Taxes for Alabama and maybe elsewhere

[scottmillhouse]

As anyone building recently knows Vans now collects state taxes with all their sales. For Alabama they charge 8%. The problem is that the state rate for plane is 2% and 1-2% country/city so you greatly overpay especially for the big kit purchases. I have gone through the process of satisfying the taxes for the construction of 4 planes over the last 25 years. I was always proactive and scheduled an appointment at the same time applying for registration and always found them cooperative.

For my recent order the tax bill alone is $4800 with $3000 excess charges. I petitioned the state to either reduce or exempt the taxes at this time for these large purchases. They said it is not possible but upon completion they will settle up and refund the difference. They want their taxes collected at the general tax rate since many projects don’t get completed and become wall hangings. So if you are is Alabama and building, PM me when getting completed and I’ll connect you with their airplane tax expert. She appears very helpful and insures me that the state will quickly refund the tax difference.

 

[wirejock]

Taxes

As anyone building recently knows Vans now collects state taxes with all their sales. For Alabama they charge 8%. The problem is that the state rate for plane is 2% and 1-2% country/city so you greatly overpay especially for the big kit purchases. I have gone through the process of satisfying the taxes for the construction of 4 planes over the last 25 years. I was always proactive and scheduled an appointment at the same time applying for registration and always found them cooperative.

For my recent order the tax bill alone is $4800 with $3000 excess charges. I petitioned the state to either reduce or exempt the taxes at this time for these large purchases. They said it is not possible but upon completion they will settle up and refund the difference. They want their taxes collected at the general tax rate since many projects don’t get completed and become wall hangings. So if you are is Alabama and building, PM me when getting completed and I’ll connect you with their airplane tax expert. She appears very helpful and insures me that the state will quickly refund the tax difference.

Do they credit for proof of taxes already paid?
Much of what goes into an airplane is purchased separately and taxes paid on those purchases.
Similar question is how do they base the value for taxes?

 

[scottmillhouse]

Do they credit for proof of taxes already paid?
Much of what goes into an airplane is purchased separately and taxes paid on those purchases.
Similar question is how do they base the value for taxes?

As they tell it, You just bring in all your receipts, total up amount and taxes paid, they apply the correct tax and refund you the difference. In the past I just brought in the untaxed receipts from kit purchases and paid taxes before the plane was actually registered with the FAA. This way I should get taxes back for the other items outside kit purchase.

 

[wirejock]

Colorado

Does anyone know how this works in Colorado?
My FAA registration was just done.

The DOR website is impossible to navigate.
I have every receipt, aiplane and non airplane and a spreadsheet with all the numbers.

 

[Carl Froehlich]

Check your state for special deals

As interest, a couple of years ago Virginia passed a “no sales tax on aviation parts” bill as incentive to expand aircraft repair shops. I called up the nice state sales tax lady and asked if this also applied to aircraft kits. I was told yes (and have the email exchanged saved somewhere).

There is a form that needs to be sent to whomever you are buying parts from to document the sales tax exclusion. It took a couple of iterations as well as connecting Van’s to the right state people, but they honored this exemption.

Carl

 

[cgarts1]

I just got the "investigation" notice from the Colorado department of revenue about a month ago asking for a bill of sale that has an amount on it. I replied that all I have is the bill of sale from Vans (that doesn't have an amount on it) and that I estimated that it cost me about 34K to buy the kits and that I already owned the engine and avionics. They replied back last week that the case is closed and that I didn't owe anything.

The airplane has been registered since 09/2021.

 

[N16KY]

Does anyone know how this works in Colorado?
My FAA registration was just done.

The DOR website is impossible to navigate.
I have every receipt, aiplane and non airplane and a spreadsheet with all the numbers.

Larry,
I just got this.

 

[agent4573]

CA sent me a similar letter based on the date I reserved my N number. I guess that's how most states are automating the tax notices now, so expect to have to do some explaining for your $10 reservation.

 

[Warp10]

CA sent me a similar letter based on the date I reserved my N number. I guess that's how most states are automating the tax notices now, so expect to have to do some explaining for your $10 reservation.

The way we did it was to take in the Bill of Sales for the Kit. That became the value of the kit... There is no airplane yet. They did the sales tax on that.

Each state is different, but in South Carolina they have a property tax on cars, mobile home and yep airplanes. They didn't have any "X Book" to look up the value of our completed RV7 so they use what we told them.. The kit price.