You may ask why you should be concerned with taxes on aviation. Aircraft owners are always looking for ways to avoid or reduce their annual taxes and states are always looking for new ways to fund programs in their state. How your state taxes an aircraft will impact where an aircraft will be based and where revenue will be generated off of this aircraft. In most cases, the attention is focused on Sales/Use (or similar) taxes, however, this sometimes causes other taxes, such as, personal property taxes, ad valorem taxes, fuel taxes, aircraft registration fees, aircraft excise taxes, etc. to be overlooked. With all this going on do you know or understand –
- How your state compares to other states when it comes to taxes?
- How much lack of uniformity there is among the states?
- That taxes on aircraft can be significant and can influence wherean entity will hangar/base their aircraft?
- That every year there is significant activity within the state legislatures to change, raise, and/or modify these taxes.
Also, could your state be considered a “Gotcha State”? A “Gotcha State”, to an aircraft owner, is a state that could impose a tax on an aircraft although the aircraft owner has paid all the appropriate taxes to the state in which the aircraft is hangared. These taxes can appear as an aircraft registration or license fee that will require an owner to register the aircraft if it is in the state for more than so many days, or it could be a personal property tax that is due based on the amount of time the aircraft spends in the state. In any case, there are many cases where an aircraft owner finds themselves trying to understand why they owe taxes in more than one state. I will point out that I am not talking about the aircraft owner who is trying to evade taxes on their aircraft.
Some states that are on the radar are Arizona, who has a .1% of fair market value license tax on any non-resident aircraft that is in the state for more than 90 days but less than 210 days. Missouri considers any aircraft that weighs more than 3,000 pounds to be a commercial aircraft and therefore subject to tax based on the amount of time it spends over the state after taking off or landing. Maine has a 20-day rule for non-residents, meaning that if the aircraft is in the state for more than 20 days, it will be subject to sales tax. These are just a few of the state rules that the aircraft owner needs to be aware of.
If you would like to suggest a topic, please email me at email@example.com and I would be more than happy to discuss it in this column.