Ohio Dept of Taxation ploy?

[pmnewlon]

After owning my airplane for almost three years now, I got a 'friendly' letter from the Ohio Department of Taxation. I am guessing that a 2012 change in tail number prompted the inquiry. Regardless, the letter and form they sent to me gives no indication that I needed to investigate further the purchase type (casual sale), just that I needed to document the purchase price, disclose where it is kept (they already know that from the registration), and calculate how much sales tax I owe them.

The end of the letter states that if I voluntarily submit the tax immediately they would waive interest and penalties. If I didn't know better, I would assume that the sale was subject to sales tax and send them several thousand dollars. Instead, I called their office (went through 'press one for, press three for, press nine for, press....) and spoke to 'Marcy'. She readily confirmed the casual sale and suggested I write the department a letter.

My hangar-mate got the same letter, he told them he inherited his airplane from his father. They didn't believe him so made him get a bill of sale from his father - which he did, stating the sale was for $1.00. He then sent them 100% tax (a nice crisp $1 bill) and asked that they dismiss the matter. They sent his dollar back and said he didn't owe any tax.

I wonder how many people in Ohio will simply send them a check? I can't wait to see where this goes next.

http://www.tax.ohio.gov/sales_and_us...7/Default.aspx

Exempt: Casual sales except sales of motor vehicles, boats and outboard motors that are required to be titled, snowmobiles, documented boats, all-purpose vehicles, off-highway motorcycles and personal watercraft.

[CATPart]

OK, so to clarify, yours was a casual sale of an untitled motor vehicle, therefore tax exempt?

[az_gila]

Use caution buying if a broker is involved.

A friend here in AZ got hit with a use tax - 2years after the sale - because his paperwork showed the seller as a broker, and the state did not classify it as a casual sale.

If you use a broker, try and get the previous owners name on the paperwork, not the brokers.

I'm sure the above is probably true in most states that exempt casual sales from use tax.

[rleffler]

That's a standard form letter they send when there is a registration change. I went through a similar fire drill with my kit. They also don't care if its airworthy, so if you register your kit early in Ohio, be prepared to pay sales tax and the $15/seat use tax.

I had been paying my sales tax annually and declaring it on my return. It was a little painful in that I had to provide a state agency a copy of the state form I sent the state to prove that I had already paid the sales tax. They also requested copies of all my purchase invoices. I compiled and the issue was quickly resolved.

[pmnewlon]

> OK, so to clarify, yours was a casual sale of an untitled motor vehicle, therefore tax exempt?

That is my understanding, yes. Any business related purchase would be subject to tax though. (So if I bought a 172, put it in an LLC and rented it out through a flight club, I would assume it would be a taxable sale even if it fit the 'casual sale' of owner to buyer.)

[Mel]

Originally Posted by pmnewlon

> OK, so to clarify, yours was a casual sale of an untitled motor vehicle, therefore tax exempt?

That is my understanding, yes. Any business related purchase would be subject to tax though. (So if I bought a 172, put it in an LLC and rented it out through a flight club, I would assume it would be a taxable sale even if it fit the 'casual sale' of owner to buyer.)

In Texas, a "casual sale" is between individuals only. If you sell to an LLC, that is not considered an individual.