(2008 – 2009)
There is growing attention among the states regarding aircraft and the application of state taxes. Among some of the known high enforcement states such as, Illinois, California, New York, Indiana, Michigan, Texas, and Arizona; we are adding Florida, Colorado, Washington, and Kentucky. With all this attention being paid to aircraft of all sizes it is even more important to understand how each of the 50 United States tax aircraft and even more so, to know when there are changes within the tax code that could affect aircraft.
It is important to the various departments of aviation in each state to understand how the various states tax aviation and how this could have an impact on their state. For instance, if your state taxes maintenance work done on non-resident aircraft and all the states around you do not, why would owners bring their aircraft to your state and have to pay a tax when they can go to another state nearby. Owners are always looking for ways to save money on the operation of their aircraft and taxes play a big part in this.
There have been significant changes to taxes impacting general aviation aircraft within the states over the past two years. Following are some of the changes that have occurred in 2008 and 2009.
COLORADO – Effective 8/8/08. The sale of a new or used aircraft is exempt from taxation if sold to a non-resident and removed within 120 days after the date of the sale.
INDIANA – Effective 4/1/08. The state sales/use tax rate went up from 6% to 7%
INDIANA – Effective 7/1/08. An aircraft acquired by a person for rental or leasing is not exempt from the sales tax unless the person establishes that the annual amount of the lease revenue derived from leasing the aircraft is equal to or greater than 10% of the cost of the aircraft, if the cost was less than $1,000,000, or 7.5% if the cost is equal to or greater than $1,000,000.
MARYLAND – Effective 1/3/08. The state sales/use tax rate went up from 5% to 6%
MISSOURI – Effective 8/28/08. The definition of commercial aircraft for personal property tax purposes changed from aircraft that weigh more than 7,000 pounds to aircraft that weigh 3,000 pounds.
NORTH CAROLINA – Effective 10/1/08. The state sales/use tax rate increased from 4.25% to 4.5%.
OHIO – Effective 6/24/08. Sales of materials, parts, equipment or engines used in the repair or maintenance of aircraft (aircraft means aircraft that weigh more than 6,000 pounds) at a FAA certified repair station are exempt from the state sales/use tax.
UTAH – Effective 1/1/08. The state sales/use tax will decrease from 4.75% to 4.65%.
GEORGIA – Effective 1/1/09. On May 4, 2009, the Governor signed legislation that extended the aircraft maintenance exemption to June 30, 2011.
IDAHO – Effective 7/1/09. The sale, lease, purchase or use of aircraft primarily for air ambulance services are exempt from sales/use tax.
MINNESOTA – Effective 7/1/09. The state sales/use tax rate will increase from 6.5% to 6.875%.
NEVADA – Effective 7/1/09. The school support tax rate will increase from 2.25% to 2.6% bringing the overall state sales/use tax rate to 6.85%
NEW YORK – Effective 6/1/09. The definition of transporting for hire was changed to not included transporting agents, employees, officers, members, partners, managers or directors of affiliated persons
OHIO – Effective 2/1/09. The maintenance work does not have to been accomplished at an FAA certified repair station in order for the exemption to apply.
Effective 1/1/09. The state sales/use tax rate increased from 4.65% to 4.7%
Effective 1/1/09. The Registration Fee changed to .4% of fair market value and the Uniform Fee changed to $25.
WEST VIRGINIA – Effective 7/1/09. The assessed value of aircraft for the purpose of ad valorem taxation shall be its salvage value. Salvage value means the lower of fair market salvage or 5% of the original cost of the aircraft.
As you can see, state taxes are a moving target for aircraft owners and to keep current on these activities is a daunting task. A resource for more information regarding state taxes, Conklin & de Decker publishes a State Tax Guide for General Aviation which is updated on a continuous basis.
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.