REFLECTOR: FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES, USE TAXES
Richard J. Gentil
richard at naples-air-center.com
Sun Feb 5 11:21:46 CST 2006
Well that or everyone just first register their newly finished Velo in
NM, and move a week later. ;-)
Richard
Grigore Rosu wrote:
> But what if one sells the kit? I guess that the final builder, the
> one who registers the airplane is the one who pays the taxes. If that
> is true, then paying sales taxes right after receiving the kit is a
> bit risky, because statistics say that only 8% of builders finish
> their airplane. Of course, I believe I'll be one of those 8%, but you
> never know.
>
> Grigore
>
>
>
> On Sun, 5 Feb 2006, Scott Baker wrote:
>
>> In this world nothing can be said to be certain, except death and
>> taxes. Benjamin Franklin
>>
>> Just about every state with a sales tax applies the tax towards
>> aircraft purchases. Buyers of Velocity kits sometimes think that the
>> act of receiving the aircraft in from another state obsolves them of
>> paying sales tax in the state in which they reside. Wrong. It only
>> means that the seller (i.e. Velocity, Inc.) need not collect the tax
>> - you are still obligated to pay your local tax collector.
>>
>> The FAA shares its aircraft registration database with state tax
>> agencies. Until Velocity builders actually register their aircraft
>> (obtain an N-number) - the tax man probably does not know that your
>> Velocity exists. Soon after you apply for your N-number, expect a
>> letter from the local tax agency offering their congratulations on
>> your "new" purchase - and to please provide evidense that you have
>> paid sales tax (either in your home state or in the state in which
>> you purchased the aircraft). Credit is given to sales tax paid in
>> other states.
>>
>> Smart owners will march down to the tax collectors office soon after
>> they receive their kit - and with factory invoice in hand to document
>> the $60,000 purchase price of their "aircraft" - pay the local sales
>> tax and say "Have a nice day!" Most local tax officials will think
>> that $60K is the total price of the aircraft - and fail to realize
>> that builders have upcoming expendatures in equipment (engine,
>> propeller, avionics). If you are lucky,, getting your name on the
>> tax roll at the onset might keep the assessor's office from
>> performing an audit after the aircraft is completed. Ask me no
>> questions, I will tell you no lies.
>>
>> A quick note about parts versus labor - and what is taxable. Believe
>> it or not, many states apply sale tax to "fabrication labor" (as
>> opposed to labor for repairs, which is generally not taxable). Let's
>> say you ignored the sales tax issue until the aircraft becomes
>> registered. The local tax office calls to say that since they cannot
>> find "Velocity" in their aircraft price guides - please make yourself
>> available for an appraiser, who will take a close look at the
>> aircraft and have you complete a questionairre regarding the
>> aircraft's components (engine make, model, hours; radio equipment;
>> etc). The appraiser compares your aircraft to other Velocity models
>> that are listed in Trade--a-Plane ... and calculates you have a
>> $150,000 aircraft. "Yes, that's true", you say - but I only have
>> $80,000 worth of parts invested in the aircraft. The reply from the
>> tax people could be - "That's nice, but you still owe taxes on the
>> $70,000 worth of work you put into the aircraft." This is another
>> reason, in my opinion, to pay the sales tax on the kit soon after it
>> arrives - and hope the local tax office does not follow up with
>> annual appraisals.
>>
>> No one likes paying taxes. Consult a tax specialist to learn what
>> you might do to legally lower or eliminate taxes by registering the
>> aircraft in another state - or in the course of a business with a
>> resale license. For some this is an option - and for others, not.
>>
>> One last comment - you are not going to win an argument with the
>> sales tax people.
>>
>> Scott Baker
>>
>>
>>
>>
>> ----- Original Message -----
>> From: Jim Agnew
>> To: Velocity Reflector
>> Sent: Saturday, February 04, 2006 11:19 AM
>> Subject: REFLECTOR: FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES,
>> USE TAXES
>>
>>
>> Take Note!
>>
>>
>> ~~~ AOPA Close to Home ~~~
>> FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES, USE TAXES
>> Members are alerting AOPA to a recurring situation in Florida where
>> the state, in reviewing its information on recent FAA aircraft
>> registrations, is aggressively seeking sales or use taxes from new
>> aircraft owners who may not have already paid. Typically, for newly
>> constructed experimental aircraft, owners are only required to pay tax
>> on the parts, not the builder's labor. However, if you register the
>> aircraft before completion, you can be responsible for taxes as of the
>> registration date unless you prove otherwise. As always, check with
>> your financial advisor for details. AOPA's Pilot's Guide to Taxes
>> ( http://www.aopa.org/members/files/guides/tax_guide.html ) has a
>> listing
>> of Web sites for revenue departments in all states and phone numbers
>> to aid you or your accounting professional.
>>
>>
>>
>>
>> James F. Agnew Jim_Agnew_2 at Yahoo.Com Tampa, FL Velocity 173 Elite
>> Aircraft Completed & Flying
>>
>>
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>>
>>
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