials and still feels that the risk to his financial health is "unacceptable" and that he feels that FL's tactics appear to be "predatory." When he called Sun 'n Fun offices for help, he received a deaf ear. The Owner/Pilot has reported that he told SnF staffers that "I had cancelled plans to be in Florida during the event and would not be able to visit Sun-N-Fun because of the DOR issue."

[deleted to fit posting length restrictions]

But... there is a white knight on the horizon. The Florida Aviation Trades Association has been aggressively lobbying the state in order to get this rule-making stricken from the ledger in upcoming sessions of the state legislature. Late Thursday, FATA's President Michael Slingluff (another one of the 'hardest working guys in GA'), and FATA Executive Director Paula Raeburn informed ANN that, "The Florida Aviation Trades Association, FATA, who represents general aviation business and interests in Florida, has been following the sales/use tax issue and is diligently working with the Florida State Legislators and the Florida Department of Revenue (FDOR) is resolve this issue once and for all. We had a small success in Tallahassee today as HB 1379 passed through one committee. It has been an uphill battle but FATA has been tenacious in their efforts. Any changes will be effective July, 2008 so in the short term, there is no relief but we hope to have success during this year's legislative session. The intend of the statute was not keep pilots out of Florida but that is happening and we have made legislators and FDOR aware of the issue. Florida depends on tourist dollars and we want new aircraft owners to be able to fly here and enjoy all Florida has to offer."

FATA fully expects the tax situation to be repealed at some point, but that progress remains "dreadfully" slow. In the interim, the rule remains highly selective. In a May 2007 phone con, ANN chatted with a spokesperson for the FL DOR, Rene Watters, who was clearly unapologetic for the issue. She told ANN that they are simply 'doing (their) jobs' and that if anyone has a problem with that, to "take it up with the legislature." This matter, of course, can be appealed through the courts... but this route necessitates expensive and time consuming litigation, via the use of a trained tax attorney... and you may still lose, after all.

[truncated to fit max posting length]
 
I don't understand what the issue is. The author makes grand claims that even flying over the state could subject the owner to taxation, but that's not what the law says. It says:

There shall be a presumption that any aircraft, boat, mobile home, motor vehicle, or other vehicle purchased in another state, territory of the United States, or the District of Columbia but titled, registered, or licensed in this state is taxable...
 
Florida does not have a state income tax. What they do have is very high property taxes.
I live in south Alabama. We are being flooded with Florida retirees running from the property taxes and the home owner's insurance cost (Huricanes).
Non-Florida residents the own property in Florida are selling their Florida assets because they can no longer afford the non-resident property tax rate (they have a special rate for non-residents).
 
I don't understand what the issue is. The author makes grand claims that even flying over the state could subject the owner to taxation, but that's not what the law says. It says:

There shall be a presumption that any aircraft, boat, mobile home, motor vehicle, or other vehicle purchased in another state, territory of the United States, or the District of Columbia but titled, registered, or licensed in this state is taxable...

The problem is that they are sending a tax bill to people who's aircraft is titled, registered, or licensed in another state (not Florida) because they visited the state of Florida for as little as 1 day. If I remember correctly, Maine is doing something very similar.

PJ Seipel
RV-10 #40032
 
The problem is that they are sending a tax bill to people who's aircraft is titled, registered, or licensed in another state (not Florida) because they visited the state of Florida for as little as 1 day. If I remember correctly, Maine is doing something very similar.

PJ Seipel
RV-10 #40032
I agree; that is the issue in Florida.

Maine is at least requiring you to spend 20 days in the state; Florida has no minimum time limit.

TODR
 
I was in Florida some time ago. How long does it take to get a letter? They won't get any money from me but since I have owned my plane over five years...I may not be a target.
 
Break out the duct tape. I'm headed to SnF as N..something or other, Doug Reeves. What is DR's tail number? :rolleyes:
 
All this is news to me. Have not heard anything on the topic.
It may be correct but...

My first plane purchase was followed by a letter to report my purchase price so I could pay the one time sale tax.
If you register as a corporation, you are tax exempt.
Create a dummy corp for $350, may save you several thousands.

I started building my 7A in Florida(emp + 1 wing), moved it to Las Vegas(emp, wings, fuse done), moved back to complete the fwf, first flight...

Florida DOT told me, if I was building > 6 months in state, I would exempt from taxation. I had about 9 months.

Following my AW, I received a notice of taxes due for my newly registered plane. They monitor the list.
I called them and communicated of my building process.
I was told to ignore the tax request and have never heard from them since.

FDOT has a booth just left of the SNF main gate every year where they hand out the free FL airport directory. Great publication.
They will be happy to talk to you. I've found them to be very accomodating.
 
Create a dummy corp for $350, may save you several thousands.
...but put you at risk of conducting illegal Part 91 operations.

Personally, as long as I lived in - and the airplane was based in - another state, I'd tell Florida to go pound sand. And I wouldn't say it nicely.
 
...but put you at risk of conducting illegal Part 91 operations.

Personally, as long as I lived in - and the airplane was based in - another state, I'd tell Florida to go pound sand. And I wouldn't say it nicely.

Many private GA aircraft are registered as corporations.
 
Create a dummy corp for $350, may save you several thousands.

From the AOPA website:

If you have seen ads for "incorporate your plane in Delaware" and believe that you may thereby avoid any income or sales taxes, you have been misled. While it may be possible to avoid paying the sales or compensating use taxes imposed by the state where your plane is hangared by falsely claiming that the plane resides elsewhere, you can only achieve this benefit by committing a fraud and thereby incurring possible substantial penalties, including criminal prosecution.

John Clark
RV8 N18U "Sunshine"
KSBA
 
Florida Tax

I am a native floridian and have owned more than twelve aircraft in Florida, two being a RV-6 & RV-9. I have never had a problem with Taxes I have never heard of a ramp check to confirm taxes were paid. I have paid sales tax on all the aircraft I have purchased 6 to 7%. Most all states require taxes be paid on cars, boats, and airplanes. At least we don't have to pay a registration fee every year like some states.
SNF having problems???? Not to my knowledge. Been going there over thirty years and it just gets better every year.
Gerry
RV-9, N92GC
CUB, NC88583
 
From the AOPA website:

If you have seen ads for "incorporate your plane in Delaware" and believe that you may thereby avoid any income or sales taxes, you have been misled. While it may be possible to avoid paying the sales or compensating use taxes imposed by the state where your plane is hangared by falsely claiming that the plane resides elsewhere, you can only achieve this benefit by committing a fraud and thereby incurring possible substantial penalties, including criminal prosecution.

John Clark
RV8 N18U "Sunshine"
KSBA

I did not say to register as an out of state corp or say the airplane is based out of state. There is no fraud intent here.

Some groups in fractionals chose to register their planes under corp for liability protection of their personal assts.
 
Florida does not have a state income tax. What they do have is very high property taxes.
I live in south Alabama. We are being flooded with Florida retirees running from the property taxes and the home owner's insurance cost (Huricanes).
Non-Florida residents the own property in Florida are selling their Florida assets because they can no longer afford the non-resident property tax rate (they have a special rate for non-residents).

I don't believe Florida has property taxes. My friend from NH, the only state with no income or sales taxes pays $8400 for his house compared to my $1800 of similar size/value.

Florida resident homeowners have a 25K% exemption on property assessment. Will be increased to 50K this year. There is also a 3-4% "Save our Homes" annual limit on annual tax increases.
Non-residents do not have this protection and are based on assessed property values. As what has happened all over the US, prices have skyrocketed and the non-residents have had to pay the increases. In the past, the resident homeowner would lose their 3-4% cap once they purchased a new house. This will now become portable this year.
Non-resident will also be able to take advantage of the cap now.

Sorry for the tax lesson, buy there has been much mis-information out there.
 
As I understand it, the issue is if you purchase or complate a plane AND operate it in Florida within 6 months of said purchase or completion, you *may* be subject to the Florida luxury, sales, property or whatever-it-is tax. The example I read was someone who bought a fast fliberglass airplane and then flew it to Florida to have some radios installed, then he was hit with this huge tax bill.
 
Many private GA aircraft are registered as corporations.

That might be, but they are operating illegally unless the plane is leased to the individual as operator. A corporation may only operate its airplane under part 91 if it is operating directly incidental to its business. If it operates the airplane for compensation, it must operate under Part 135 (charter/on-demand). The FAA considers capital contributions to the corporation (for example, money for hangar rental, insurance, etc...) compensation for these purposes.

The bottom line: If you own a corporation and inject money into it for the ownership and maintenance of the corporation's aircraft, the corporation must operate the aircraft under Part 135 if you use the plane for anything but company business.

What's worse, operating the plane illegally under Part 91 is de facto negligence and exposes you to more liability than not having a corporation at all.

Ignoring illegal Part 91 thing, the only real benefit to having a corporation is if there are multiple owners. A corporation could shield the individual owners from liability for the actions of the other owners (but not from their own actions). A corporation is senseless for an individual owner. Sure, a corporation owns the plane - but who flew it into the school bus? Your personal assets are still on the line.

Something else to think about: Does your insurance exclude coverage for commercial operations? How about coverage while operating illegally? Better go check...
 
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Is this legal advice?

That might be, but they are operating illegally unless the plane is leased to the individual as operator. A corporation may only operate its airplane under part 91 if it is operating directly incidental to its business. If it operates the airplane for compensation, it must operate under Part 135 (charter/on-demand). The FAA considers capital contributions to the corporation (for example, money for hangar rental, insurance, etc...) compensation for these purposes.

The bottom line: If you own a corporation and inject money into it for the ownership and maintenance of the corporation's aircraft, the corporation must operate the aircraft under Part 135 if you use the plane for anything but company business.

What's worse, operating the plane illegally under Part 91 is de facto negligence and exposes you to more liability than not having a corporation at all.

Ignoring illegal Part 91 thing, the only real benefit to having a corporation is if there are multiple owners. A corporation could shield the individual owners from liability for the actions of the other owners (but not from their own actions). A corporation is senseless for an individual owner. Sure, a corporation owns the plane - but who flew it into the school bus? Your personal assets are still on the line.

Something else to think about: Does your insurance exclude coverage for commercial operations? How about coverage while operating illegally? Better go check...
Are you an attorney? Not to argue any point you have made, but this sounds a lot like legal advice. Maybe you can share with us the source of your information if you are not an attorney. Thanks.
 
Nope, not an attorney. And no, it's not legal advice. Legal advice is something you pay an attorney for, not something you find for free on an aviation web site :D

Here's an article (by an aviation attorney) that addresses the problems quite well: http://www.jetviser.com/Publications.jsp

This article, along with some stuff from a Delaware Registered Agent I use for some unrelated ventures, formed the basis of my assertions on this matter. I think AOPA has some articles on it too but I can't put my finger on them.
 
Thread Creep!

That might be, but they are operating illegally unless the plane is leased to the individual as operator. A corporation may only operate its airplane under part 91 if it is operating directly incidental to its business. If it operates the airplane for compensation, it must operate under Part 135 (charter/on-demand). The FAA considers capital contributions to the corporation (for example, money for hangar rental, insurance, etc...) compensation for these purposes.

The bottom line: If you own a corporation and inject money into it for the ownership and maintenance of the corporation's aircraft, the corporation must operate the aircraft under Part 135 if you use the plane for anything but company business.

What's worse, operating the plane illegally under Part 91 is de facto negligence and exposes you to more liability than not having a corporation at all.

Ignoring illegal Part 91 thing, the only real benefit to having a corporation is if there are multiple owners. A corporation could shield the individual owners from liability for the actions of the other owners (but not from their own actions). A corporation is senseless for an individual owner. Sure, a corporation owns the plane - but who flew it into the school bus? Your personal assets are still on the line.

Something else to think about: Does your insurance exclude coverage for commercial operations? How about coverage while operating illegally? Better go check...

OK, but remember that this is the RV forum and I will make the assumption that most of us are here because we fly airplanes on an experimental certificate. FAR 91.319 is very clear on "compensation or hire."

John Clark
RV8 N18U "Sunshine"
KSBA
 
OK, but remember that this is the RV forum and I will make the assumption that most of us are here because we fly airplanes on an experimental certificate. FAR 91.319 is very clear on "compensation or hire."

John Clark
RV8 N18U "Sunshine"
KSBA

You can be for compensation and for hire in an experimental. You just cant fly persons and property for it.
You can fly your experimental and get paid for it. I asked EAA about it sometime ago and got a position on it. Mine was for operating at an air show for hire in my RV, which can be done. I could fly gas lines, or be paid as an aerial photographer as an example also. All of which might lend it self to being incorporated for liability reasons. SO its not as clear as you might think on the surface. THere are quite a few examples you could muster that would muddy the waters.
 
UPDATE: Florida Tax Bill Dead

From AOPA:

Out-of-state aircraft owners who fly into Florida within six
months of purchasing their aircraft could still be faced with a
hefty use tax. The legislature adjourned last week without
passing AOPA-backed legislation that would exempt aircraft that
were in the state less than 21 days. Because of a $5 billion
state deficit, many bills that included a tax exemption failed in
the Senate. AOPA will work to push through the exemption if the
legislature reconvenes in a special session later this summer.

:confused:
TODR
 
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