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Van's is collecting sales tax in Colorado despite exemption for aircraft parts

mackd

mackd

Active Member
Just an FYI that I was notified in September by Van's that per their tax software vendor, they are now required to collect sales tax on purchases shipped to Colorado. As you may be aware, Colorado specifically exempts aircraft parts from sales tax (see references below). I'm trying to work through this with Van's, but we haven't gotten there yet. This is a sizeable chunk of change on my engine purchase...

Anybody else run into this?

https://tax.colorado.gov/sites/tax/files/documents/SUTT_Aircraft_December_2022.pdf
https://tax.colorado.gov/sites/tax/files/Sales%2085.pdf
https://codes.findlaw.com/co/title-39-taxation/co-rev-st-sect-39-26-711/
 
mackd said:
Just an FYI that I was notified in September by Van's that per their tax software vendor, they are now required to collect sales tax on purchases shipped to Colorado. As you may be aware, Colorado specifically exempts aircraft parts from sales tax (see references below). I'm trying to work through this with Van's, but we haven't gotten there yet. This is a sizeable chunk of change on my engine purchase...

Anybody else run into this?
Click to expand...

I live in New York where aircraft parts are also exempt from sales tax. I got an email notice as well in September and immediately responded with the legal backup from my state. They modified the order to remove the sales tax.

If you can't get a similar result, you can always apply for a sale tax refund: https://tax.colorado.gov/sales-tax-refund#:~:text=You%20can%20file%20a%20claim,or%20by%20using%20Revenue%20Online.&text=To%20make%20a%20claim%20for,directly%20to%20obtain%20refund%20information.
 
I brought up these concerns about a year ago regarding tax exempt Wisconsin. While Van’s did recognize the collection of sales tax wasn’t required, their computer system wasn’t set up to discriminate on a state by state basis.

Kinda makes sense looking back at it now.
 
Most states are similar. In Ohio you’ll automatically get a tax invoice on what the state perceives is the value of you aircraft, which is usually much greater than the sum of the parts, when you register it.

I built mine before Van’s started taxing sales. However, I declared and paid tax on the materials I purchased every year. There are several benefits to this approach. The biggest is paying taxes in much smaller annual chunks. It fit my budget better. When they sent me the invoice, I just simply reminded them that I had already paid taxes on everything. They couldn’t argue trying to tax on the potential value since I paid taxes on all the kits purchased. The difference was significant between the two values since they used tea-a-plane or barnstormers ads to substantiate what the potential value.

Fortunately private aircraft sales aren’t taxable in Ohio, so I don’t have to worry about what the kits cost versus the current value of the aircraft.
 
I’ve had the same email exchanges with Vans and supplied the state laws and handouts on the topic. It’s clear as day.
 
Had a similar discussion with Mitch Lock at Van's about similar laws in Maryland but he wouldn't budge. Aircraft Spruce howeever has made the change ad does not charge tax.
 
Ordered a bunch of parts today and had to call in as one part could not be ordered online. Customer Service was great - answered immediately and helpfully added the part to my current shopping cart. Yes they added a $100 of Colroado sales tax.

I think they use Shopify which is easy to configure and override - given 99% of their business is aviation parts shame the CFO won't move of this. I guess I can claim it back from the state.


Robert
 
fr0gpil0t said:
Ordered a bunch of parts today and had to call in as one part could not be ordered online. Customer Service was great - answered immediately and helpfully added the part to my current shopping cart. Yes they added a $100 of Colroado sales tax.

I think they use Shopify which is easy to configure and override - given 99% of their business is aviation parts shame the CFO won't move of this. I guess I can claim it back from the state.
Click to expand...

We actually use Magento for the web store. Shopify can't handle the inventory size that well, and can't be as customized. :)

We will (and do) review. When a state notifies us and requires us to withhold, it can take some effort to get an official "okay" to make a change. And the state may hold Van's responsible for failing to collect (even when the state's own code says it should be fine to not withhold).

We have a lot going on, but this will be on our list of tax-related items to review. Thx.
 
Thanks Greg for taking this on-board.

Yes Magneto allows tax classes so hopefully can support states that don't charge sales tax on aviation parts.
 
fr0gpil0t said:
Thanks Greg for taking this on-board.

Yes Magneto allows tax classes so hopefully can support states that don't charge sales tax on aviation parts.
Click to expand...

We actually use a tax service that classifies right down to the actual physical address. However, it doesn’t have aviation specific classes. That said, we do review. Can’t promise anything since the state tells us what we have to do but we will take a look when we can find time to do so.
 
Thanks for looking into this for us, Greg. Appreciate it very much. I know y'all are very busy and stressed right now.
 
Just an update that I pushed Van's hard on this issue with my engine order since it seems perfectly clear to me in the statute that this purchase should be exempt. They worked on it for a while and reported to me that both the state of Colorado and their tax vendor told them they are required to collect the sales tax. There was no reported justification for why the statute wouldn't apply given the written guidance from the state and I don't really understand it. However, I don't know what more I can do other than cancel the order, so I will proceed and pay the tax.

I will then submit the sales tax refund form to the state and see where that gets me. If the state rejects it, I can consider consulting a lawyer at that time. I'll let y'all know what happens.
 
I'm battling the State of Colorado at the moment, they place claims under the "USE TAX" and not sales tax. Yours is a part, which maybe you could argue is except but I'm guessing they will argue it isn't a plane without an engine and thus the Use tax is due.

Here is the webpage with information (https://tax.colorado.gov/aviation-taxes) and here is the important section:
Use Tax on Airplanes
When purchasing personal property, including airplanes, the buyer needs to file a Consumer Use Tax Return (DR 0252(opens in new window)) if the seller did not collect and remit sales tax for the purchase. The Consumer Use Tax Return can also be filed using Revenue Online(opens in new window). For airplane purchases, the return and the use tax payment are due on or before the 20th of the month following the purchase. For more information, visit the Consumer Use Tax(opens in new window) section of this website.
 
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