Van's Air Force
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Bill of Sale Consideration line item
- Thread starter Larry
- Start date
Dprestonsr
Member
Put $1.00 & OVC on all A/C Bill of Sales. It is nobody's business.
DP
DP
aadamson
Well Known Member
Something like
OVC is something like "Other value considerations" or some such, it's a pretty typical thing to do when selling a certified airplane. I think people used to use that for tax purposes, but that doesn't work anymore. So most do it for privacy now. That form is a public document that anyone can request a copy of from the FAA.
See
http://www.aeroprice.com/aerolibrary/aircraftbillofsale.htm
OVC is something like "Other value considerations" or some such, it's a pretty typical thing to do when selling a certified airplane. I think people used to use that for tax purposes, but that doesn't work anymore. So most do it for privacy now. That form is a public document that anyone can request a copy of from the FAA.
See
http://www.aeroprice.com/aerolibrary/aircraftbillofsale.htm
Bill:
Timing is everything. The FAA saids that it could take 3 months from sending them the forms and getting registered. You can not get flight cert without registration. In CA they watch the FAA registrations and look for their taxes as soon as you register. Thats not property taxes but sales taxes. You are suppose to pay 7 to 8% on the cost of the kit because you bought it out side of CA. Theres a good article in EEA Mag maybe 4 months back on that. So thats why I waited till about 3 months before first flight.
Larry N72NJ
Timing is everything. The FAA saids that it could take 3 months from sending them the forms and getting registered. You can not get flight cert without registration. In CA they watch the FAA registrations and look for their taxes as soon as you register. Thats not property taxes but sales taxes. You are suppose to pay 7 to 8% on the cost of the kit because you bought it out side of CA. Theres a good article in EEA Mag maybe 4 months back on that. So thats why I waited till about 3 months before first flight.
Larry N72NJ
This is a fickel issue I guess. I took out a loan with NAFCO to purchase a full QB with finish kit. Part of the process required me to sign an FAA registration card when submitting for the loan. I didn't think much about the card at the time. Additionally, I was asked to submit a bill of sale once I recieved the kit from Vans.
Well, once I recieved the last of it (the finish kit came several weeks after the QB) I simply faxed copies of Vans' invoices for the 2 deliveries. My thoughts were that if that didn't satisfy NAFCO, I would then go through the extra task of getting a bill of sale from Vans.
About 6 weeks later, out of the blue, I recieved my FAA registration. My RV was fully registered and I hadn't even finished the empanage not to mention starting on the QB. Of course, that triggered the tax collector and I received a letter several weeks after that stating they had been notified by the FAA of a new registration in the state but, that's another story.
The only issue I have is that when I filled out the form I entered the vanilla manufacturer's designation of "Vans RV-7A" instead of something like Jackal-7A.
Jekyll
Well, once I recieved the last of it (the finish kit came several weeks after the QB) I simply faxed copies of Vans' invoices for the 2 deliveries. My thoughts were that if that didn't satisfy NAFCO, I would then go through the extra task of getting a bill of sale from Vans.
About 6 weeks later, out of the blue, I recieved my FAA registration. My RV was fully registered and I hadn't even finished the empanage not to mention starting on the QB. Of course, that triggered the tax collector and I received a letter several weeks after that stating they had been notified by the FAA of a new registration in the state but, that's another story.
The only issue I have is that when I filled out the form I entered the vanilla manufacturer's designation of "Vans RV-7A" instead of something like Jackal-7A.
Jekyll
Allan Stern
Well Known Member
Bill of Sale and registration
Did any of you folks pay attention to that article in Sport Aviation several months ago about your use tax? Many states have started collecting sales taxes on any items purchased via the internet or out of state like from Van's and those companies are not collecting your state sales tax on your purchases. The article said that when you apply and receive your N number, your plane then becomes public record. State tax departments can now see who has registered such an expensive new toy and then see if any taxes have been paid on it or not. Then when you least expect it they will come and ask you for their due sales/use tax. I paid Ohio use tax on my 2001/2002 purchase and will again pay them for 05 when I got my engine, prop and other finish items. So that was an approximately $3600.00 I had not counted on. Ohio had a tax amnesty program for people who "forgot" to pay the taxes and you did not get any penalty for paying late and a small interest penalty.
Just a thought to keep in mind if your state has been making rumblings about collecting taxes on out of state purchases.
Did any of you folks pay attention to that article in Sport Aviation several months ago about your use tax? Many states have started collecting sales taxes on any items purchased via the internet or out of state like from Van's and those companies are not collecting your state sales tax on your purchases. The article said that when you apply and receive your N number, your plane then becomes public record. State tax departments can now see who has registered such an expensive new toy and then see if any taxes have been paid on it or not. Then when you least expect it they will come and ask you for their due sales/use tax. I paid Ohio use tax on my 2001/2002 purchase and will again pay them for 05 when I got my engine, prop and other finish items. So that was an approximately $3600.00 I had not counted on. Ohio had a tax amnesty program for people who "forgot" to pay the taxes and you did not get any penalty for paying late and a small interest penalty.
Just a thought to keep in mind if your state has been making rumblings about collecting taxes on out of state purchases.
aparchment
Well Known Member
Same tax rules in ME
We have the same rules in Maine Allan. The tax folks receive notice from the FAA of aircraft registrations, then come knocking for the sales tax. I am electing to pay as I go because it's less painful that way.
Antony
We have the same rules in Maine Allan. The tax folks receive notice from the FAA of aircraft registrations, then come knocking for the sales tax. I am electing to pay as I go because it's less painful that way.
Antony
So...
What's to keep you from registering the completed plane to your Oregon LLC (based at Mail Boxes Etc. in Portland - Oregon has no sales tax) and then purchasing the plane from that LLC for $2000? In Texas, you'd owe a whopping $120 in sales/use taxes instead of $3000+.
Update:
Okay, just figured it out. Creating an Oregon LLC costs $50 if you're willing to spend 3 minutes to fill in the form. You can pay someone else $200 to do it for you. The LLC buys all the parts. In the end, the plane is bought from the LLC for whatever you feel like paying - that's the amount you'll pay sales tax on. That's it, there's nothing else to it.
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aadamson
Well Known Member
Just be careful
There is sales tax, and then there is use tax. If they don't get you for sales tax on the LLC idea, they *will* get you on use tax. YOu see, if you buy it thru an OR LLC and don't pay sales tax, then when your change the registration to TX, you get a bill from the state for USE tax on the sale.
It just gets really complicated, and you can be assured that us little guys will get caught because the BIG guys have tried ever trick in the book to not pay the big tax bill on their big ticket airplane and that has taught the states well.
There is sales tax, and then there is use tax. If they don't get you for sales tax on the LLC idea, they *will* get you on use tax. YOu see, if you buy it thru an OR LLC and don't pay sales tax, then when your change the registration to TX, you get a bill from the state for USE tax on the sale.
It just gets really complicated, and you can be assured that us little guys will get caught because the BIG guys have tried ever trick in the book to not pay the big tax bill on their big ticket airplane and that has taught the states well.
aadamson said:
Sales Tax = paid on items bought from sellers in-state or with a nexus in-state
Use Tax = An identical amount of money as Sales Tax, but owed by a buyer who buys from a seller who does not collect sales tax (e.g., an out of state seller). Anytime you order from Amazon, you technically owe a Use Tax to your state.
Sales and Use tax are identical in amount. The only thing that changes is who collects/pays the tax. Both are calculated on the amount of the sale.
So... you only pay use tax on the sale AMOUNT. When you buy it from the Oregon LLC for $2000 (or whatever), THAT is the amount used to calculate the use tax.
No offense to any of you out there, but government employees are one or more of (a) too stupid, or (b) too lazy, or (c) not mandated to determine an item's value - they just use sales documents to levy taxes.
The sale of an item (airplane) by an out of state entity to an in-state entity will be taxed on the amount of the sale. The out of state entity need not show its cost, because it is not within the jurisdiction of the taxing state (e.g., an Oregon LLC can tell Texas to go pound sand if Texas wants to know what it paid for the airplane it sold for $2000).
My point is: by controlling the Oregon LLC, you can sell the airplane to yourself for whatever amount you wish, that amount being that used to calculate the sales/use tax you owe your home state.
I'm telling you (as a non-lawyer) that this is the way to do it.
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aadamson
Well Known Member
I believe...
Having experienced it first hand and knowing of at least 3 other examples of the same. I'd say, try, it, you'll be surprised or perhaps it is just a Georgia thing.
Followed your exact scenario, even waiting a number of years before the LLC sold it to me. State retrieved the original sales records, saw that it had paid not sales tax (delaware LLC).... When it was *resold*, state used fair market value instead of the price paid and came after their use tax. Remember, only public record of transaction of the resale was the BOS and it said "$1 & OVC".
There are numerous stories about this on line and more than one aviation tax consultants take on the whole matter.
Perhaps thats how it's done, but I'd suggest that "buyer beware" it certainly didn't work at in aleast 4 cases that I know of.
Having experienced it first hand and knowing of at least 3 other examples of the same. I'd say, try, it, you'll be surprised or perhaps it is just a Georgia thing.
Followed your exact scenario, even waiting a number of years before the LLC sold it to me. State retrieved the original sales records, saw that it had paid not sales tax (delaware LLC).... When it was *resold*, state used fair market value instead of the price paid and came after their use tax. Remember, only public record of transaction of the resale was the BOS and it said "$1 & OVC".
There are numerous stories about this on line and more than one aviation tax consultants take on the whole matter.
Perhaps thats how it's done, but I'd suggest that "buyer beware" it certainly didn't work at in aleast 4 cases that I know of.
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roadrunner20
Well Known Member
I left mine blank as well and received my FAA registration with no problems.
Ssshhh.....
It makes me nervous to read all of this, because SOME states have yet to figure out this particular revenue stream, and I'd hate for them to get the idea by surfing the web and reading about it....let sleeping dogs lie, I always say (at least when it comes to taxes...)
It makes me nervous to read all of this, because SOME states have yet to figure out this particular revenue stream, and I'd hate for them to get the idea by surfing the web and reading about it....let sleeping dogs lie, I always say (at least when it comes to taxes...)
Davepar
Well Known Member
mdredmond said:
You obviously haven't been to the same licensing office I used for my last car purchase. They seem to take particular pleasure in making a simple transaction into a painful event.
Does the Van's license agreement need to be signed/notarized in order to get the bill of sale from them?
OneTwoSierra
Well Known Member
Davepar said:
I didn't have to. YMMV
RatMan said:
Hmmmm. It's because:
A. I'm getting ready to write a check to the IRS that could buy several RV kits. I've paid plenty of what I 'owe'.
B. There is precisely NOTHING about my spending 2000 hours to build a plane that entitles my fellow citizens to come tax me for it. Now if they'd like to help me build it, then I'll reconsider.
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Deuskid said:
Hmmmm. I don't believe you. Or at least, I don't believe there are corporate law or income tax issues. While not a lawyer, I'm pretty well versed in the law and without specific examples, I'm not believing it.
In the end it really doesn't matter. Here I don't have to pay use tax on a plane older than 1 year. So if my brother (or LLC) registers it in Oregon for a year, I can buy it (for any amount) and pay no use tax.
Davepar
Well Known Member
mdredmond said:
As far as I know, there isn't any sales/use tax on the hours you put into the plane. Only on the parts that other people made for you, Vans, Lycoming, Garmin, etc.
Not trying to start a flame war. Just pointing out a small flaw in your logic. Personally, I'd like to avoid our 9% sales/use tax as well.
From what I've heard, here in Washington you pay the tax on the receipts you present. If you happen to forget a few receipts for a box or two from Garmin...
Oh, I know there's no tax on your own labor. It's just sort of irritating and I'm hypersensitive to taxes right this sec because I just got royally screwed. I'm a part of that class of people (as are most here, I'm sure) that earns enough bread that taxes hurt and doesn't earn enough to not care about it.
