What's new
Van's Air Force

Don't miss anything! Register now for full access to the definitive RV support community.

Plane tax question

G

grover

Well Known Member
or the financial equivalent. . .

got a call this week from the friendly neighborhood assessor. inquiry was made of the nature/type of my plane. I suppose it was inevitable. . . anyway, she asked make and model the plane is. I said I built it. she indicated that for an accurate assessment, she needed to ask some questions, as they weren't very familiar with "home planes".

so the bottom line is this: how much information do I volunteer, and how much do I make them drag out of me? and, since my tail and wings were "previously enjoyed" and only the fus. came direct from van, is it worth visitng my accountant to try to minimize the damage? and by the way, the data plate says "JK8SP" for model.
 
Last edited:
grover said:
so the bottom line is this: how much information do I volunteer, and how much do I make them drag out of me?
Click to expand...

Volunteer nothing. Let them drag it out of you. Give them exactly the information they ask. After all, it's their job.

I'm interested inthe previously enjoyed part. My kit was purchased from someone in the same state as I (3rd owner of the kit, first to open the boxes). I guess I'll cross the tax bridge when I get to it.
 
Use your build reciepts

They dont know, but you can use your reciepts to come to a reasonable estimate. You dont have to use them all, just enough to show them something reasonable. I was able to get Washington State to accept $60K for my 6, IO-360, Efis, AP, EM, CS, etc... I also volunteered my Bucker, which was registered in another State, but live with me.
It was a $10K tax bill. Ouch!
However, I did this voluntarily. If Washington State finds you (unlikely as they dont have the budget or manpower to do their regular job) the penalty in Washington is -
Original Tax from day of purchase or air worthiness, plus accumulated compounded interest from that time, plus fines. The bill would have been $25K or $30K. If you voluntarily go in, at anytime, you just pay the usage tax as if it was new or built that day and all is forgiven.
Wether you feel it is right or wrong, the laws are what they are. I did not want the black cloud hanging over my head any longer, so I took the hit. I feel better now. However, that is an individual choice. Some have no problem disobeying a law they dont feel is fair. I have never heard of anybody getting caught and there are many skirting the tax out there.
 
Taxman

My attitude is to always be honest. If you're honest, they will usually treat you fairly and cut you some slack. In Florida, when I registered my RV-7A I got a letter from the Fla Dept of Revenue saying I owed some taxes. I called the taxman (actually a lady in this case) and told her what my plane was worth. I estimated it based on the cost of the main components (empennage, wings, fuselage, finish, engine and avionics), Since I bought the kit components over the course of several years, I could have been liable for penalty and interest over the course of years. She said she would waive that and just call the purchase date the same as the registration date. I didn't itemize every bolt or rivet that I bought and they seemed happy. If they come back and want to see all of my purchase records, I may be on the hook for a few hundred more dollars but I doubt my little homebuilt is a very big blip on their revenue radar screen.

The other consideration is to let them pry it out of you and then they start raising eyebrows and want to know A LOT more. In order to save a few tax dollars it is not worth having to pay the interest and penalties. It ends up costing you more than if you just sucked it up and wrote the check.
 
I remember the bill I got for sales tax--it was based on a purchase price of $150k! I called real quick. I was told that was just done to get my attention (which it sure did.) I answered only what was asked and ended up with a very fair bill. BTW, the yearly property tax on the 9A is about 10% what I pay in auto excise tax on a '05 Subaru. Kinda makes you want to quit driving...

Bob Kelly
 
Washington state Taxes

JonJay, Oh I can assure you that Washington State will find you. It takes about 1 year, ask me how I know. They check the registrations for Washington with the FAA and don't even leave there chair. Budget and Money problems are not gona stop them ,if anything they will look harder when they need money. I think I'm going to pay as I go with the RV. Gene
 
In FL, we're supposed to pay the sale tax within X days on big items. The tax on small items is paid at the end of the year.
 
So if we pay as we go on the kits, we don't have to pay at the end?

This tax stuff is all very confusing. Every once in a while one of these threads pops up and I can never make head or tail of my own personal situation. I know it's different for each state...

Is there a website somewhere that lists details for different states?
 
Andy,

You're supposed to pay as you go. If you do, you won't get caught at the end and be "surprised" with a big tax bill.
 
Andy...your progress looks good. On your engine did you tear it down and send of to be rebuilt? just wondering.

As for as tax...not sure how Indiana is but I plan to just pay them as I go and hopefully avoid any big headaches in the future.
 
or just deduct the entire thing!

nothing like a good plane to support that aerial photography and crop survery business / engineer... :D

Lots of corn!
 
what is this plane tax i hear you all talking about? I live in oregon, never heard of this kind of tax in this state.

danny
 
Oregon does not have a use tax or sales tax

Danny7 said:
what is this plane tax i hear you all talking about? I live in oregon, never heard of this kind of tax in this state.

danny
Click to expand...

You just have income and and property taxes! They get you comnig or going...
 
Well, it is the right thing to do...

gbumga said:
JonJay, Oh I can assure you that Washington State will find you. It takes about 1 year, ask me how I know. They check the registrations for Washington with the FAA and don't even leave there chair. Budget and Money problems are not gona stop them ,if anything they will look harder when they need money. I think I'm going to pay as I go with the RV. Gene
Click to expand...

That does not cover the aircraft living in the State that are registered elsewhere, which I believe to be pretty common. But, I do believe you and after all, agree or disagree with useage taxes in general, it is the right thing to do.
I own a business in Oregon, commute with my Oregon leased car, and Washington dinged me for the use tax by watching the bridge each day and taking license plate numbers. I drive far more on Oregon roads than Washington and I dont pay a dime in Oregon except when I buy gas to maintain the roads. Silly.
The new reporting transponders will solve all of that and every State can monitor when you are in their airspace and ding you for that too. Ha!
 
Ryan - PM Sent.

It looks like I'll be putting all of the kits on this year's taxes. The engine came second hand, so I would imagine that will be untaxed.
 
Washington State Tax System

Washington State is pretty aggressive in collecting sales and/or use tax, and the current budget shortfall will result in even more aggressive collection. Sale tax is due on "retail sales" that take place within the state. Use tax, which is the same rate as sales tax, applies to the "use of goods" within the state when sales tax has not been paid :eek:. For homebuilt aircraft the use tax is applied to the "value of the materials" used to build the aircraft. Establishing the value is where there may be some wiggle room in favor of taxpayers.

If an aircraft registered to a non-resident of WA spends more than 90 days (in total) in the state within a given calendar year the state can assess the aircraft for use tax :eek:. At that point the use tax is based on the "market value" of the aircraft at the time of assessment and NOT the original purchase price. They do ramp checks and employ other non-disclosed techniques for policing aircraft location within the state.

So beware if you plan to bring your airplane to the Socialist Republic of WA for extended stays, as the "Comrades" may ding you big time!
 
JonJay said:
I was able to get Washington State to accept $60K for my 6... I also volunteered my Bucker.
It was a $10K tax bill. Ouch!
Click to expand...

Paul Thomas said:
In FL, we're supposed to pay the sale tax within X days on big items. The tax on small items is paid at the end of the year.
Click to expand...

videobobk said:
I remember the bill I got for sales tax--it was based on a purchase price of $150k!....
Click to expand...

Paul Thomas said:
...You're supposed to pay as you go. If you do, you won't get caught at the end and be "surprised" with a big tax bill.
Click to expand...

Wow. Some of these posts read like a badly written horror stories. Makes me kinda glad we pay a personal property tax.

When it comes to kit built aircraft, Missouri seems to be more agreeable and accommodating than many states. Whoda thunk it. Interestingly, while suffering from the economic slowdown like almost every other state, Missouri is for the moment, reasonably solvent....not reduced to publicly begging the feds for a bailout like other state governments...well...not yet anyway.

I see Florida is now trying to assure potential fly in visitors to the state that it will not target them as it has other hapless out-of-state airplane owners in exacting very sizable taxes on transient airplane owners. Actions speak louder than words and no way am I going to take that chance and fly my new plane to Florida to attend Sun N Fun risking a 6% tax tribute based on the (revised) word of a state bureaucracy now offering purported assurances to the contrary.

Missouri Revised Statutes. Read down the page a bit "Light aircraft kit": http://www.moga.missouri.gov/statutes/C100-199/1440000043.HTM
 
wjnmd said:
My attitude is to always be honest. If you're honest, they will usually treat you fairly and cut you some slack. In Florida, when I registered my RV-7A I got a letter from the Fla Dept of Revenue saying I owed some taxes. I called the taxman (actually a lady in this case) and told her what my plane was worth. I estimated it based on the cost of the main components (empennage, wings, fuselage, finish, engine and avionics), Since I bought the kit components over the course of several years, I could have been liable for penalty and interest over the course of years. She said she would waive that and just call the purchase date the same as the registration date. I didn't itemize every bolt or rivet that I bought and they seemed happy. If they come back and want to see all of my purchase records, I may be on the hook for a few hundred more dollars but I doubt my little homebuilt is a very big blip on their revenue radar screen.

The other consideration is to let them pry it out of you and then they start raising eyebrows and want to know A LOT more. In order to save a few tax dollars it is not worth having to pay the interest and penalties. It ends up costing you more than if you just sucked it up and wrote the check.
Click to expand...


I live in Florida and had received my letter from DOT once I received my AW. As long as you've been in the build process > 6 months, no tax.
I called & informed them and they told me to disregard the notice.:)
 
Rick6a said:
I see Florida is now trying to assure potential fly in visitors to the state that it will not target them as it has other hapless out-of-state airplane owners in exacting very sizable taxes on transient airplane owners. Actions speak louder than words and no way am I going to take that chance and fly my new plane to Florida to attend Sun N Fun risking a 6% tax tribute based on the (revised) word of a state bureaucracy now offering purported assurances to the contrary.
Click to expand...


Lots of mis-information out there.
Here's the letter from DOT to AOPA re: FL tax issues.
http://www.sun-n-fun.org/content/interior.asp?section=flyin&body=flasalestax


As I've stated earlier, in FL, there is no tax if build time > 6 months.
 
Also, if they ask you what radios are installed be aware that they don't know the difference between one and another, or whether or not you bought it used. They just look it up in a chart and assign a value. If you tell them about it...
 
Dan,

I'm not seeing where a builder is exempt from taxes. I believe the 6 month exemption you refer to is for use tax. If I buy an airplane out of state, register it and I leave it out for 6 month, I won't have to pay the tax. I've gone through this with a boat before.

As I understand it, the sale tax we're paying as we're building has nothing to do with an airplane but with buying out of state goods. I sure hope there is a loophole I don't know about, I'd love to be educated about it.
 
Food for thought

I am trying to figure out what is the most reasonable way to pay the tax man myself. I wanted to ad to the fray something that definitely applies to the tax liability on our airplanes. Many may disagree with me.... certainly the tax collectors. Anyhow, has anyone ever wondered why you DON'T PAY ANY SALES TAX ON an item purchased OUT OF YOUR STATE? It is because the Constitution of the United States of America says, "Interstate Commerce shall not be taxed."
I would love to get the EAA legal people involved and see their thinking on this matter. Unfortunately, most of us (me included!?) will probably just cowtow to the tax man and let him steal my money. After all, I've got an airplane to build. :eek:
 
Mea Culpa!

(I think that means "My bad!")

Everything I learned about the Constitution in 9th grade has been completely re-interpreted by the Supreme Court, so nothing I used to know is right anymore.

BTW - Do you think any of the Supreme Court Justices fly RV's?;)
 
Is there a differnce in your state's tax rate

In Mississippi there is a difference in the tax rate for an airplane or parts. An airplane has a 3% tax, my county has a 7% tax on parts.

I voluntarily gathered up my kit invoices and went to the tax office with my N registration and paid the tax for an "airplane" instead of seperate kits.

I did this before getting my airworthyness certificate in the event that I get a letter or notice from the state so I can make a copy of the receipt and send it to them.

Call it a preemptive strike with hopes of avoiding having a "price" put on my plane by the tax office.....After all....Sir - this is a homebuilt amateur airplane, not a commercially made one. I couldn't afford one of those.
 
Utah

Utah has a flat property tax of $100 per year for experimentals and vintage aircraft. An additional $25 per year is required for registration. Not bad. $125 per year. I can do that.
However, I just visited the State Tax Commission yesterday to register my completed-in-'08 RV9A for it's first time. I didn't have any receipts with me so I completed a "statement of ownership" form. The tax lady and I determined Utah sales tax was not collected on $12.5K of the total cost of my airplane. Anyway, the total bill came to $981.00 including the $125 and 6.7% sales tax and other misc local taxes.

not feeling to bad,
Steve
 
North Carolina

This thread has made me so nervous that I dread opening my mailbox! Been flying the RV-8 for nearly three years now and the letter from the tax man has never come. I decided upon a preemptive strike and headed for the county tax assessor's office on Tuesday with paperwork in hand. I was greeted by a little old lady who thankfully knew nothing about airplanes and was fascinated when I told her I built one in my garage! I gave her the receipt for my wing and fuselage kit and another for the engine core. Total value of those receipts was $29,770.58. :rolleyes: She was pleased with just those receipts and I was dancing on the inside! She told me to expect a tax bill from the county in July. Before I left I asked if there would be any tax due to the state? No, only the county and city where the airplane is located may issue a tax bill. (Mine is outside city limits, so only a county personnal property tax is due.) Any back taxes or penalty? No! She couldn't tell me what my tax would be, but I am expecting something like $40 based upon other aircraft owners I have talked to.

I sleep much better now. :)
 
TClinton said:
Anyhow, has anyone ever wondered why you DON'T PAY ANY SALES TAX ON an item purchased OUT OF YOUR STATE? It is because the Constitution of the United States of America says, "Interstate Commerce shall not be taxed."
Click to expand...

"Use" tax is levied by your home state on YOU: you owe the homies the same amount of sales tax you would have paid were the transaction conducted in-state, less any sales taxes paid to the other state.

The home state isn't imposing a tax or duty on the out-of-state goods, to be paid by the out-of-state business, so the Commerce Clause is not infringed. Home state citizens are required by law to pay the same amount of tax on all purchases, from any business, regardless of its location in- or out-of-state.

No business is "favored" by use taxes due on out-of-state purchases, properly credited for the out-of-state tax paid, if any. If your home state decided not to take taxes paid to another state into account, that would constitute favorable treatment of intra-state commerce and then I think you, the out-of-state business, or both, would have a Federal case.

Bottom line: If you don't live in Oregon or another no-sales-tax state, your state can impose use tax on a Vans kit (to get back OT) without running afoul of the US Constitution.
 
VT or NY ?

Any one got experience of the tax situation in either NY or VT?
To make life fun my residence is in VT and the plane is hangared in nearby NY.
Jim Sharkey
RV6 - Almost there
(I have a creepy feeling that I might regret launching this question into the ether.)
 
In Wisconsin, when you register and licence the plane , then they charge you a sales tax based on your estimated price of the materials to build. Your labor has no value. (stripped , plain, , VFR, etc):eek:
 
Virginia

Anyone have any experience in the great state of Virginia?? I can't find anything anywhere... and I've been looking for a week.
 
FL use tax

If a FL resident, and you buy an airplane out of state, do not pay sales tax, AND bring it into FL within 6 months of purchase, the DOR will demand a use tax be paid. They used to allow an appraised value to be used, not actual purchase price, but not anymore.

If you buy an airplane in FL, you only have a certain number of days to get it out of the state, or the use/sales tax issue will arise with the FL DOR. Ditto if having an airplane repaired in FL. Certain parts for repair are exempted from sales or use tax. There's lots of other caveats that would be good to research before the fact. Guess you could simply call FL DOR and ask them, pre-purchase. 1-850-922-2650.

I would assume, as someone else posted, that if a builder and you've owned the parts more than 6 months, then by the same logic that is why use tax may not be due. No experience with this.

You can debate the constitution, LLC's in another state, fibbing, withholding, etc., and maybe that might work in the end, but I doubt it. Likely, you'll spend more in atty fees than the use/sales tax on a typical RV. You also open yourself up to penalties and interest.

Your results may vary. Just my experience.
 
Ohio Use Tax Code

For those in Ohio, here is a link to the use tax code. I read some of it and I do not speak leagaleze too well, will have to have my tax accountant look at this for me and see what he says.
 
Washington State Use Tax

I paid my Washington State Use Tax last week. No appointment necessary. Just went to the local Dept of Revenue and stood in line.

I took a statement of costs that I prepared along with supporting documents. For example, I showed the kit value from Van's along with a printscreen of Van's website showing the cost of the RV-7.

I declared (for tax purposes) the cost of the kit ($19,075), cost of engine and prop purchased used from individual in California ($13,500), instrumentation and communication purchased from various vendors and eBay ($4,132), Nav & Strobe lights ($508). I also declared that the plane interior materials were purchased in-state (sales tax already paid), and no exterior paint.

Total declared cost/value was $37,215.

I specified that the "Location of First Use" is my home address. Sales/Use tax rate at my home is 7.6%, compared to 8.5% if I used the Arlington Airport location.

Final bill to the tax man - $2,828.35

They provide a "Use Tax Paid" document, which I can then present to the Dept of Transportation - Aviation Division, and then pay my $35/year aircraft registration fee.

Now I just need a DAR and some transition training!
 
NY Aircraft Tax

jsharkey said:
Any one got experience of the tax situation in either NY or VT?
Click to expand...

The NY tax dept. has a squad that roams airports and fly-ins and takes down N numbers. If they have a file on you they move on. If not , you get a threatening tax form in the mail demanding you pay up. It happened to a buddy of mine a few months after he registered his Champ. I figured I'd head them off at the pass so I called the Tax department. They seemed surprised by my request. Sure enough I received the same threatening form in the mail but somebody at the Tax dept. has written "Voluntary" over the top. As of this date all aviation services and parts bought in NY are tax free but that law is about to expire. The AOPA is fighting to keep it in affect. Still can't believe I got my engine from Manlon tax free. Especially in this state.
 
Indiana

Somewhere on this thread or another someone stated that state registration is expected to be accomplished within (specified time frame) from the date of FAA registration. In Indiana, that time frame is 30 days with penalties and interest accruing.

Often we homebuilders have obtained an FAA registration a long time before receiving an airworthiness certificate.

It took some digging on the Indiana state government website, but when I pulled up the registration form, it states very clearly that, for homebuilt aircraft, the FAA weight and balance form MUST be submitted.

Well, my plane has an FAA registration. However, because it's still in pieces, there is no W&B for it yet. It would be physically impossible for me to register my plane with the state at this time because I have no FAA weight and balance form!

Go figure.
 
Exempt???

Washington allows you to declare a registered airplane as "exempt" for various reasons. One of the reasons is if the airplane is "out of annual". When you have your DAR inspection, the "annual inspection" logbook entry is one of the required items that the DAR will check.
 
N8RV said:
Somewhere on this thread or another someone stated that state registration is expected to be accomplished within (specified time frame) from the date of FAA registration. In Indiana, that time frame is 30 days with penalties and interest accruing.

Often we homebuilders have obtained an FAA registration a long time before receiving an airworthiness certificate.

It took some digging on the Indiana state government website, but when I pulled up the registration form, it states very clearly that, for homebuilt aircraft, the FAA weight and balance form MUST be submitted.

Well, my plane has an FAA registration. However, because it's still in pieces, there is no W&B for it yet. It would be physically impossible for me to register my plane with the state at this time because I have no FAA weight and balance form!

Go figure.
Click to expand...

I've registered three experimentals in Indiana. I've never submitted, nor have I been asked to submit, a weight and balance form.

While we are supposed to pay sales tax on out of state purchases as they occur, there is actually a line on the State Tax Form that tells you to exclude airplanes for this calculation.

On my first one, I payed it all when I registered it. On the second one, I payed as I went and I had to provide them with a copy of my income tax form proving that I already paid it. In both cases, I was never charged interest.
 
I took that info from the www.in.gov site. I had to type in "aircraft" in the search function to find registration info. That brought up the list of PDF forms, one of which states that you MUST have the FAA W&B form, that's all.
 
Tax?

No state income tax here. Use tax in place for planes instead of sales tax. Each year I have to have a County affidavit notarized stating that my experimental aircraft is not allowed to be used for commercial purposes. This exempts me from the use tax. Of course they still try to tax all my tools every year because I make money with them. I've told them if they collect on every rancher's baler and fence tools, then they can come after me. They quit sending me tool tax notices about 8 years ago.
 
in.gov

When I register my aircraft with the Federal Aviation Administration (FAA), will the FAA automatically notify the Indiana Department of Revenue?

No. The FAA and the Indiana Department of Revenue are separate government agencies. They do not automatically exchange information. It is the aircraft owner?s responsibility to register the aircraft with the federal government?through the FAA?and with the State of Indiana?through the Indiana Department of Revenue.

If my aircraft is not airworthy, do I still need to register and pay aircraft excise tax annually?

Aircraft registration and excise tax are in lieu of personal property tax. So if you own the aircraft, the registration and tax are due regardless of the condition of the aircraft. If you release or surrender the FAA Certificate of Registration (FAA N#) and the airworthiness certificate, it is no longer considered an aircraft by the FAA or the State of Indiana; registration and payment of the excise tax would not be required.
 
looks in Indiana you can pay now or later. this is off the form

4. Homebuilt aircraft from raw material

Indiana sales/use tax was paid on each part as purchased. All receipts are available upon request.

Any kit, parts or material purchased to build aircraft but Indiana sales/use tax was not paid, the Indiana sales/use tax is due. The
accumulative total of all untaxed purchases must be entered in the purchase price area below and receipts submitted on request.
 
Our economy is in a death spiral and the city/county/state/federal budget shortfalls put the public officials in an untenable position. Like a animal trapped in a corner the taxpayer looks left, right, up, down and realizes he cannot escape. With no where to go and no way to pay he forfeits, in this case stops buying goods and services. We all know how the death spiral ends so what is about to happen over the next few months/years should come as no surprise to anyone on this board who pilots a RV or any other airplane. :(
 
Last edited:
You must log in or register to reply here.
Back
Top