Timing of airworthiness paperwork and use tax

ArVeeNiner · #1 06-03-2010, 04:48 PM

I attended the EAA webinar last night about how to register our aircraft. There was a question about how early to submit the paperwork to the FAA. It was said that 6 months before you expect to fly is good. However, the mediator said something about perhaps not submitting it that early due to the yearly use tax that you may owe on the aircraft. Unfortunatly, my daughter interupted me and I missed what was said. It also appears that perhaps this comment was edited out on the version that was posted on line.

So, are there any disadvantages tax wise to filing the paperwork early? I'm thinking I'm at the six month point now.

roee · #2 06-03-2010, 05:20 PM

Use tax is on purchases for which you haven't been charged sales tax, typically the case from out-of-state vendors, e.g. kits from Van's, etc. Use tax is a one time tax (equivalent to sales tax) and is due the year that you made the purchase. Property tax on the other hand is on the assessed value of the completed airplane and is paid annually after you register it. Property tax, not use tax, is probably what the comment was referring to.

So many ways that the tax man bleeds us...

ArVeeNiner · #3 06-03-2010, 09:15 PM

Yes I meant property tax.

Jim P · #4 06-03-2010, 10:07 PM

Hey Kelly, I'm sure some of the other CA guys will chime in, but when I submitted registration for my Boredom Fighter while at Chino, it didn't take long before the County sent a property tax bill to me. I'm thinking that when you register, the county will send you the bill fairly soon. I'm sure more recent victims will give you their experience.

az_gila · #5 06-03-2010, 10:49 PM

Quote:

Originally Posted by roee

Use tax is on purchases for which you haven't been charged sales tax, typically the case from out-of-state vendors, e.g. kits from Van's, etc. Use tax is a one time tax (equivalent to sales tax) and is due the year that you made the purchase. Property tax on the other hand is on the assessed value of the completed airplane and is paid annually after you register it. Property tax, not use tax, is probably what the comment was referring to.

So many ways that the tax man bleeds us...

...since your state does not know that you built an expen$ive plane from parts until you submit paperwork to the FAA, who will then share it in a friendly way with your state...

Of course, your state can quite thoughtfully add you to their Personal Property Tax rolls at the same time...

It easily could set off both taxes.

roee · #6 06-04-2010, 12:26 AM

Quote:

Originally Posted by az_gila

...since your state does not know that you built an expen$ive plane from parts until you submit paperwork to the FAA, who will then share it in a friendly way with your state...

Of course, your state can quite thoughtfully add you to their Personal Property Tax rolls at the same time...

It easily could set off both taxes.

I surmised that it was property tax he was talking about from his use of the word "yearly" in the original post. But you're absolutely right, Gil, that registration could likely trigger enforcement of either or both taxes.

But there's a subtle point here too. If I understand the law correctly, then your property tax liability begins when you register the plane, while use tax is owed the year the purchases were made. The state expects you to voluntarily fess up to your purchase and cough up the cash even though they have no way of knowing about the purchase otherwise, at least not yet. So if at the time of registration the state decides to come after you for use tax on purchases that went into building the plane, then technically you'll already be overdue on any purchases made more than a year prior. And if the state could prove it, then I suppose it could come after you with penalties or whatever else. I don't know if they actually do that in practice, but I wouldn't put it past em. They're really clawing for dollars these days... Ehh, don't get me started on our state and its @#$%! fiscal practices...

Wayne Gillispie · #7 06-04-2010, 08:39 PM

Sales tax on the kit or major purchases due and paid with my personal income taxes. Then I will be paying a tangible property tax in October on the value of the unfinished plane on Jan 1st every year. I called the state tax offices to find out just after purchasing the kit. Most states do know when you make a major purchase. I would rather pay it now than to worry about it later. Can you say late fees, interest, etc.